<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PLATINUM TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7372 36-3509662
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
1815 SOUTH MEYERS ROAD, OAKBROOK TERRACE, ILLINOIS 60181, (708) 620-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ANDREW J. FILIPOWSKI
1815 SOUTH MEYERS ROAD, OAKBROOK TERRACE, ILLINOIS 60181, (708) 620-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
MATTHEW S. BROWN, ESQ. ELLEN B. CORENSWET, ESQ.
MARK D. WOOD, ESQ. BROBECK PHLEGER & HARRISON LLP
KATTEN MUCHIN & ZAVIS 1633 BROADWAY, 47TH FLOOR
525 WEST MONROE STREET, SUITE 1600 NEW YORK, NEW YORK 10019
CHICAGO, ILLINOIS 60661-3693
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At the
effective time of the merger of a wholly-owned subsidiary of the Registrant
with and into Logic Works, Inc. (the "Merger") which shall occur as soon as
practicable after the effective date of this Registration Statement and the
satisfaction of all conditions to closing of such merger.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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 the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT OFFERING PRICE FEE (2)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par 8,677,295
value.................. shares N/A(3) $221,858,379(3) $65,448(3)
</TABLE>
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- -------------------------------------------------------------------------------
(1) Represents the maximum number of shares of common stock, par value $.001
per share, of PLATINUM technology, inc. (the "PLATINUM Common Stock")
issuable in the Merger, assuming the exercise of all outstanding options
to purchase Logic Works, Inc. common stock. Includes associated rights
(the "Rights") to purchase 1/100 of a share of Series A Participating
Preferred Stock, par value $.01 per share, of PLATINUM technology, inc.
Rights initially attached to and trade with PLATINUM Common Stock. The
value attributable to such Rights, if any, is reflected in the market
price of the PLATINUM Common Stock.
(2) A filing fee of $38,402 was paid by the Registrant in connection with a
Preliminary Proxy Statement/Prospectus filed on April 10, 1998 and,
pursuant to Rule 457(b), such amount is credited to the registration fee.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) and 457(c), based upon the maximum of
15,041,246 shares of common stock of LogicWorks, Inc. being exchanged for
PLATINUM Common Stock, using the average of the high and low prices of
LogicWorks, Inc. common stock of $14.75, as reported on the Nasdaq
National Market on April 16, 1998.
---------------
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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[LOGIC WORKS LOGO]
111 CAMPUS DRIVE
PRINCETON, NEW JERSEY 08540
April 21, 1998
Dear Stockholder:
A Special Meeting in Lieu of Annual Meeting of Stockholders (the "Meeting")
of Logic Works, Inc., a Delaware corporation ("Logic Works"), will be held at
The Nassau Inn, Senior Room, 10 Palmer Square, Princeton, New Jersey 08542 on
May 28, 1998, at 10:00 a.m., local time.
At the Meeting, you will be asked to consider and vote upon a proposal to
approve the Agreement and Plan of Merger, dated as of March 14, 1998 (the
"Merger Agreement"), among PLATINUM technology, inc. ("PLATINUM"), Logic Works
and PT Acquisition Corporation II, a newly-formed, wholly-owned subsidiary of
PLATINUM ("PT Acquisition"), and the merger (the "Merger") of PT Acquisition
with and into Logic Works. If the proposed Merger is approved and becomes
effective, Logic Works will become a wholly-owned subsidiary of PLATINUM, and
each outstanding share of common stock of Logic Works, $.01 par value per
share ("Logic Works Common Stock"), will be converted into 0.5769 of a share
of common stock of PLATINUM, $.001 par value per share ("PLATINUM Common
Stock"). Cash will be paid in lieu of any fractional share of PLATINUM Common
Stock. If the requisite approval of the stockholders of Logic Works is
received, the Merger is expected to be consummated on or about May 28, 1998 or
as soon thereafter as practicable after all necessary conditions to the
closing have been satisfied.
After careful consideration, your Board of Directors has unanimously
approved the Merger Agreement and the transactions provided for therein and
has concluded that they are in the best interests of Logic Works and its
stockholders. Your Board of Directors unanimously recommends that you vote in
favor of the Merger Agreement and the Merger.
At the Meeting, you will also be asked to consider and vote upon two other
proposals: (i) to elect one Class III director to Logic Works' Board of
Directors and (ii) to ratify the appointment of Ernst & Young LLP as
independent auditors of Logic Works' financial statements for the year ending
December 31, 1998. Your Board of Directors unanimously recommends that you
vote in favor of these two proposals. However, if the proposal to approve the
Merger Agreement is approved and the Merger is consummated, the current
members of Logic Works' Board of Directors, including any directors elected at
the Meeting, will be replaced by the directors of PT Acquisition, and Ernst &
Young LLP will not continue as independent auditors of Logic Works' financial
statements.
In the material accompanying this letter, you will find a Notice of Special
Meeting in Lieu of Annual Meeting of Stockholders, a Proxy
Statement/Prospectus relating to the actions to be taken by Logic Works
stockholders at the Meeting and a proxy. The Proxy Statement/Prospectus more
fully describes the proposed Merger and includes information about Logic Works
and PLATINUM and about the additional matters for consideration at the
Meeting.
<PAGE>
All stockholders are cordially invited to attend the Meeting in person.
However, regardless of whether you plan to attend the Meeting, please
complete, sign, date and return your proxy in the enclosed envelope. If you
attend the Meeting, you may revoke your proxy at the Meeting by voting in
person. It is important that your shares be represented and voted at the
Meeting.
I look forward to seeing you at the Meeting. On behalf of the management and
directors of Logic Works. I want to thank you for your support.
Sincerely,
/s/ Gregory A. Peters
----------------------------------
Gregory A. Peters
President and Chief Executive
Officer
Logic Works, Inc.
<PAGE>
[LOGIC WORKS LOGO]
----------------
NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
----------------
To Our Stockholders:
A Special Meeting in Lieu of Annual Meeting of Stockholders (the "Meeting")
of Logic Works, Inc., a Delaware corporation ("Logic Works"), will be held at
10:00 a.m., local time, on May 28, 1998 at The Nassau Inn, Senior Room, 10
Palmer Square, Princeton, New Jersey 08542, for the following purposes:
(1) To consider and vote upon a proposal to approve and adopt (a) the
Agreement and Plan of Merger, dated as of March 14, 1998 (the "Merger
Agreement"), entered into among Logic Works, Inc. ("Logic Works"), PLATINUM
technology, inc. ("PLATINUM") and PT Acquisition Corporation II, a newly-
formed, wholly-owned subsidiary of PLATINUM ("PT Acquisition"), and (b) the
merger (the "Merger") of PT Acquisition with and into Logic Works, whereby,
among other things, Logic Works will be the surviving corporation in the
Merger and become a wholly-owned subsidiary of PLATINUM, and each
outstanding share of common stock of Logic Works, $.01 par value per share
("Logic Works Common Stock"), will be converted into 0.5769 of a share of
common stock of PLATINUM, $.001 par value per share ("PLATINUM Common
Stock"). Cash will be paid in lieu of any fractional share of PLATINUM
Common Stock.
(2) To elect one Class III Director to serve until the third annual
meeting of stockholders following such director's election or until such
director's successor shall have been duly elected and qualified; provided,
that if the proposal to approve the Merger Agreement is approved and
adopted by the stockholders of Logic Works and the Merger is consummated,
the current members of Logic Works' Board of Directors, including any
director elected at the Meeting, will be replaced by the directors of PT
Acquisition Corporation at the effective time of the Merger.
(3) To ratify the selection of Ernst & Young LLP, independent public
accountants, as auditors of Logic Works as set forth below for the fiscal
year ending December 31, 1998; provided, that if the proposal to approve
the Merger Agreement is approved and adopted by the stockholders of Logic
Works and the Merger is consummated, Ernst & Young LLP will not continue as
independent auditors of Logic Works.
The foregoing items of business are more fully described in the Proxy
Statement/Prospectus accompanying this Notice.
Only stockholders of record of Logic Works Common Stock at the close of
business on April 20, 1998 are entitled to notice of, and will be entitled to
vote at, the Meeting or any postponement or adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gregory A. Peters
-------------------------------------
Gregory A. Peters
President and Chief Executive
Officer
Logic Works, Inc.
Princeton, New Jersey
April 21, 1998
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, YOU ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU AT ANY TIME BEFORE IT
IS VOTED. YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATES WHEN RETURNING YOUR
PROXY. IF THE MERGER IS CONSUMMATED, YOU WILL BE NOTIFIED AND PROVIDED WITH
INSTRUCTIONS FOR EXCHANGE OF YOUR STOCK CERTIFICATES.
<PAGE>
[LOGIC WORKS, INC. LOGO]
PROXY STATEMENT
FOR THE SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
[PLATINUM TECHNOLOGY INC. LOGO]
PROSPECTUS
This Proxy Statement/Prospectus (the "Proxy Statement/Prospectus") is being
furnished to the stockholders of Logic Works, Inc., a Delaware corporation
("Logic Works"), in connection with the solicitation of proxies by the Board
of Directors of Logic Works (the "Logic Works Board") for use at a special
meeting in lieu of the annual meeting of stockholders to be held on May 28,
1998 at 10:00 a.m. (local time) at Nassau Inn, Senior Room, 10 Palmer Square,
Princeton, New Jersey 08542, and at any and all adjournments or postponements
thereof (the "Meeting").
At the Meeting, stockholders will be asked to consider and vote on a
proposal to approve the Agreement and Plan of Merger, dated as of March 14,
1998 (the "Merger Agreement"), by and among PLATINUM technology, inc., a
Delaware corporation ("PLATINUM"), PT Acquisition Corporation II, a Delaware
corporation and wholly-owned subsidiary of PLATINUM ("PT Acquisition"), and
Logic Works, which provides for the merger (the "Merger") of PT Acquisition
with and into Logic Works, with Logic Works surviving as a wholly-owned
subsidiary of PLATINUM. A copy of the Merger Agreement is attached as Appendix
A to this Proxy Statement/Prospectus. Subject to the terms and conditions of
the Merger Agreement, each share of common stock of Logic Works, $.01 par
value per share ("Logic Works Common Stock"), outstanding immediately prior to
the Effective Time (as defined in the Merger Agreement) of the Merger (other
than shares owned directly or indirectly by PLATINUM or Logic Works, which
will be cancelled) will be converted into 0.5769 of a share (the "Exchange
Ratio") of common stock, $.001 par value per share, of PLATINUM (the "PLATINUM
Common Stock"). Cash will be paid in lieu of any fractional share of PLATINUM
Common Stock. Logic Works' Board has unanimously approved the Merger Agreement
and the Merger and recommends that the stockholders of Logic Works ("Logic
Works Stockholders") vote in favor of the proposal to approve the Merger
Agreement.
[cover continued on next page]
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DESCRIPTION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY HOLDERS OF LOGIC WORKS COMMON STOCK BEFORE
VOTING.
----------------
This Proxy Statement/Prospectus also constitutes the Prospectus of PLATINUM
with respect to up to approximately 8,677,295 shares of PLATINUM Common Stock
issuable pursuant to the Merger (assuming the exercise of outstanding options
to purchase Logic Works Common Stock).
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being sent to Logic Works Stockholders on or about April 24, 1998. The Logic
Works Board has fixed the close of business on April 20, 1998 as the record
date for the determination of stockholders entitled to receive notice of and
to vote at the Meeting and any postponement or adjournment thereof. As of the
record date, 12,702,222 shares of Logic Works Common Stock were issued and
outstanding and entitled to vote.
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 PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS APRIL 21, 1998.
<PAGE>
The consummation of the Merger is subject, among other things, to the
approval of the Merger Agreement and the Merger by the affirmative vote, in
person or by proxy, of the holders of a majority of the issued and outstanding
shares of Logic Works Common Stock. Holders of Logic Works Common Stock are
entitled to one vote for each share of Logic Works Common Stock held.
The PLATINUM Common Stock is listed for trading under the symbol "PLAT" on
the Nasdaq National Market ("Nasdaq"). The Logic Works Common Stock is listed
for trading under the symbol "LGWX" on Nasdaq. On March 13, 1998, the last
trading day prior to the announcement of the Merger, the last sale price of
PLATINUM Common Stock, as reported by Nasdaq, was $26.56 per share and the
last reported sale price of Logic Works Common Stock, as reported by Nasdaq,
was $13.56 per share. On April 20, 1998, the last trading day prior to the
date of this Proxy Statement/Prospectus, the last sale price of PLATINUM
Common Stock, as reported by Nasdaq, was $26.56 per share and the last sale
price of Logic Works Common Stock, as reported by Nasdaq, was $15.00 per
share. See "Description of PLATINUM's Common Stock" and "Comparison of
Stockholder Rights." Based on the last reported sale price of PLATINUM Common
Stock on March 13, 1998 and April 20, 1998, and on the number of shares of
Logic Works Common Stock outstanding as of such dates, the aggregate value of
the PLATINUM Common Stock to be issued in respect of all outstanding shares of
Logic Works Common Stock would be approximately $193.6 million and $194.6
million, respectively.
At the Meeting, the Logic Works Stockholders will also be asked to consider
and vote upon the following two proposals: (i) the election of one Class III
director to Logic Works' Board of Directors and (ii) the ratification of the
appointment of Ernst & Young LLP as independent auditors of Logic Works for
the year ending December 31, 1998. Logic Works' Board of Directors unanimously
recommends that the Logic Works stockholders vote in favor of these two
proposals. However, if the proposal to approve the Merger Agreement is
approved and the Merger is consummated, the current members of Logic Works'
Board of Directors, including any directors elected at the Meeting, will be
replaced by the directors of PT Acquisition, and Ernst & Young LLP will not
continue as independent auditors of Logic Works' financial statements.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Preliminary Proxy Materials............................................... -1-
AVAILABLE INFORMATION..................................................... -i-
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... -ii-
SUMMARY................................................................... 1
The Companies........................................................... 1
The Meeting............................................................. 1
The Merger.............................................................. 2
PLATINUM Summary Selected Consolidated Financial Information............ 6
Logic Works Summary Selected Consolidated Financial Information......... 7
Unaudited Pro Forma Condensed Selected Financial Data................... 8
Pro Forma Combined Comparative Per Share Data........................... 9
Market Price Data....................................................... 9
Cautionary Statement Regarding Forward-looking Statements............... 10
RISK FACTORS.............................................................. 11
THE MEETING............................................................... 17
THE MERGER................................................................ 18
THE MERGER AGREEMENT...................................................... 33
COMPARATIVE PER SHARE MARKET PRICE DATA................................... 41
PLATINUM SELECTED CONSOLIDATED FINANCIAL DATA (1)......................... 42
LOGIC WORKS SELECTED CONSOLIDATED FINANCIAL INFORMATION................... 44
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL DATA.................... 45
PRO FORMA COMBINED COMPARATIVE PER SHARE DATA............................. 50
INFORMATION REGARDING PLATINUM............................................ 51
DESCRIPTION OF PLATINUM'S CAPITAL STOCK................................... 52
INFORMATION REGARDING LOGIC WORKS......................................... 56
COMPARISON OF STOCKHOLDER RIGHTS.......................................... 56
ELECTION OF CLASS III DIRECTOR TO THE LOGIC WORKS BOARD................... 60
LOGIC WORKS EXECUTIVE COMPENSATION AND OTHER INFORMATION.................. 63
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF LOGIC
WORKS.................................................................... 70
CERTAIN TRANSACTIONS RELATING TO LOGIC WORKS.............................. 70
RATIFICATION OF ACCOUNTANTS FOR LOGIC WORKS............................... 71
EXPERTS................................................................... 71
LEGAL MATTERS............................................................. 71
PROXY SOLICITATION........................................................ 72
PROPOSALS BY LOGIC WORKS STOCKHOLDERS FOR THE 1999 ANNUAL MEETING OF
STOCKHOLDERS............................................................. 72
OTHER MATTERS............................................................. 72
APPENDICES
A Agreement and Plan of Merger............................................ A-1
B Broadview Associates LLC Opinion........................................ B-1
</TABLE>
<PAGE>
NO PERSON HAS BEEN AUTHORIZED BY PLATINUM OR LOGIC WORKS TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PLATINUM
OR LOGIC WORKS. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED BY THIS
PROXY STATEMENT/PROSPECTUS OR A SOLICITATION OF A PROXY IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS
RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION CONTAINED HEREIN SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
Logic Works and PLATINUM are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). These materials can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices at 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 these materials can also be obtained
from the Commission at prescribed rates by writing to the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy and information
statements and other materials of the companies (including Logic Works and
PLATINUM) that file electronically with the Commission. This Web site can be
accessed at http://www.sec.gov. In addition, material filed by each of Logic
Works and PLATINUM can be inspected at the offices of The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006.
This Proxy Statement/Prospectus constitutes a part of a registration
statement on Form S-4 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by PLATINUM under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the offering of PLATINUM
Common Stock in connection with the Merger. As permitted by the rules and
regulations of the Commission, this Proxy Statement/Prospectus omits certain
information contained or incorporated by reference in the Registration
Statement. Reference is made to the Registration Statement for further
information with respect to PLATINUM and Logic Works. Statements contained in
this Proxy Statement/Prospectus as to the contents of any contract or other
document filed as an exhibit to the Registration Statement are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference. For further
information, reference is hereby made to the Registration Statement.
As used in this Proxy Statement/Prospectus, the term "Logic Works" means
Logic Works, Inc. and its subsidiaries, and the term "PLATINUM" means PLATINUM
technology, inc. and its subsidiaries. All information contained or
incorporated by reference in this Proxy Statement/Prospectus relating to Logic
Works was provided by the management of Logic Works and the Logic Works Board.
PLATINUM assumes no responsibility for the accuracy of such information. All
information contained or incorporated by reference in this Proxy
Statement/Prospectus relating to PLATINUM was provided by the management and
Board of Directors of PLATINUM. Logic Works assumes no responsibility for the
accuracy of such information or for any of the information contained or
incorporated by reference herein relating to PLATINUM.
i
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by PLATINUM and by Logic
Works pursuant to the Exchange Act are incorporated herein by reference.
1. Logic Works' Annual Report on Form 10-K for the year ended December 31,
1997.
2. Logic Works' Current Report on Form 8-K dated March 14, 1998.
3. The description of the Logic Works Common Stock contained in Logic Works'
Registration Statement on Form 8-A dated September 20, 1995 and all amendments
thereto and reports filed for the purpose of updating such description.
4. PLATINUM's Annual Report on Form 10-K for the year ended December 31,
1997.
5. PLATINUM's Current Reports on Form 8-K dated January 27, 1998, March 3,
1998 and April 16, 1998.
6. The description of the PLATINUM Common Stock contained in PLATINUM'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.
7. The description of the preferred stock purchase rights contained in
PLATINUM'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 reports and definitive proxy or information statements filed by Logic
Works and PLATINUM pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Proxy Statement/Prospectus and
prior to the date of the Meeting shall be deemed to be incorporated by
reference into this Proxy Statement/Prospectus from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein shall be deemed to be modified or superseded for purposes
of this Proxy Statement/Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or 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 Proxy
Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS
(EXCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE INTO THE INFORMATION INCORPORATED HEREIN) WILL BE PROVIDED BY FIRST
CLASS MAIL WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY
STATEMENT/PROSPECTUS IS DELIVERED, INCLUDING ANY BENEFICIAL OWNER OF LOGIC
WORKS COMMON STOCK, UPON WRITTEN OR ORAL REQUEST BY SUCH PERSON, WITHIN ONE
BUSINESS DAY OF SUCH REQUEST, AS FOLLOWS: WITH RESPECT TO LOGIC WORKS TO LOGIC
WORKS, INC., 111 CAMPUS DRIVE, PRINCETON, NJ 08540, ATTENTION: KENNETH ZENG,
(TELEPHONE: (609) 514-1177); AND WITH RESPECT TO PLATINUM TO PLATINUM
TECHNOLOGY, INC., 1815 SOUTH MEYERS ROAD, OAKBROOK TERRACE, ILLINOIS 60181,
ATTENTION: LARRY S. FREEDMAN, (TELEPHONE: (630) 620-5000).
ii
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere
or incorporated by reference in this Proxy Statement/Prospectus. The summary is
not, and is not intended to be, complete and is qualified in its entirety by
reference to the more detailed information contained or incorporated by
reference in this Proxy Statement/Prospectus and the Appendices hereto.
Stockholders are urged to read this Proxy Statement/Prospectus and the
Appendices in their entirety.
THE COMPANIES
PLATINUM
PLATINUM develops, markets and supports software products, and provides
related professional services, that help organizations manage and improve their
information technology ("IT") infrastructures, which consist of data, systems
and applications. PLATINUM's products and services help IT departments,
primarily in large and data intensive organizations, minimize risk and improve
service levels and leverage information to make better business decisions.
PLATINUM's products typically perform fundamental functions, such as automating
operations, maintaining the operating efficiency of systems and applications,
and ensuring data access and integrity. PLATINUM 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.
PLATINUM 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 Web site is located
at http://www.platinum.com. PLATINUM's Web site is not a part of this Proxy
Statement/Prospectus.
PT ACQUISITION CORPORATION
PT Acquisition Corporation II, a Delaware corporation ("PT Acquisition"), is
a wholly-owned subsidiary of PLATINUM formed solely for the purpose of the
Merger. PT Acquisition's principal executive offices are located at 1815 South
Meyers Road, Oakbrook Terrace, Illinois 60181, and its telephone number is
(630) 620-5000.
LOGIC WORKS
Logic Works is a leading provider of client/server database design and
business process modeling software. Logic Works' Windows-based products allow
customers to realize the benefits of client/server systems by enabling easy,
rapid and high-quality design, deployment and management of relational
databases and related applications. Logic Works' award-winning products have
been licensed to approximately 50,000 users in 7,000 organizations worldwide,
including AT&T Corp., Barnett Banks, Inc., The Coca-Cola Company, Dell Computer
Corporation, GTE Corporation, Hewlett-Packard Company, Intel Corporation, ITT
Corporation, JP Morgan & Co., Johnson & Johnson, Merck & Co., Inc., Microsoft
Corporation, Monsanto Corporation, Republic National Bank of New York, Union
Pacific Railroad Company, Universal Studios, Inc., Visa International and the
United States Army. Logic Works' principal executive offices are located at 111
Campus Drive, Princeton, New Jersey 08540. Its telephone number at that address
is (609) 514-1177, and its Web site is located at http://www.logicworks.com.
Logic Works' Web site is not a part of this Proxy Statement/Prospectus.
THE MEETING
TIME, PLACE AND DATE
The Meeting will be held on May 28, 1998 at 10:00 a.m., local time, at The
Nassau Inn, Senior Room, 10 Palmer Square, Princeton, New Jersey 08542.
PURPOSES OF THE MEETING
At the Meeting, the holders of Logic Works Common Stock will be asked to
consider and vote upon a proposal to approve and adopt the Merger Agreement and
the Merger, pursuant to which, among other things, at
1
<PAGE>
the Effective Time, and subject to and upon the terms and conditions of the
Merger Agreement, each outstanding share of Logic Works Common Stock will be
converted into 0.5769 of a share of PLATINUM Common Stock, and Logic Works will
become a wholly-owned subsidiary of PLATINUM. In addition, Logic Works
stockholders will vote upon (i) the election of a Class III director to the
Board of Directors of Logic Works and (ii) the ratification of the appointment
of Ernst & Young LLP as independent auditors for Logic Works for the year
ending December 31, 1998.
RECORD DATE; SHARES ENTITLED TO VOTE
The Logic Works Board has fixed the close of business on April 20, 1998 as
the Record Date for the determination of stockholders entitled to receive
notice of and to vote at the Meeting and any postponement or adjournment
thereof. On the Record Date, there were 12,702,222 shares of Logic Works Common
Stock issued and outstanding. At the close of business on the Record Date,
directors and executive officers of Logic Works and their affiliates
beneficially owned and had the right to vote an aggregate of 2,277,894 shares
of Logic Works Common Stock (approximately 17.4% of the outstanding shares of
Logic Works Common Stock).
VOTES REQUIRED; QUORUM; ABSTENTIONS AND BROKER NON-VOTES
The Logic Works Stockholders are entitled to one vote per share on all
matters to be considered at the Meeting. A majority of the shares entitled to
vote present, in person or by proxy, at the Meeting shall constitute a quorum.
The affirmative vote of holders of a majority of the issued and outstanding
Logic Works Common Stock is required to approve the Merger Agreement and the
Merger. Abstentions and broker non-votes will be treated as present at the
Meeting for purposes of reaching a quorum. Abstentions and broker non-votes
will have the same effect as votes against the proposal to approve the Merger
Agreement and the Merger and will not affect the outcome of the vote on the
election of the Class III Director. Abstentions will have the same effect as
votes against the proposals to ratify the appointment of Ernst & Young LLP as
independent auditors, and broker non-votes will have no effect on the vote on
such proposal. Brokers who hold Logic Works Common Stock will not have
discretionary authority to vote such shares on the proposal to approve the
Merger Agreement and the Merger in the absence of instructions from the
beneficial owners thereof. See "THE MEETING--Vote Required" and "--Abstentions
and Broker Non-Votes."
THE MERGER
GENERAL
Upon the terms and subject to the conditions of the Merger Agreement, PT
Acquisition will be merged with and into Logic Works, with Logic Works
continuing as the surviving corporation and a wholly-owned subsidiary of
PLATINUM. As a result of the Merger, the separate corporate existence of PT
Acquisition will cease and Logic Works will succeed to all the rights and be
responsible for all the obligations of PT Acquisition in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"). It is
anticipated that the Merger will be consummated on or about May 28, 1998, if
approved at the Meeting, provided that the other conditions to the Merger are
then fulfilled or waived. See "THE MERGER--General."
CONVERSION OF LOGIC WORKS COMMON STOCK
At the Effective Time, each of the Logic Works Common Stock outstanding
immediately prior to the Effective Time of the Merger (other than shares owned
directly or indirectly by PLATINUM or Logic Works, which will be cancelled)
will be converted into 0.5769 of a validly issued, fully paid and nonassessable
share of PLATINUM Common Stock. Cash will be paid in lieu of any fractional
share of PLATINUM Common Stock. See "THE MERGER--Conversion of Logic Works
Common Stock."
RECOMMENDATION OF THE LOGIC WORKS BOARD OF DIRECTORS
The Logic Works Board has unanimously approved the Merger Agreement and the
Merger and recommends that holders of Logic Works Common Stock vote in favor of
the Merger Agreement at the Meeting. See "THE
2
<PAGE>
MERGER--Recommendations of the Logic Works Board of Directors; Reasons for the
Merger." The Logic Works Board also unanimously recommends the election of the
Class III director to the Logic Works Board and the ratification of the
appointment of Ernst & Young LLP as independent auditors of Logic Works for the
year ending December 31, 1998.
OPINION OF LOGIC WORKS' FINANCIAL ADVISOR
On March 14, 1998, Broadview Associates LLC ("Broadview") rendered its
written opinion to the Logic Works Board to the effect that, as of March 14,
1998, based upon and subject to the various factors and assumptions set forth
therein, the Exchange Ratio to be paid to the holders of Logic Works Common
Stock pursuant to the Merger Agreement was fair, from a financial point of
view, to such holders. The full text of the opinion of Broadview, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken by Broadview is attached as Appendix B to this Proxy
Statement/Prospectus. Logic Works stockholders are urged to read this opinion
carefully in its entirety. See "THE MERGER--Opinion of Logic Works' Financial
Advisor."
NASDAQ NATIONAL MARKET LISTING
The shares of PLATINUM Common Stock to be issued to Logic Works stockholders
in exchange for shares of Logic Works Common Stock in the Merger (including the
shares of PLATINUM Common Stock issuable upon exercise of Substitute Options,
as hereinafter defined) will be listed on Nasdaq.
CONDITIONS TO THE MERGER
The respective obligations of Logic Works and PLATINUM to consummate the
Merger are subject to the fulfillment or waiver (where permissible) of certain
conditions set forth in the Merger Agreement. See "THE MERGER AGREEMENT--
Conditions to the Merger."
EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
Harris Trust and Savings Bank will be the Exchange Agent (as defined in The
Merger Agreement) under the Merger Agreement. Promptly after the Effective
Time, PLATINUM will make available to the Exchange Agent shares of PLATINUM
Common Stock issuable pursuant to the Merger in accordance with the Merger
Agreement. The Exchange Agent will deliver the certificates representing
PLATINUM Common Stock (the "PLATINUM Certificates") upon the surrender for
exchange of certificates representing Logic Works Common Stock (the "Logic
Works Certificates"). See "THE MERGER AGREEMENT--Exchange Agent; Procedures for
Exchange of Certificates."
Promptly after the Effective Time, the Exchange Agent will mail to each
record holder of a Logic Works Certificate a letter of transmittal. Upon
surrender for exchange to the Exchange Agent of all Logic Works Certificates
held by any record holder, together with such letter of transmittal duly
executed, such holder will be entitled to receive in exchange therefor: (i) a
PLATINUM Certificate representing the number of whole shares of PLATINUM Common
Stock into which the shares of Logic Works Common Stock represented by the
surrendered Logic Works Certificates have been converted at the Effective Time,
(ii) cash in lieu of any fractional share of PLATINUM Common Stock and (iii)
dividends and other distributions, if any. See "THE MERGER AGREEMENT--Exchange
Agent; Procedures for Exchange of Company Certificates."
HOLDERS OF LOGIC WORKS COMMON STOCK SHOULD NOT FORWARD THEIR LOGIC WORKS
CERTIFICATES WITH THE ENCLOSED PROXY CARD, NOR SHOULD THEY RETURN THEIR LOGIC
WORKS CERTIFICATES TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED A TRANSMITTAL
LETTER FROM THE EXCHANGE AGENT AFTER THE EFFECTIVE TIME.
STOCK OPTIONS
Each option to purchase shares of Logic Works Common Stock (a "Logic Works
Stock Option") granted under a Logic Works Stock Plan (as hereinafter defined)
which is outstanding immediately prior to the Effective Time will become an
option to purchase shares of PLATINUM Common Stock (a "Substitute Option").
3
<PAGE>
Appropriate adjustment will be made to the number of shares of PLATINUM Common
Stock subject thereto and the associated exercise price. Each such option will
be otherwise exercisable upon the same terms and conditions as were applicable
to the related Logic Works Stock Option. The Logic Works Stock Options granted
under the automatic option grant program of the Logic Works 1995 Stock
Option/Stock Issuance Plan ("1995 Plan") to Logic Works non-employee directors
will accelerate and become exercisable in full for all the option shares as
fully vested shares immediately prior to the Effective Time. See "THE MERGER
AGREEMENT--Substitution of Options."
TERMINATION
The Merger Agreement may be terminated (i) by mutual written consent of Logic
Works and PLATINUM; (ii) by either party if (a) there has been a material
breach by the other party of any representation, warranty, covenant or other
agreement set forth in the Merger Agreement (in most cases after a 20-day cure
period after notice of such breach) (b) the Merger is not approved by Logic
Works Stockholders at the Meeting, (c) the Merger is not consummated by July
31, 1998, subject to certain limitations and exceptions, (d) there is a final,
non-appealable order of a Federal or state court in effect preventing
consummation of the Merger, (e) there is any final action taken, or any
statute, rule, regulation or order enacted, promulgated or issued and deemed
applicable to the Merger by any governmental entity which would make
consummation of the Merger illegal or which would prohibit PLATINUM's ownership
or operation of all or a material portion of Logic Works' business, or compel
PLATINUM to dispose of or hold separate all or a material portion of the
business or assets of Logic Works or PLATINUM, or (f) Logic Works' Board
accepts or approves a Superior Proposal (as defined hereinafter) or recommends
a Superior Proposal to the Logic Works Stockholders; (iii) by PLATINUM if (a)
Logic Works Board adversely amends, withholds or withdraws its recommendation
of the Merger or shall have resolved or publicly announced its intention to
recommend or enter into an agreement with respect to an Acquisition Proposal
(as hereinafter defined), (b) a tender offer or exchange offer for twenty
percent (20%) or more of the outstanding Logic Works Common Stock shall have
been commenced, or a registration statement with respect thereto shall have
been filed (other than by PLATINUM or an affiliate thereof), and Logic Works'
Board shall have (x) recommended that Logic Works stockholders tender their
shares in such tender or exchange offer or (y) publicly announced its intention
to take no position with respect to such tender offer, (c) Logic Works breaches
any provisions of the Merger Agreement with respect to non-solicitation, or (d)
the Merger is not submitted to the Logic Works Stockholders in accordance with
the Merger Agreement and such breach has not been cured after 20 days written
notice from PLATINUM; or (iv) by Logic Works if the Share Value (as hereinafter
defined), at any time from the date of the Merger Agreement and prior to the
date of the Meeting, is less than $22.00. See "THE MERGER AGREEMENT--
Termination."
EXPENSES AND TERMINATION FEE
The Merger Agreement provides for the payment of certain fees and the
reimbursement of expenses following a termination of the Merger Agreement under
certain circumstances. See "THE MERGER AGREEMENT--Expenses and Termination
Fee."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Logic Works Board with respect to
the Merger, Logic Works Stockholders should be aware that members of Logic
Works' management and Board of Directors have certain interests in the Merger
as holders of options to purchase shares of Logic Works Common Stock that are
in addition to the interests of the stockholders of Logic Works generally. See
"THE MERGER--Interests of Certain Persons in the Merger."
CERTAIN TAX CONSEQUENCES
Subject to the limitations and qualifications referred to under "THE MERGER--
Certain U.S. Federal Income Tax Consequences," the Merger will constitute a
"reorganization" for U.S. federal income tax purposes,
4
<PAGE>
and, accordingly, no gain or loss will be recognized for U.S. federal income
tax purposes by holders of Logic Works Common Stock when each share of Logic
Works Common Stock is converted into 0.5769 of a share of PLATINUM Common Stock
(except to the extent of any cash received in lieu of a fractional share
interest in PLATINUM Common Stock). Holders of Logic Works Common Stock are
urged to consult their own tax advisors as to the specific tax consequences to
them of the Merger. See "THE MERGER--Certain U.S. Federal Income Tax
Consequences."
ACCOUNTING TREATMENT
The Merger is expected to be accounted for under the pooling-of-interests
method of accounting in accordance with generally accepted accounting
principles. The receipt by each of PLATINUM and Logic Works of a letter from
its respective independent public accountants with respect to pooling of
interests satisfactory to the other party is a condition precedent to the
obligations of PLATINUM and Logic Works to effect the Merger. See "THE MERGER--
Accounting Treatment."
REGULATORY APPROVALS
The Merger is subject to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder,
which provide that certain transactions (including the Merger) may not be
consummated until certain information has been furnished to the Antitrust
Division of the Department of Justice and the Federal Trade Commission and
certain waiting period requirements have been satisfied. Logic Works and
PLATINUM have filed the required information and have received notice of early
termination of the waiting period.
RISK FACTORS
IN CONSIDERING WHETHER TO APPROVE THE MERGER AGREEMENT AND THE MERGER, LOGIC
WORKS STOCKHOLDERS SHOULD CAREFULLY REVIEW AND CONSIDER THE INFORMATION
CONTAINED HEREIN UNDER THE CAPTION "RISK FACTORS."
NO APPRAISAL OR DISSENTERS' RIGHTS
Holders of Logic Works Common Stock will not be entitled to any dissenter or
appraisal rights under the DGCL in connection with the Merger.
COMPARATIVE RIGHTS OF STOCKHOLDERS
The rights of Logic Works Stockholders are currently governed by the DGCL,
Logic Works' Second Amended and Restated Certificate of Incorporation ("Logic
Works Charter") and Logic Works' Bylaws. Upon consummation of the Merger, Logic
Works Stockholders will become stockholders of PLATINUM, and their rights as
stockholders of PLATINUM will be governed by the DGCL, PLATINUM's Restated
Certificate of Incorporation, as amended ("PLATINUM Charter"), and PLATINUM's
Bylaws. For a discussion of various differences between the rights of Logic
Works Stockholders and the rights of stockholders of PLATINUM, see "COMPARISON
OF STOCKHOLDER RIGHTS."
ADDITIONAL PROPOSALS FOR LOGIC WORKS STOCKHOLDERS
In addition to the proposal to approve the Merger Agreement and the Merger,
Logic Works Stockholders will be asked at the Meeting to consider and vote upon
proposals (i) to elect one Class III director to Logic Works' Board of
Directors to serve for a term of three years expiring at the 2001 Annual
Meeting of Stockholders of Logic Works and (ii) to ratify the appointment by
the Board of Directors of Logic Works of Ernst & Young LLP as the independent
auditors of Logic Works for the fiscal year ending December 31, 1998. However,
if the proposal to approve the Merger Agreement is approved and the Merger is
consummated, the current members of Logic Works' Board of Directors, including
any directors elected at the Meeting, will be replaced by the directors of PT
Acquisition, and Ernst & Young LLP will not continue as independent auditors of
Logic Works' financial statements.
5
<PAGE>
PLATINUM SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
The summary selected consolidated financial data set forth below has been
derived from the historical financial statements of PLATINUM. The selected
consolidated financial data should be read in conjunction with "PLATINUM
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes thereto
incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenues........ $ 623,503 $ 468,065 $ 326,411 $ 243,607 $ 190,623
Operating income
(loss)............... (115,792)(2) (79,404)(3) (127,377)(4) (517)(5) 3,062(6)
Net income (loss)..... (117,784)(2) (64,922)(3) (111,567)(4) (1,562)(5) 126(6)
Net income (loss) per
share................ $ (1.90)(2) $ (1.14)(3) $ (2.50)(4) $ (0.04)(5) $ -- (6)
Shares used in per
share calculation.... 62,042 56,968 44,671 41,294 39,375
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash
equivalents, and
investments.......... $ 261,288 $ 185,673 $ 136,737 $ 126,215 $ 71,148
Working capital....... 288,349 217,157 127,990 90,500 43,672
Total assets.......... 834,177 618,572 452,267 273,333 176,064
Long-term obligations
and acquisition-
related payables,
less current portion. 285,144 118,305 11,389 9,080 3,465
Total stockholders'
equity............... $ 243,560 $ 295,760 $ 290,213 $ 160,126 $ 93,350
</TABLE>
- --------
(1) The selected consolidated financial data give retroactive effect to the
acquisitions of Australian Technology Resources Pty Limited ("ATR") as of
January 31, 1997 and I&S Informationstechnik and Services GmbH ("I&S") as
of February 28, 1997, each of which has been accounted for as a pooling of
interests for financial reporting purposes. As a result, the financial
position and results of operations are presented as if the combining
companies had been consolidated for all periods presented.
(2) Reflects a pre-tax charge for acquired in-process technology of $67,904,000
relating to PLATINUM's acquisitions of GEJAC, Inc. ("GEJAC") and ProMetrics
Group Limited ("ProMetrics"), the purchase of certain product technologies
and other intangible assets from Intel and the purchase of certain other
product technologies. Also reflects a pre-tax charge for merger costs of
$8,927,000 relating to PLATINUM's acquisitions of ATR, I&S and Vayda
Consulting, Inc. ("Vayda") and a pre-tax charge of $57,319,000 for
restructuring costs.
(3) Reflects a pre-tax charge for acquired in-process technology of $48,456,000
relating to PLATINUM's acquisitions of Advanced Systems Technologies, Inc.
("AST"), Software Alternatives, Inc. (d/b/a System Software Alternatives)
("Software Alternatives"), Grateful Data, Inc. (d/b/a TransCentury Data
Systems) ("Grateful Data") and VREAM, Inc. ("VREAM"); substantially all of
the assets of the Access Manager business unit of the High Performance
Systems division of International Computers Limited ("Access Manager"); and
certain product technologies. Also reflects a pre-tax charge for merger
costs of $5,782,000 relating primarily to PLATINUM's acquisitions of Prodea
Software Corporation ("Prodea"), Paradigm Systems Corporation ("Paradigm")
and Axis Systems International, Inc. ("Axis").
(4) Reflects a pre-tax charge for acquired in-process technology of $88,493,000
relating primarily to PLATINUM's acquisitions of Advanced Software
Concepts, Inc. ("ASC"), SQL Software Corporation ("SQL"), RELTECH Group,
Inc. ("Reltech"), Protellicess Software, Inc. ("Protellicess"), AIB
Software Corporation ("AIB") and BMS Computer, Inc. ("BMS") and the net
assets of ViaTech Development, Inc. ("ViaTech"), BrownStone Solutions, Inc.
("BrownStone") and ProtoSoft, Inc. ("ProtoSoft") and to certain product
acquisitions. Also reflects a pre-tax charge for merger costs of
$30,819,000 relating to PLATINUM's acquisitions of Software Interfaces,
Inc. ("SII"), Answer Systems, Inc. ("Answer"), Locus Computing Corporation
("Locus"), Altai, Inc. ("Altai"), Trinzic Corporation ("Trinzic") and
Softool Corporation ("Softool").
(5) Reflects a pre-tax charge for acquired in-process technology of $24,594,000
relating primarily to PLATINUM's acquisitions of Dimeric Development, Inc.
("Dimeric") and the net assets of Aston Brooke Software, Inc. ("Aston
Brooke") and AutoSystems Corporation ("AutoSystems").
(6) Reflects a pre-tax charge for acquired in-process technology of $8,735,000
relating primarily to PLATINUM's acquisition of Datura Corporation
("Datura") and a pre-tax charge of $4,659,000 relating to Trinzic and Locus
restructuring costs.
6
<PAGE>
RECENT PLATINUM OPERATING RESULTS
For the three months ended March 31, 1998, PLATINUM's revenues were
$158,261,000, an increase of 37% over revenues of $115,623,000 for the three
months ended March 31, 1997. PLATINUM's net income for the three months ended
March 31, 1998 was $3,665,000, or $0.05 per diluted share, compared to a net
loss of $25,269,000, or $0.41 per diluted share ($11,146,000, or $0.18 per
diluted share, excluding charges for merger costs and acquired in-process
technology), for the three months ended March 31, 1997.
LOGIC WORKS SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected historical financial data for Logic
Works for each of the five years in the period ended December 31, 1997, which
data has been derived from Logic Works' audited consolidated financial
statements. Such Logic Works selected historical financial data should be read
in conjunction with the audited consolidated financial statements, including
the notes thereto, and other financial information contained in Logic Works'
Annual Report on Form 10-K for the year ended December 31, 1997, incorporated
by reference herein. See "Available Information" and "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
License fees......................... $37,161 $33,017 $25,255 $11,639 $3,855
Maintenance & service fees........... 13,353 9,523 5,433 1,663 370
Total revenues....................... 50,514 42,540 30,688 13,302 4,225
Operating income (loss).............. 6,017 (4,796) 2,152 1,161 678
Net income (loss).................... 4,606 (3,062) 1,407 701 413
Diluted earnings (loss) per common
share............................... $ 0.36 $ (0.27) $ 0.14 $ 0.07 $ 0.05
Shares used in per share computation
(1)................................. 12,859 11,335 10,373 9,721 7,716
BALANCE SHEET DATA:
Working capital...................... $37,168 $28,297 $30,896 $ 1,300 $1,647
Total assets......................... 59,450 48,369 43,891 6,551 2,923
Total debt........................... -- -- -- -- --
Redeemable preferred stock........... -- -- -- 1,801 1,709
Total stockholders' equity........... $43,298 $34,315 $33,517 $ 1,010 $ 131
</TABLE>
- --------
(1) For an explanation of the number of shares used to compute diluted earnings
(loss) per share, see Note 2 of Notes to Consolidated Financial Statements
of Logic Works contained in the Logic Works Annual Report on Form 10-K for
the year ended December 31, 1997, incorporated by reference herein.
7
<PAGE>
UNAUDITED PRO FORMA CONDENSED SELECTED COMBINED FINANCIAL DATA
The unaudited pro forma condensed selected combined financial data are
qualified in their entirety by reference to, and should be read in conjunction
with, the pro forma unaudited condensed combining financial statements and
notes thereto that are included elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
DATA:
Total revenues............................... $ 674,017 $ 510,605 $ 357,099
Operating loss............................... (109,775) (84,200) (125,225)
Net loss..................................... (113,178) (67,984) (110,160)
Net loss per share........................... $ (1.64) $ (1.07) $ (2.22)
Shares used in computing per share amounts... 69,037 63,507 49,629
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C>
PRO FORMA COMBINED BALANCE SHEET DATA:
Cash, cash equivalents and investments................. $299,662
Working capital........................................ 325,517
Total assets........................................... 893,652
Long-term obligations and acquisition-related payables,
less current portion.................................. 285,144
Total stockholders' equity............................. 286,883
Book value per share (1)............................... 4.03
</TABLE>
- --------
(1) Book value per share is computed by dividing pro forma stockholders' equity
by the pro forma number of shares of common stock outstanding at December
31, 1997.
8
<PAGE>
PRO FORMA COMBINED COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of PLATINUM
and Logic Works and combined per share data on an unaudited pro forma basis
after giving effect to the Merger on a pooling-of-interests basis utilizing the
Exchange Ratio discussed in Note (4) below, as if the Merger had been effective
for all periods presented. This data should be read in conjunction with the
selected financial data, the unaudited pro forma condensed combining financial
statements and the separate historical financial statements of PLATINUM and
Logic Works and notes thereto, included elsewhere herein or incorporated by
reference in this Proxy Statement/Prospectus. The unaudited pro forma combined
financial data are not necessarily indicative of the operating results that
would have been achieved had the transactions been in effect as of the
beginning of the periods presented and should not be construed as
representative of future operations.
<TABLE>
<CAPTION>
EQUIVALENT
LOGIC WORKS
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PLATINUM LOGIC WORKS (2) COMBINED (3) COMBINED (4)
---------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Income (Loss) Per
Share
Years ended December 31:
1997.................. $(1.90) $0.38 $(1.64) $(0.95)
1996.................. (1.14) (0.27) (1.07) (0.62)
1995.................. (2.50) 0.16(5) (2.22) (1.28)
Book Value Per Share:(1)
December 31, 1997....... 3.81 3.43 4.03 2.32
</TABLE>
- --------
(1) Book value per share reflects PLATINUM and Logic Works at December 31, 1997
and is computed by dividing stockholders' equity by the number of shares of
common stock outstanding at the respective dates.
(2) Historical Logic Works per share data reflect basic earnings per share for
each period.
(3) Pro forma combined per share amounts reflect the Merger.
(4) The equivalent Logic Works pro forma combined per share amount is
calculated by multiplying the pro forma combined per share amount by the
Exchange Ratio of 0.5769.
(5) Represents historical Logic Works net income per share for the year ended
December 31, 1995 before the effects of preferred stock cash dividends and
the accretion of a preferred stock redemption requirement.
MARKET PRICE DATA
The following table sets forth the closing prices per share of PLATINUM
Common Stock and the Logic Works Common Stock on Nasdaq on March 13, 1998, the
last trading day before the announcement of the Merger, and on April 20, 1998,
the latest practicable trading day prior to the printing of this Proxy
Statement/Prospectus, and equivalent per share prices for the Logic Works
Common Stock based on PLATINUM Common Stock prices:
<TABLE>
<CAPTION>
LOGIC LOGIC
PLATINUM WORKS WORKS
COMMON COMMON EQUIVALENT
STOCK SHARES (A)
-------- ------ ----------
<S> <C> <C> <C>
March 13, 1998....................................... $26.56 $13.56 $15.32
April 20, 1998....................................... $26.56 $15.00 $15.32
</TABLE>
- --------
(a) Represents the equivalent of one share of Logic Works Common Stock,
calculated by multiplying the sale price per share of PLATINUM Common Stock
by the Exchange Ratio of 0.5769. Based on the last reported sale price of
PLATINUM Common Stock on March 13, 1998 and April 20, 1998, and on the
number of shares of Logic Works Common Stock outstanding as of such dates,
the aggregate value of the PLATINUM Common Stock to be issued in respect of
all outstanding shares of Logic Works Common Stock would be approximately
$193.6 million and $194.6 million, respectively.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following statements are or may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"):
(i) certain statements, including possible or assumed future results of
operations of PLATINUM or Logic Works, contained in this Proxy
Statement/Prospectus, including any forecasts, projections and descriptions
of anticipated cost savings or other synergies referred to herein, and
certain statements incorporated by reference from documents filed with the
Commission by PLATINUM or Logic Works, including any statements contained
herein or therein regarding the development of possible or assumed future
results of operations of businesses, the markets for the products and
services of PLATINUM or Logic Works, anticipated capital expenditures,
regulatory developments, competition or the effects of the Merger.
(ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends" or similar expressions; and
(iii) other statements contained or incorporated by reference herein
regarding matters that are not historical facts.
Because such statements are subject to risks, uncertainties and other
factors, actual results may differ materially from those expressed or implied
by such forward-looking statements. Risks, uncertainties and other factors that
could cause actual results to differ materially include, but are not limited
to, PLATINUM's ability to develop and market existing and acquired products for
the IT infrastructure market; PLATINUM's ability to successfully integrate its
acquired products, services and businesses and continue its acquisition
strategy; PLATINUM'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 PLATINUM's products and services;
charges and costs related to acquisitions; PLATINUM'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 other factors discussed under "Risk Factors."
Logic Works stockholders are cautioned not to place undue reliance on such
statements, which speak only as of the date thereof.
All subsequent written and oral forward-looking statements attributable to
Logic Works or PLATINUM or persons acting on its or their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Neither Logic Works nor PLATINUM undertakes any obligation
to release publicly any revisions to such forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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RISK FACTORS
The following risk factors should be considered by holders of Logic Works
Common Stock in evaluating whether to approve and adopt the Merger Agreement
and thereby become holders of PLATINUM Common Stock. These factors should be
considered in conjunction with the other information contained or incorporated
by reference in this Proxy Statement/Prospectus and the Appendices hereto.
NET LOSSES; ABILITY TO SATISFY DEBT OBLIGATIONS
PLATINUM experienced operating and net losses in 1995, 1996 and 1997. There
can be no assurance that PLATINUM will not continue to incur operating and net
losses. PLATINUM's future operating results will depend upon 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, PLATINUM 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 PLATINUM's revenues at the
end of fiscal periods, particularly the fourth quarter, PLATINUM's lack of
backlog and PLATINUM's cost structure, PLATINUM's operating results would be
materially adversely affected if revenue targets are not met. See "--
Seasonality and Variability of Quarterly Operating Results." No assurances can
be given that any of PLATINUM's revenue expectations will be fulfilled, and
PLATINUM'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, PLATINUM's ability to pay
interest on, or ultimately pay the principal amount of, its indebtedness could
become impaired. As of March 31, 1998, PLATINUM had outstanding long-term
obligations and acquisition-related payables of approximately $299,514,000
requiring PLATINUM to make payments of principal and interest of approximately
$35,000,000 and $36,000,000 in 1998 and 1999, respectively. If PLATINUM 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,
PLATINUM'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
PLATINUM expects that the market for IT software products will continue to
be subject to frequent and rapid changes in technology and customer
preferences. Substantially all of PLATINUM's products have maintained their
commercial viability for a significant period of time, as evidenced by the
fact that PLATINUM 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
PLATINUM varies depending on customer demand and emerging technologies.
PLATINUM'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 PLATINUM, that any new products will
achieve market acceptance, or that other software vendors will not develop and
market products which are superior to PLATINUM's products or that such
products will not achieve greater market acceptance. Furthermore, customers
may delay purchases in anticipation of technological changes. PLATINUM'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 PLATINUM to anticipate or respond adequately to the changes in
technology and customer preferences, to develop and introduce new products in
a timely fashion, or to attract and retain qualified employees, could
materially adversely affect PLATINUM's business, results of operations and
financial condition.
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EXECUTION OF MERGER RISK
PLATINUM and Logic Works believe that important benefits to be realized from
the Merger will be the integration of their strategies and product lines. The
anticipated benefits of the Merger may not be achieved unless PLATINUM's and
Logic Works' product offerings are successfully integrated in a timely manner,
and the combined company could be materially adversely affected if these
expectations are unfulfilled. The difficulties of such integration may
initially be increased by the necessity of coordinating geographically
separated organizations and integrating personnel with disparate business
backgrounds and corporate cultures. The integration of Logic Works into
PLATINUM will require the dedication of management resources that will
temporarily detract from attention to the daily business of the combined
company. This integration process may cause an interruption of, or a loss of
momentum in, the activities of either or both of PLATINUM's or Logic Works'
businesses, which could have a material adverse effect on the revenues and
operating results of the combined company, at least in the near term. Other
recent acquisitions, as well as the rapid growth in PLATINUM's business, have
strained management resources and may impose additional difficulties on the
integration of Logic Works into PLATINUM. Additionally, changes that may be
made relating to the operations or management of Logic Works may have a
material adverse effect on the revenues and operating results of the combined
company.
Upon consummation of the Merger, PLATINUM expects to incur charges, currently
estimated to be approximately $7 million, in connection with the combination of
the companies. This amount is a preliminary estimate only and is therefore
subject to change. There can be no assurance that PLATINUM will not incur
additional charges to reflect costs associated with the Merger, nor can there
be any assurance that PLATINUM will realize the anticipated benefits of the
Merger.
RELIANCE ON AND RISKS OF ACQUISITION STRATEGY
PLATINUM 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. PLATINUM 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 PLATINUM of a
significant amount of PLATINUM Common Stock.
PLATINUM believes that its future growth depends, in part, upon the success
of this acquisition strategy. There can be no assurance that PLATINUM will
successfully identify, acquire on favorable terms or integrate such businesses,
products, services or technologies. PLATINUM may in the future face increased
competition for acquisition opportunities, which may inhibit PLATINUM's ability
to consummate suitable acquisitions and may 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 PLATINUM will or will not occur, or that, if an
acquisition does occur, it will not ultimately have a material adverse affect
on PLATINUM or that any such acquisition will succeed in enhancing PLATINUM's
business.
PLATINUM has historically issued PLATINUM 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 PLATINUM's
stockholders. Additionally, PLATINUM 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. PLATINUM expects to
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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 PLATINUM's products is highly competitive. PLATINUM 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 PLATINUM's current and
prospective competitors have significantly greater financial, technical and
marketing resources than PLATINUM. Competitive pressure could cause PLATINUM's
products to lose market acceptance or result in significant price erosion, with
a material adverse effect upon PLATINUM's results of operations.
A variety of external and internal factors could adversely affect PLATINUM'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 PLATINUM and its competitors; the success and timing
of new product development efforts; changes affecting the hardware, operating
systems or database systems which PLATINUM 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.
PLATINUM also encounters competition from a broad range of firms in the
market for professional services. Many of PLATINUM's current and prospective
competitors in the professional services market have significantly greater
financial, technical and marketing resources than PLATINUM. The competitive
factors affecting the market for PLATINUM'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
PLATINUM's success is heavily dependent upon its proprietary software
technology. PLATINUM relies on a combination of contractual rights, trademarks,
trade secrets, patents and copyright laws to establish or protect its
proprietary rights in its products. PLATINUM's license agreements restrict a
customer's use of PLATINUM's software and prohibit disclosure to third persons.
Notwithstanding those restrictions, it may be possible for unauthorized persons
to obtain copies of PLATINUM's software products. PLATINUM 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 PLATINUM in this
regard will be adequate to deter misappropriation of its proprietary rights or
independent third party development of functionally equivalent technologies.
Although PLATINUM does not believe that it is materially infringing on
intellectual property rights of others, there can be no assurance that such
claims will not be successfully asserted against PLATINUM in the future or that
any attempt to protect its technology will not be challenged.
DEPENDENCE ON DB2
A significant portion of PLATINUM'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 PLATINUM, and such adverse
effect could be material. Also, if IBM were to enhance DB2 or its DB2 utilities
so as to render PLATINUM's products obsolete or unnecessary, or devote more
resources to developing and marketing IBM's own DB2 tools and utilities,
PLATINUM's business could be materially adversely affected.
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DEPENDENCE ON RELATIONSHIPS WITH RELATIONAL DATABASE VENDORS
PLATINUM believes that in order to address its markets, PLATINUM 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. PLATINUM
has entered into alliances with, among others, Oracle Systems Corp., Sybase,
Inc. and Informix Software, Inc. There can be no assurance that PLATINUM will
be able to maintain existing relationships or enter into new relationships
with such vendors. PLATINUM'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
PLATINUM'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, PLATINUM believes that certain of its customers might reduce or delay
their purchases of PLATINUM's products or services, leading to a reduction in
PLATINUM's revenues. The factors that might influence current and prospective
customers to reduce their IT budgets under these circumstances are beyond
PLATINUM's control. In the event of an economic downturn, PLATINUM's business,
results of operations and financial condition could be materially adversely
affected. There can be no assurance that growth in the markets for PLATINUM's
products and services will occur or that such growth will result in increased
demand for PLATINUM's products and services.
RISKS ASSOCIATED WITH A FIXED EXCHANGE RATIO DESPITE POTENTIAL CHANGES IN
STOCK PRICES
The Exchange Ratio is fixed and will not be adjusted in the event of any
increases or decreases in the price of either PLATINUM Common Stock or Logic
Works Common Stock. The prices of PLATINUM Common Stock and of the Logic Works
Common Stock at the Effective Time may vary from their prices on the date of
this Proxy Statement/Prospectus. The price of PLATINUM Common Stock has
historically been volatile. Various factors could cause the market price of
PLATINUM Common Stock to fluctuate, perhaps substantially. See "--Volatility
of PLATINUM's Stock Price." Various factors, including without limitation,
changes in the business, operations or prospects of Logic Works, assessments
of the likelihood that the Merger will be consummated and general market and
economic conditions could cause the market price of the Logic Works Common
Stock to fluctuate. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR PLATINUM COMMON STOCK AND LOGIC WORKS COMMON STOCK. NO ASSURANCE CAN BE
GIVEN AS TO THE FUTURE PRICES OR MARKET FOR PLATINUM COMMON STOCK.
SEASONALITY AND VARIABILITY OF QUARTERLY OPERATING RESULTS
PLATINUM 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 PLATINUM's fourth quarters have historically
been higher than those for the first quarters of the following years. Because
operating expenses continued to increase in the first quarters of those years,
PLATINUM realized substantially lower operating margins and net income
(excluding the effect of charges for acquired in-process technology and merger
costs) for such quarters. PLATINUM expects this pattern to continue for the
foreseeable future. PLATINUM believes the seasonality of its revenues results
primarily from the budgeting cycles of its software product customers and the
structure of PLATINUM's sales commission and bonus programs.
PLATINUM 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 PLATINUM's products
weakens or if sales do not close in any quarter as anticipated, PLATINUM's
results of operations for that quarter would be adversely, and perhaps
materially, affected. In addition, the timing and amount of PLATINUM'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 PLATINUM's quarterly
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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.
PLATINUM'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 PLATINUM and its competitors, the
ability of PLATINUM to develop, introduce and market new and enhanced versions
of PLATINUM's products on a timely basis, changes in PLATINUM's level of
operating expenses, changes in PLATINUM's sales incentive plans, budgeting
cycles of its customers, customer order deferrals in anticipation of
enhancements or new products offered by PLATINUM 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 PLATINUM'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, PLATINUM has
changed the primary means of international distribution of its products from a
network of independent distributors to wholly-owned PLATINUM subsidiaries.
PLATINUM may encounter difficulties in integrating and managing these new
overseas subsidiaries.
RISKS OF CONSULTING SERVICES BUSINESS
PLATINUM 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 PLATINUM's
consulting services revenue may be derived from the performance of services
under fixed-price contracts. There can be no assurance that PLATINUM 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, PLATINUM issued $150,000,000 of convertible
subordinated 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 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 PLATINUM will be able to attract and retain a
sufficient number of qualified employees. PLATINUM's success depends to a
significant degree upon the continued contributions of its key management,
marketing, product development, professional services and operational
personnel, including key personnel of acquired companies. As the business of
PLATINUM 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 PLATINUM, and certain key members of the
management of acquired companies may not continue with PLATINUM. Any
difficulty in attracting and
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retaining key employees could have a material adverse effect on PLATINUM's
business, results of operations and financial condition.
PLATINUM's success to date has depended in large part on the skills and
efforts of Andrew J. Filipowski, PLATINUM's President and Chief Executive
Officer, and Paul L. Humenansky, PLATINUM's Executive Vice President--Product
Development and Chief Operations Officer. PLATINUM has not entered into non-
competition agreements with Messrs. Filipowski or Humenansky or any of its
other key personnel, nor does PLATINUM have "key man" life insurance policies
covering these individuals.
VOLATILITY OF PLATINUM'S STOCK PRICE
PLATINUM's Common Stock price has historically been volatile. PLATINUM
believes factors such as quarterly fluctuations in results of operations,
announcements of new products and acquisitions by PLATINUM or by its
competitors, changes or anticipated changes in earnings estimates by analysts
or others, changes in accounting treatments or principles and other factors
may cause the market price of PLATINUM Common Stock to fluctuate, perhaps
substantially. The market price of PLATINUM Common Stock may be affected by
PLATINUM'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 PLATINUM 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 PLATINUM 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 PLATINUM could result in substantial
costs and a diversion of management's attention and resources, which could
have a material adverse effect on PLATINUM's business, results of operations
and financial condition. See "COMPARATIVE PER SHARE MARKET PRICE DATA--
PLATINUM."
ANTITAKEOVER EFFECT OF RIGHTS AGREEMENT, CHARTER AND STATUTORY PROVISIONS
PLATINUM has entered into a rights agreement (the "Rights Agreement"), which
provides that, in the event that 15% or more of the outstanding shares of
PLATINUM Common Stock are acquired by a person or group of persons, the holder
of each outstanding share of PLATINUM Common Stock, other than such acquiring
person(s), shall have the right to purchase from PLATINUM additional shares of
PLATINUM Common Stock having a market value equal to two times the exercise
price of such right. In addition, PLATINUM'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. PLATINUM 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 PLATINUM Common Stock. The
Rights Agreement and these other provisions may have the effect of delaying,
deferring or preventing a change of control of PLATINUM, even if such event
would be beneficial to stockholders. See "DESCRIPTION OF PLATINUM'S CAPITAL
STOCK."
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THE MEETING
TIME, PLACE AND DATE
The Meeting will be held on May 28, 1998 at The Nassau Inn, Senior Room, 10
Palmer Square, Princeton, New Jersey 08542, commencing at 10:00 a.m. (local
time).
PURPOSE OF THE MEETING
At the Meeting, the holders of Logic Works Common Stock will be asked to
consider and vote upon a proposal to approve and adopt the Merger Agreement
and the Merger, pursuant to which, among other things, at the Effective Time,
and subject to and upon the terms and conditions of the Merger Agreement, each
outstanding share of Logic Works Common Stock will be converted into 0.5769 of
a share of PLATINUM Common Stock, and Logic Works will become a wholly-owned
subsidiary of PLATINUM. In addition, Logic Works Stockholders will vote upon:
(i) the election of a Class III director to the Logic Works Board and (ii) the
ratification of the appointment of Ernst & Young LLP as independent auditors
for Logic Works for the year ending December 31, 1998.
RECORD DATE; SHARES ENTITLED TO VOTE
The Logic Works Board has fixed the close of business on April 20, 1998 as
the Record Date for the determination of stockholders entitled to receive
notice of and to vote at the Meeting and any postponement or adjournment
thereof. On the Record Date, there were 12,702,222 shares of Logic Works
Common Stock issued and outstanding. At the close of business on the Record
Date, directors and executive officers of Logic Works and their affiliates
beneficially owned and had the right to vote an aggregate of 2,277,894 shares
of Logic Works Common Stock (approximately 17.4% of the outstanding shares of
Logic Works Common Stock).
VOTING AND REVOCATION OF PROXIES
The proxy accompanying this Proxy Statement/Prospectus is solicited on
behalf of the Logic Works Board for use at the Meeting. Stockholders are
requested to complete, date and sign the accompanying proxy and return it
promptly. All proxies that are properly executed and returned will be voted at
the Meeting in accordance with any directions noted thereon. IF NO DIRECTION
IS INDICATED, PROXIES WILL BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT, FOR THE LOGIC WORKS DIRECTOR NOMINATION AND FOR THE RATIFICATION OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS. Proxies will be voted in the
discretion of the holders of the proxy with respect to any other business that
may properly come before the Meeting and all matters incidental to the conduct
of the Meeting. It is not expected that any matter other than those referred
to herein will be brought before the Meeting.
Any stockholders signing and delivering a proxy may revoke it at any time
before it is voted by submitting a later dated proxy with respect to the same
shares or by delivering to Logic Works' Secretary a written revocation. Any
stockholder attending the Meeting in person may also revoke his or her proxy
and vote his or her shares at the Meeting. Attendance at the Meeting will not
in and of itself constitute a revocation of a proxy.
VOTE REQUIRED
Stockholders are entitled to one vote per share on all matters to be
considered at the Meeting. A majority of the shares entitled to vote present,
in person or by proxy, at the Meeting shall constitute a quorum. The
affirmative vote of holders of a majority of the shares of Logic Works Common
Stock issued and outstanding (voting in person or by proxy) is required to
approve the Merger Agreement. If a quorum is present, the affirmative vote of
a plurality of the shares that are present, in person or by proxy, at the
Meeting and entitled to vote, will be sufficient to elect the Class III
director and the affirmative vote of a majority of such shares will be
sufficient to approve the ratification of the appointment of Ernst & Young LLP
as independent auditors.
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ABSTENTIONS AND BROKER NON-VOTES
The election inspectors will count shares represented by proxies that
withhold authority to vote for a particular matter or that reflect abstentions
on "broker non-votes" (i.e., shares represented at the Meeting held by brokers
or nominees as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the broker or nominee
does not have the discretionary voting power on a particular matter) only as
shares that are present and entitled to vote on the matter for purposes of
determining the presence of a quorum. Such abstentions and broker non-votes
will have the effect of votes against the proposal to approve the Merger
Agreement and will not affect the outcome of the vote on the election of the
Class III director. Abstentions will have the same effect as votes against the
proposal to ratify the appointment of Ernst & Young LLP as independent
auditors, and broker non-votes will have no effect on the vote on such
proposal.
THE MERGER
GENERAL
At the Effective Time and subject to and upon the terms and conditions of
the Merger Agreement and the applicable provisions of the DGCL, PT Acquisition
will be merged with and into Logic Works, with Logic Works surviving as a
wholly-owned subsidiary of PLATINUM. As a result of the Merger, the separate
corporate existence of PT Acquisition will cease and Logic Works will succeed
to all the rights and be responsible for all the obligations of PT Acquisition
in accordance with the DGCL. For the Merger to be consummated, it must be
approved by Logic Works' stockholders and the other conditions specified in
the Merger Agreement must be satisfied or waived. The discussion in this Proxy
Statement/Prospectus of the Merger and the description of the principal terms
and conditions of the Merger Agreement are subject to and qualified in their
entirety by reference to the Merger Agreement, a copy of which is attached to
this Proxy Statement/Prospectus as Appendix A and is incorporated herein by
reference. Logic Works' stockholders are urged to carefully read the Merger
Agreement.
The Merger will become effective when a certificate of merger (the
"Certificate of Merger"), executed in accordance with the relevant provisions
of the DGCL, is accepted for filing by the Secretary of State of the State of
Delaware. The filing of the Certificate of Merger will occur as soon as
practicable following the satisfaction or waiver of the conditions set forth
in the Merger Agreement. See "THE MERGER AGREEMENT--Conditions to the Merger."
CONVERSION OF LOGIC WORKS COMMON STOCK
Each share of Logic Works Common Stock outstanding immediately prior to the
Effective Time shall at the Effective Time be automatically converted into
0.5769 of a share of PLATINUM Common Stock (the "Exchange Ratio"). Cash will
be paid in lieu of any fractional share of PLATINUM Common Stock. The Exchange
Ratio will be appropriately adjusted in the event of any reclassification,
stock split or stock dividend with respect to PLATINUM Common Stock, any
change or conversion of PLATINUM Common Stock into other securities or any
other dividend or distribution with respect to PLATINUM Common Stock (or if a
record date with respect to any of the foregoing should occur) prior to the
Effective Time.
BACKGROUND OF THE MERGER
Logic Works has utilized Broadview for investment banking and financial
advisory services since May 1996. In early 1997, Logic Works was approached
independently by two possible strategic acquirers. During March 1997, Benjamin
C. Cohen, then serving as the President and Chief Executive Officer of Logic
Works, and Gregory A. Peters, then serving as the Chief Financial Officer of
Logic Works, held various conversations with the members of the Logic Works'
Board to discuss, among other things, the unsolicited indications of interest
to acquire Logic Works and the advisability of retaining a financial advisor
to assist the Board in evaluating the approaches and Logic Works' other
strategic alternatives.
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On April 1, 1997, Logic Works engaged Broadview as its financial advisor to
assist in discussions with the two possible acquirers as well as to explore
other strategic alternatives pursuant to the terms of a letter agreement (the
"Broadview Agreement"). Charles Federman, the then Chairman of Broadview, is a
director of Logic Works. See "Certain Transactions Relating To Logic Works."
The Logic Works Board selected Broadview on the basis of Broadview's
reputation and experience in the information technology sector and the
computer software industry in particular, and its in-depth knowledge of Logic
Works.
On April 2, 1997, Messrs. Cohen and Peters met with Scot Sedlacek, Managing
Director at Broadview, and Andrea Meakem, Senior Associate at Broadview, via
teleconference to discuss Logic Works' business activities, including products
and technology, sales and marketing, organizational and personnel matters,
financial performance and market performance. Possible strategic partners were
also discussed based on strategic imperative and business fit with Logic
Works, proclivity for acquisitions and the availability of cash or liquid
stock. Broadview proceeded to contact potential partners to explore their
interest in entering into discussions with Logic Works.
On May 7, 1997, a meeting of the Logic Works Board was held in Princeton,
New Jersey. All members of the Logic Works Board and representatives of
Broadview and Brobeck, Phleger & Harrison LLP, counsel to Logic Works
("Brobeck"), were present. During that meeting, Mr. Sedlacek apprised the
Logic Works Board of the recent discussions with various potential acquirers
and provided an analysis of a potential transaction with a specific strategic
partner. The Logic Works Board concluded not to pursue the potential
transaction.
On May 27, 1997, as part of Logic Works' broad exploration of potential
strategic alternatives, Mr. Peters and Dan Shiffman, then the Executive Vice
President of Research and Development of Logic Works, Mr. Sedlacek and Ms.
Meakem met with Tom DePasquale, Vice President of the Data Warehousing and
Decision Support division of PLATINUM, and Edward Miller, Vice President of
the Application Infrastructure Management division of PLATINUM. At this
meeting, the parties presented general overviews of their respective
businesses, strategic direction, products, services, market presence,
financial performance and management personnel.
On June 6, 1997, after consultation with Andrew Filipowski, President and
Chief Executive Officer of PLATINUM, Mr. DePasquale indicated to Broadview
that PLATINUM was interested in continuing discussions with Logic Works
regarding a potential business combination and also indicated PLATINUM's
preliminary view of valuation of Logic Works. Given this verbal indication of
interest and valuation, and after consultation with Mr. Peters and members of
the Logic Works Board, Broadview communicated to PLATINUM that Logic Works was
not prepared to continue discussions at that time in the price range
indicated. Discussions with PLATINUM were terminated at that time.
Between June 1997 and October 1997, representatives of Logic Works and
Broadview engaged in exploratory discussions with several other potential
acquirers. For a variety of reasons, all such discussions were terminated with
such companies. On October 16, 1997, Logic Works terminated the Broadview
Agreement and Broadview ceased its exploration for a possible acquirer of
Logic Works.
On December 19, 1997, Joseph Josephson, a Managing Director of Deutsche,
Morgan Grenfell ("DMG"), financial advisor to PLATINUM, called Mr. Sedlacek to
indicate an interest in restarting discussions with Logic Works regarding a
potential business combination. Upon consultation with Mr. Peters and the
Logic Works Board, Broadview communicated to DMG Logic Works' willingness to
meet in the first quarter of 1998 after the completion of Logic Works' 1997
fiscal year.
On January 12, 1998, Mr. Filipowski contacted Mr. Peters by phone to
communicate PLATINUM's continued interest in pursuing a combination with Logic
Works.
On January 16, 1998, a special meeting of the Logic Works Board was held via
teleconference to, among other things, allow Mr. Peters to update the Board on
the re-initiation by PLATINUM of merger discussions with Logic Works. The
Logic Works Board authorized Mr. Peters to move forward with these
discussions.
On January 21, 1998, after consultation with the Logic Works Board, Mr.
Peters contacted Mr. Filipowski to schedule a meeting for February 9, 1998.
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On February 3, 1998, at a regularly scheduled Logic Works Board meeting, the
Logic Works Board discussed strategic alternatives for Logic Works, including
a potential combination with PLATINUM, and the upcoming meeting between Mr.
Peters and Mr. Filipowski on February 9.
On February 5, 1998, upon Logic Works' authorization, Broadview delivered to
PLATINUM and DMG updated materials regarding Logic Works' historical financial
performance, 1998 preliminary projections and the potential financial impact
of an acquisition.
On February 9, 1998, Messrs. Peters and Filipowski met to discuss the basis
for a potential combination and a process and timetable for determining mutual
interest in a timely manner.
On February 17, 1998, Messrs. Peters and Shiffman, Flint Lane, Executive
Vice President, Research and Development of Logic Works, Edward McLaughlin,
Director, Erwin/ModelMart Product Management of Logic Works, Mr. Sedlacek, Ms.
Meakem and Brad Topchik, Senior Analyst at Broadview, met in Chicago with Paul
Humenansky, Chief Operations Officer of PLATINUM; Mr. Miller; Robert Gersten,
Vice President Redwood Lab of PLATINUM; Mark DeBroeck, Senior Vice President,
Sales Operations of PLATINUM; Brian Jannusch, Senior Financial Analyst of
PLATINUM; Mr. Josephson; and David Popowitz, Vice President of DMG, to perform
preliminary business due diligence as well as to discuss possible synergies
resulting from a business combination.
The parties proceeded to hold three separate follow-up meetings to discuss
their respective businesses in greater detail. On February 26, 1998, Messrs.
Shiffman, McLaughlin and Lane met with Mr. Gersten and Eric Rivas, Vice
President of Engineering Clearlake Lab of PLATINUM, in Princeton to discuss
Logic Works' products and technology. Also on February 26, 1998, Mr. Peters
met with Mr. Miller and Michael Barker, Associate at DMG, via teleconference
to discuss the details of potential synergies, including cost savings and
revenue enhancement opportunities as a result of a merger. On February 27,
1998, Mr. Peters met with Tom Slowey, Executive Vice President of Sales of
PLATINUM; Paul Tatro, Executive Vice President of International Operations of
PLATINUM; Deborah Goslin, Senior Vice President of Worldwide Business
Development of PLATINUM; and Mr. Miller via teleconference to discuss
potential sales and marketing opportunities in a combination of the two
parties.
On March 4, 1998, PLATINUM provided a term sheet to Logic Works proposing an
acquisition of Logic Works, in which the shareholders would receive, on a tax-
free basis, 0.5769 of a share of PLATINUM Common Stock for each share of Logic
Works Common Stock, based on a pooling of interests. The term sheet also
included other general deal terms and conditions for an acquisition. PLATINUM
also requested that, as a condition to committing its resources extensively
towards completion of a transaction, Logic Works execute an agreement
requiring exclusive negotiations with PLATINUM through March 16, 1998.
On March 5, 1998, a special meeting of the Logic Works Board was held via
teleconference. All members of the Logic Works Board and representatives of
Broadview and Brobeck participated. During that meeting, the Exchange Ratio
and principal terms of the transaction, the status of negotiations and a
proposed timetable for negotiating and completing the proposed transaction
were reviewed. Following these discussions, the Logic Works Board unanimously
recommended that management continue to explore further the possibility of a
business combination with PLATINUM. The Board authorized Mr. Peters and
Broadview to continue to permit PLATINUM to conduct due diligence on Logic
Works, to conduct further due diligence on PLATINUM, and to enter into
negotiations with PLATINUM with respect to the preparation of a definitive
merger agreement for consideration by the Logic Works Board.
On March 5 and 6, 1998, a series of conference calls took place between
representatives of Broadview and DMG and Mr. Peters and Mr. Humenansky to
continue the negotiation of the terms of the transaction.
On March 6, 1998, PLATINUM transmitted the first draft of a definitive
agreement to Mr. Peters and Logic Works' financial and legal advisors.
On March 8, 1998, Logic Works executed the "no shop" agreement with
PLATINUM, agreeing not to negotiate with any other parties through March 16,
1998.
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On March 9, 1998, Messrs. Peters and Sedlacek, Ms. Meakem, and Ellen
Corenswet and Ken Eheman of Brobeck met via teleconference to discuss and
aggregate comments on the draft definitive agreement.
On March 10, 1998, after an exchange of comments on the definitive
agreement, Messrs. Peters and Sedlacek, Ms. Meakem, Ms. Corenswet and Mr.
Eheman met in Chicago with Larry Freedman, Senior Vice President and General
Counsel of PLATINUM, Messrs. Josephson and Barker of DMG, and Kenneth Miller
and Richard Marks of Katten Muchin & Zavis, counsel to PLATINUM, to continue
negotiations of the terms and conditions of the definitive agreement.
On March 11 and March 12, 1998, Mr. Peters and representatives of Broadview
met with representatives of PLATINUM, including Michael Cullinane, Executive
Vice President and Chief Financial Officer, to conduct further financial and
business due diligence on PLATINUM.
On March 12, 1998, a special meeting of the Logic Works Board was held via
teleconference. All members of the Logic Works Board, except Mr. Cohen,
participated. Representatives of Broadview and Brobeck also participated.
During the meeting, Mr. Peters and Ms. Corenswet updated the Logic Works Board
on the conversations held with PLATINUM and the revised terms of the proposed
transaction. Mr. Sedlacek and Ms. Meakem were then asked to present a
financial analysis of the proposed transaction. In connection with this
analysis, a report had been distributed previously for the Board's
consideration. This report included the following detailed information: i) an
analysis of the historic share performance of Logic Works, PLATINUM, and
respective comparable companies; ii) an analysis of premiums paid for public
software companies in merger and acquisition transactions; iii) an analysis of
the historic relative share prices of PLATINUM and Logic Works; iv) an
analysis of the accretion (dilution) on EPS from the proposed transaction; v)
an analysis of the present value of Logic Works' share price and the combined
PLATINUM/Logic Works share price; vi) an analysis of the relative
contributions of revenue and profit by the two companies; vii) an analysis of
the operating statistics and valuation statistics of comparable companies to
Logic Works and PLATINUM; viii) an analysis of valuation multiples in
transactions with comparable sellers to Logic Works; ix) an analysis of
breakup fees in information technology transactions; and x) an analysis of
analysts' estimates for PLATINUM for 1998. The Broadview representatives
reviewed the foregoing information in detail with the Logic Works Board and
responded to extensive questions and comments from Board members during the
course of their presentation. The Logic Works Board unanimously authorized Mr.
Peters and its financial and legal advisors to continue negotiations with
PLATINUM.
On March 14, 1998, a special meeting of the Logic Works Board was held in
New York City at the offices of Brobeck. All members of the Logic Works Board,
as well as representatives of Broadview and Brobeck, participated in person or
by telephone. Copies of the March 13, 1998 draft of the Merger Agreement and
Broadview's written opinion were distributed to the Logic Works Board prior to
the meeting. Ms. Corenswet informed the Logic Works Board that the definitive
agreement had been finalized subject to Logic Works' Board approval. Ms.
Corenswet then reviewed the terms of the definitive agreement with the Logic
Works Board and answered questions. Representatives of Broadview then
presented an oral and written opinion to the Logic Works Board that the
consideration to be received by Logic Works shareholders in the acquisition
was fair, from a financial point of view. After further deliberation, the
Logic Works' Board unanimously approved the Merger and the Merger Agreement,
and authorized management to execute the Merger Agreement. Subsequent to this
meeting, each company executed and delivered the Merger Agreement. The
execution of the Merger Agreement was announced on March 16, 1998 by issuance
of a press release.
RECOMMENDATION OF THE LOGIC WORKS BOARD; REASONS FOR THE MERGER
The Board of Logic Works has carefully considered the advisability of the
Merger, and believes that the terms of the Merger Agreement are fair to, and
that the Merger is in the best interests of, Logic Works and its stockholders.
THE BOARD OF DIRECTORS OF LOGIC WORKS HAS APPROVED AND ADOPTED THE MERGER
AGREEMENT AND APPROVED THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF LOGIC WORKS VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER.
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In reaching it determination, the Logic Works Board consulted with Logic
Works' management, as well as its financial and legal advisors, and considered
a number of factors, including, but not limited to, the following:
I. the strategic and financial alternatives available to Logic Works,
including remaining a separate company and pursuing its existing growth
strategy;
II. the consideration to be received by Logic Works' stockholders,
including the fact that, based on the closing price of PLATINUM Common
Stock and Logic Works Common Stock as of March 13, 1998, the Exchange
Ratio of 0.5769 of a share of PLATINUM Common Stock for each share of
Logic Works Common Stock represented a 48% premium over the previous 30
day average closing market price per share of the Logic Works Common
Stock;
III. the terms and conditions of the proposed combination of PLATINUM and
Logic Works, including: (a) the absence of any voting or option
agreements from Logic Works stockholders and the absence of any option
agreement from Logic Works, (b) the ability of Logic Works' Board to
consider unsolicited, superior acquisition proposals from third
parties following the execution of the Merger Agreement, where the
failure would constitute a breach of their fiduciary duties under
Delaware law, subject to certain conditions and restrictions, (c) the
right of Logic Works to terminate the Merger Agreement in the event
the average market price of PLATINUM Common Stock is less than $22.00
per share during certain time periods, and (e) the size and structure
of the termination fees, which the Logic Works Board believed would
not prevent competing business combination proposals from third
parties;
IV. the results of Logic Works' eleven-month process of identifying
possible strategic partners and soliciting indications of interest from
third parties, including the absence of any superior proposals (given
Logic Works' strategic and financial goals);
V. the strategic fit between PLATINUM and Logic Works, including the
ability of Logic Works' customers to benefit from complete, integrated
enterprise product suites and the ability to leverage PLATINUM's global
sales and support organization;
VI. PLATINUM's and Logic Works' respective business, financial condition,
results of operation and prospects;
VII. the opportunity for Logic Works' stockholders to receive PLATINUM
Common Stock in a tax-free reorganization and thus continue to
participate in the growth of the business conducted by PLATINUM and
Logic Works after the Merger without paying current United States
federal income tax;
VIII. the expected accounting treatment of the Merger as a pooling of
interests;
IX. the likelihood that holders of Logic Works Common Stock would have
greater liquidity in their holdings in the combined entity following
the Merger; and
X. the presentations of Broadview delivered to the Logic Works Board on
March 12 and 14, 1998, including the written opinion of Broadview dated
March 14, 1998 that the Exchange Ratio was fair, from a financial point
of view, to the holders of Logic Works Common Stock as of the date of
such opinion.
The foregoing discussion of the information and factors considered and given
weight by the Logic Works Board is not intended to be exhaustive. In view of
the variety of factors considered in connection with its evaluation of the
Merger, the Logic Works Board did not find it practicable to and did not
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members of
the Logic Works Board may have given different weights to different factors.
For a discussion of the interests of certain members of Logic Works management
and the Logic Works Board in the Merger, see
"--Interests of Certain Persons in the Merger."
PLATINUM'S REASONS FOR THE MERGER
PLATINUM's management believes the Merger will make the combined companies a
leader in enterprise modeling, with the ability to provide a comprehensive
solution for modeling application components, databases
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and business processes. The Merger will combine Logic Works' award winning
Erwin products with PLATINUM's Paradigm Plus object-oriented analysis and
design solution. Overall, Logic Works skillsets and products will complement
PLATINUM's extensive offerings in application component and business process
modeling, as well as database management and data warehousing solutions.
Furthermore, PLATINUM's management believes the two companies' product lines
and distribution channels have minimal overlap and provide significant cross-
selling and cross-marketing opportunities, enhancing the value of the combined
business.
OPINION OF LOGIC WORKS' FINANCIAL ADVISOR
Logic Works engaged Broadview to act as its financial advisor and requested
that Broadview render an opinion regarding the fairness, from a financial
point of view, to Logic Works' stockholders, of the Exchange Ratio. At the
meeting of the Logic Works Board on Saturday, March 14, 1998, Broadview
rendered its written opinion (the "Broadview Opinion") that, as of March 14,
1998, based upon and subject to the various factors and assumptions set forth
in the Broadview Opinion, the Exchange Ratio was fair, from a financial point
of view, to the Logic Works stockholders. The Exchange Ratio was determined
pursuant to negotiations between Logic Works and PLATINUM and not pursuant to
recommendations of Broadview.
The text of the Broadview Opinion, which sets forth assumptions made,
matters considered, and limitations on the review undertaken, is attached as
Appendix B to this Proxy Statement/Prospectus. Logic Works stockholders are
urged to read the Broadview Opinion carefully in its entirety. The Broadview
Opinion addresses only the fairness of the Exchange Ratio from a financial
point of view and does not constitute a recommendation to any stockholder of
Logic Works as to how such stockholder should vote at the Meeting. In
addition, Broadview will receive a fee from Logic Works contingent upon
successful conclusion of the Merger. Pursuant to the terms of the Broadview
Agreement, Logic Works agreed to pay Broadview (i) a monthly retainer of
$5,000 plus reimbursement of all out-of-pocket expenses incurred by Broadview
and (ii) a fee upon the consummation of a transaction calculated as 5% of the
first five million dollars of consideration, 3% of the next five million
dollars of consideration, and 1% of all consideration beyond the first ten
million dollars of the total consideration received by stockholders, with a
minimum fee of $500,000. A fee of $250,000 paid in connection with the
delivery of the Broadview Opinion will be credited against such amount. See
"--Interests of Certain Persons in the Merger." The summary of the Broadview
Opinion set forth in this Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of such opinion.
In rendering its opinion, Broadview, among other actions: (i) reviewed the
terms of the Agreement and the associated schedules thereto in the form of the
draft dated March 13, 1998 (the "Agreement"), which draft contained no
material differences from the definitive Merger Agreement; (ii) reviewed Logic
Works' Form 10-K for its fiscal year ended December 31, 1996, including the
audited financial statements included therein, Logic Works' Form 10-Q for the
nine months ended September 30, 1997, including the unaudited financial
statements included therein, Logic Works' audited financial information for
its fiscal year ended December 31, 1997 included in a Logic Works press
release dated February 10, 1998, and Logic Works' draft annual report dated
March 10, 1998 for its fiscal year ended December 31, 1997, including the
draft audited financial statements included therein; (iii) reviewed financial
projections for Logic Works for its fiscal year ending December 31, 1998
prepared and provided to Broadview by Logic Works' management; (iv)
participated in discussions with Logic Works' management concerning the
operations, business strategy, financial performance and prospects for Logic
Works; (v) discussed with Logic Works' management its view of the strategic
rationale for the Merger; (vi) reviewed the reported closing prices and
trading activity for Logic Works Common Stock; (vii) compared certain aspects
of the financial performance of Logic Works with public companies Broadview
deemed comparable; (viii) analyzed available information, both public and
private, concerning other mergers and acquisitions Broadview believed to be
comparable in whole or in part to the Merger; (ix) reviewed PLATINUM's annual
report and Form 10-K for its fiscal year ended December 31, 1996, including
the audited financial statements included therein, PLATINUM's Form 10-Q for
the nine months ended September 30, 1997, including the unaudited financial
statements included therein, PLATINUM's unaudited financial information for
its fiscal year ended December 31, 1997 reported in a PLATINUM press release
dated February 10, 1998, and
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PLATINUM's draft Form 10-K dated March 6, 1998 for its fiscal year ended
December 31, 1997, including the draft audited financial statements included
therein; (x) participated in discussions with PLATINUM management concerning
the operations, business strategy, financial performance and prospects for
PLATINUM; (xi) discussed with PLATINUM management its view of the strategic
rationale for the Merger; (xii) reviewed the reported closing prices and
trading activity for PLATINUM Common Stock; (xiii) compared certain aspects of
the financial performance of PLATINUM with public companies Broadview deemed
comparable; (xiv) considered the total number of shares of PLATINUM Common
Stock outstanding and the average weekly trading volume of PLATINUM Common
Stock; (xv) reviewed recent equity analyst reports covering Logic Works and
PLATINUM; (xvi) analyzed the anticipated effect of the Merger on the future
financial performance of the consolidated entity; (xvii) participated in
negotiations and discussions related to the Merger among Logic Works, PLATINUM
and their financial and legal advisors; and (xviii) conducted other financial
studies, analyses and investigations as deemed appropriate for purposes of the
Broadview Opinion.
In rendering the Broadview Opinion, Broadview relied, without independent
verification, on the accuracy and completeness of all the financial and other
information (including without limitation the representations and warranties
contained in the Agreement) that was publicly available or furnished by Logic
Works, PLATINUM or PLATINUM's financial advisor. Broadview assumed that those
projections prepared and provided by Logic Works were reasonably prepared and
reflected the best available estimates and good faith judgments of the
management of Logic Works as to the future performance of Logic Works.
Broadview did not make or obtain an independent appraisal or valuation of any
of Logic Works' assets. Broadview has not reviewed any internal financial
projections prepared by PLATINUM management as such projections have not been
made available to Broadview. With regard to any analyses relating to
valuations of comparable public companies, the share prices used were for the
close of trading on March 13, 1998, the last trading day before the Logic
Works Board met to give final consideration to the proposed Merger.
The following is a summary explanation of the various sources of information
and valuation methodologies employed by Broadview in conjunction with
rendering the Broadview Opinion regarding the proposed Merger.
Public Company Comparables Analysis. Total Market Capitalization/Revenue
("TMC/R") and Price/Earnings ("P/E") multiples indicate the value public
markets place on companies in a particular market segment. Although there are
no public company "pure plays" in the market in which Logic Works competes,
several companies are comparable to Logic Works based on revenue size,
products offered, business model, and management structure. Broadview reviewed
seven public company comparables in the analysis, design and modeling, and
development management software markets with positive revenue growth from a
financial point of view including each company's: Trailing Twelve Month
("TTM") Revenue; TTM Revenue Growth; TTM Operating Margin; 5-year EPS Compound
Annual Growth Rate ("CAGR"); Equity Market Capitalization; TTM P/E ratio;
Price/Forward Calendar 1998 EPS ratio ("Forward P/E"); Growth Adjusted
Price/Forward Calendar 1998 EPS ratio ("Growth Adjusted Forward P/E"); TTM
TMC/R ratio; and Forward Calendar 1998 TMC/R ratio ("Forward TMC/R"). The
public company comparables were selected from the Broadview Barometer, a
proprietary database of publicly-traded Information Technology ("IT")
companies maintained by Broadview Associates and broken down by industry
segment. In order of descending TTM TMC/R, the public company comparables
consist of: (i) SEEC, Inc.; (ii) Mercury Interactive, Inc.; (iii) Viasoft,
Inc.; (iv) Segue Software, Inc; (v) Rational Software, Inc.; (vi) SELECT
Software Tools, Inc.; and (vii) INTERSOLV, Inc. These comparables have a TTM
P/E ratio range of 23.6 to 70.9, with a median of 37.6; Forward P/E ratio
range of 16.4 to 68.2, with a median of 25.4; Growth Adjusted P/E ratio range
of 6.7 to 45.5, with a median of 17.2; TTM TMC/R ratio range of 1.58 to 7.82
with a median of 3.61; and Forward TMC/R ratio range of 0.83 to 4.60, with a
median of 2.50.
The equity value per share range implied by the TTM P/E multiples is $8.46
to $25.40 with a median implied value of $13.46. The equity value per share
range implied by the Forward P/E multiples is $8.24 to $34.29, with a median
implied value of $12.76. The equity value per share range implied by the
Growth Adjusted P/E multiples is $3.35 to $22.86, with a median implied value
of $8.65. The equity value per share range implied
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by the TTM TMC/R multiples is $8.49 to $31.17, with a median implied value of
$15.86. The equity value per share range implied by the Forward TMC/R
multiples is $6.46 to $23.29, with a median implied value of $13.90.
Evaluation of PLATINUM Equity. Broadview compared the ranges and medians of
public companies deemed comparable to PLATINUM based upon revenue size,
product offering, business model and management structure. Broadview reviewed
nine public company comparables in the systems management software and
application development tools markets from a financial point of view. In order
of descending TMC/R, the public company comparables consist of: (i) BMC
Software, Inc.; (ii) Compuware Corporation; (iii) Computer Associates Inc.;
(iv) Oracle Corporation; (v) Boole & Babbage, Inc.; (vi) Sterling Software
Corp.; (vii) Rational Software Corp.; (viii) Informix Corp.; and (ix) Sybase,
Inc.
Transaction Comparables Analysis. Valuation statistics from transaction
comparables indicate the Adjusted Price/Revenue ("P/R") and Equity
Price/Pretax Income ("Equity Price/Pretax") multiples acquirers have paid for
comparable companies in a particular market segment. Broadview reviewed seven
comparable public company merger and acquisition ("M&A") transactions and 10
comparable private company merger and acquisition from 1995 through the
present with seller revenue between $5 and $100 million that involved sellers
sharing many characteristics with Logic Works, including products offered and
business model. Transactions were selected from Broadview's proprietary
database of published and confidential M&A transactions in the IT industry.
These transactions represent 17 sellers in the analysis, design and modeling,
development management, and middleware development tools information
technology market segments. In order of descending P/R multiple, the public
company transactions used are the acquisition of: (i) Atria Software Inc. by
Pure Software Inc.; (ii) SQA Inc. by Rational Software Corp.; (iii) Visigenic
Software, Inc. by Borland International, Inc.; (iv) Trinzic Corp. by PLATINUM;
(v) Learmonth & Burchett Management Systems plc by PLATINUM (pending); (vi)
Open Environment Corp. by Borland International Inc.; and (vii) Easel Corp. by
VMARK Software Inc. The P/R multiples of the seven transactions range from
1.05 to 19.93, with a median of 3.25. The Equity Price/Pretax multiples of the
three transactions with meaningful data range from 22.42 to 92.75, with a
median of 51.00. In order of descending P/R multiple, the private company
transactions used are the acquisition of: (i) Performix by Pure Software Inc.;
(ii) Prodea Software Corp. by PLATINUM; and (iii) Digitalk Inc. by Parcplace
Systems Inc. Additionally Broadview considered seven transactions with respect
to which Broadview has information that is not publicly available. The P/R
multiples of all 17 transactions range from 1.05 to 19.93, with a median of
3.25. The Equity Price/Pretax multiples of the six transactions with either
available or meaningful data range from 8.78 to 92.75, with a median of 28.78.
The equity value per share range implied by the P/R multiples of the seven
public seller transaction comparables is $6.59 to $75.15, with a median
implied value of $14.56. The equity value per share range implied by the
Equity Price/Pretax multiples in the three public seller transaction
comparables with meaningful data is $11.87 to $49.10, with a median implied
value of $26.99. The equity value per share range implied by the P/R multiples
in all 17 transaction comparables is $6.59 to $75.15, with a median implied
value of $14.56. The equity value per share range implied by the Equity
Price/Pretax multiples in the six transaction comparables with either
available or meaningful data is $4.65 to $49.10, with a median implied value
of $15.24.
Transaction Premiums Paid Analysis. Premiums paid in comparable public
seller transactions indicate the amount of consideration acquirers are willing
to pay above the seller's equity market capitalization. In this analysis, the
value of consideration paid in transactions involving stock is computed using
the buyer's stock price immediately prior to announcement, while the seller's
equity market capitalization is measured one day prior and 30 days prior to
announcement. Broadview reviewed 50 comparable merger and acquisition
transactions involving software vendors from January 1, 1995 to the present
with total consideration between $50 and $500 million. Transactions were
selected from Broadview's proprietary database of published and confidential
merger and acquisition transactions in the IT industry. In order of descending
premium paid 30 days prior to announce date, the software transactions used
were the acquisition of: (i) High Level Design Systems, Inc. by Cadence Design
Systems, Inc.; (ii) GMIS Inc. by HBO & Company, Inc.; (iii) CyCare Systems,
Inc. by HBO & Company, Inc.; (iv) Softdesk Inc. by Autodesk Inc.; (v) Trusted
Information Systems, Inc. by Network Associates, Inc. (pending); (vi) National
Health Enhancement Systems, Inc. by HBO & Company, Inc.; (vii) Scopus
Technology,
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Inc. by Siebel Systems, Inc. (pending); (viii) Triad Systems Corp. by
Cooperative Computing, Inc.; (ix) Visigenic Software, Inc. by Borland
International, Inc.; (x) Interactive Group Inc. by Dataworks Corp.; (xi)
Wonderware Corp. by Siebe PLC (pending); (xii) TGV Software, Inc. by Cisco
Systems, Inc.; (xiii) Computer Language Research, Inc. by Thomson Corp.; (xiv)
Open Environment Corp. by Borland International Inc.; (xv) Technology Modeling
Associates, Inc. by Avant! Corp.; (xvi) Alias Research, Inc. by Silicon
Graphics, Inc.; (xvii) Hogan Systems, Inc. by Continuum Co.; (xviii) MDL
Information Systems, Inc. by Reed Elsevier plc (Elsevier Science Inc.); (xix)
Software Artistry, Inc. by IBM Corp. (Tivoli Systems); (xx) Aurum Software,
Inc. by Baan International BV; (xxi) Datalogix International, Inc. by Oracle
Corp.; (xxii) Integrated Silicon Systems, Inc. by ArcSys, Inc.; (xxiii)
OpenVision Technologies, Inc. by VERITAS Software Corp.; (xxiv) Learmonth and
Burchett Management Systems plc by PLATINUM (pending); (xxv) Trinzic
Corporation by PLATINUM; (xxvi) Delrina Corp. by Symantec Corp.; (xxvii) SQA,
Inc. by Rational Software Corp.; (xxviii) AMISYS Managed Care Systems, Inc. by
HBO & Company, Inc.; (xxix) Frame Technology Corp. by Adobe Systems, Inc.;
(xxx) Saber Software Corp. by McAfee Associates, Inc.; (xxxi) Clinicom Inc. by
HBO & Company; (xxxii) Maxis, Inc. by Electronic Arts, Inc.; (xxxiii)
Viewlogic Systems, Inc. by Synopsys, Inc.; (xxxiv) EPIC Design Technology,
Inc. by Synopsys, Inc.; (xxxv) CIS Technologies, Inc. by National Data Corp.;
(xxxvi) Wavefront Technologies, Inc. by Silicon Graphics, Inc.; (xxxvii)
Microtec Research, Inc. by Mentor Graphics Corp.; (xxxviii) HPR Inc. by HBO &
Company, Inc.; (xxxix) BGS Systems, Inc. by BMC Software (pending); (xl) State
Of The Art, Inc. by Sage Group PLC (pending); (xli) Edmark Corp. by IBM Corp.;
(xlii) PHAMIS Inc. by IDX Systems Corp.; (xliii) Cooper & Chyan Technology,
Inc. by Cadence Design Systems, Inc.; (xliv) Infinity Financial Technology,
Inc. by Sungard Data Systems, Inc.; (xlv) Enterprise Systems, Inc. by HBO &
Company, Inc.; (xlvi) Unison Software Inc. by IBM Corp. (Tivoli Systems);
(xlvii) Premenos Corp. by Harbinger Corp.; (xlviii) Raptor Systems, Inc. by
AXENT Technologies, Inc.; (xlix) Meta-Software, Inc. by Avant! Corp.; and (l)
Fractal Design Corp. by MetaTools Inc. Based upon Broadview's analysis of
premiums paid in comparable software transactions, Broadview found that
premiums/(discounts) paid to sellers' equity market capitalizations (using the
buyer's share price on the day prior to the announcement date of the
transaction to calculate consideration in stock transactions) 30 days prior to
announce date ranged from (2.3%) to 138.5% with a median of 45.7%. The
premiums/(discounts) paid to each sellers' equity market capitalization one
day prior to announce date ranged from (8.8%) to 94.7%, with a median of
32.1%.
The equity value per share range implied by the premiums paid to the share
price 30 days prior to announce is $10.39 to $25.35 with a median implied
value of $15.49. The equity value per share range implied by the premiums paid
to the share price one day prior to announce is $12.37 to $26.40, with a
median implied value of $17.91.
Stock Performance Analysis. For comparative purposes, Broadview examined the
weekly historical volume and trading prices and the daily relative share
prices for both Logic Works and PLATINUM common stock. Broadview examined the
following: (i) PLATINUM's and Logic Works' actual share prices and trading
volumes from March 14, 1997 to March 13, 1998; (ii) PLATINUM, Logic Works and
their respective Public Company Comparables Indexed share prices from March
14, 1997 to March 13, 1998; and (iii) Relative ratio of Logic Works' to
PLATINUM's actual share prices from March 14, 1997 to March 13, 1998.
Relative Contribution Analysis. A relative contribution analysis measures
each of the merging companies' contributions to items such as Revenue and
Pretax Income on a percentage basis. Broadview examined the relative
contributions during the TTM ended December 31, 1997 and Projected Calendar
1998 based upon consensus analyst estimates for PLATINUM and management's
projections for Logic Works for each of the following income statement items:
(i) Revenue; (ii) Pretax Income; and (iii) Net Income.
Logic Works' relative contribution for Revenue for the TTM ended December
31, 1997 and Projected Calendar 1998 is 7.5% and 7.1%, respectively. Logic
Works' relative contribution for Pretax Income for the TTM ended December 31,
1997 and Projected Calendar 1998 is 13.2% and 10.4%, respectively. Logic
Works' relative contribution for Net Income for the TTM ended December 31,
1997 and Projected Calendar 1998 is 11.7% and 9.3%, respectively.
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Relative Ownership Analysis. A relative ownership analysis measures each of
the merging companies' relative equity ownership and relative entity values
(net of cash) at various exchange ratios. Broadview examined the relative
equity ownership and relative entity value at exchange ratios ranging from
0.2687 through 0.9008. At an exchange ratio of 0.2687, the implied equity
ownership is 5.0% for Logic Works and 95.0% for PLATINUM, while the implied
entity value is 3.1% for Logic Works and 96.9% for PLATINUM. At an exchange
ratio of 0.5769, the implied equity ownership is 10.2% for Logic Works and
89.8% for PLATINUM, while the implied entity value is 8.4% for Logic Works and
91.6% for PLATINUM. At an exchange ratio of 0.9008, the implied equity
ownership is 15.0% for Logic Works and 85.0% for PLATINUM while the implied
entity value is 13.3% for Logic Works and 86.7% for PLATINUM.
Pro Forma Pooling Model Analysis. A pro forma merger analysis calculates the
EPS accretion/dilution of the pro forma combined entity taking into
consideration various financial affects which will result from a consummation
of the Merger. This analysis relies upon certain financial and operating
assumptions provided by equity research analysts and on publicly available
data about Logic Works and PLATINUM. Based on consensus analysts' forecasts
for PLATINUM and management's internal projections for Logic Works (assuming
no cost savings), the pro forma pooling analysis indicates EPS
accretion/(dilution) without acquisition expenses for the fiscal year ending
December 31, 1998 of (0.9%). Based on consensus analysts' forecasts for
PLATINUM, management's internal projections for Logic Works, and the
assumption of approximately $3.5 million of pretax contribution derived from
cost savings (based on discussions with Logic Works management), the pro forma
pooling analysis indicates EPS accretion/(dilution) without acquisition
expenses for the fiscal year ending December 31, 1998 of 1.9%.
Present Value of Projected Share Price Analysis. Broadview calculated the
present value of the potential future price of shares of Logic Works Common
Stock on a standalone basis using management's internal estimates for the
fiscal year ending December 31, 1998 discounted to today at discount rates
from 15.0% to 25.0%. The potential future share price based on December 31,
1998 financial results is calculated based upon an estimated calendar 1998 EPS
(as estimated using management's internal projections) and assumes TTM P/E
multiples of between 25.0x and 40.0x, in line with comparable public company
multiples for Logic Works. Based on this analysis, Broadview calculated
present values of potential future share prices ranging from $10.31 to $17.77.
In addition, Broadview performed an analysis of the pro forma present value
per PLATINUM share assuming the consummation of the Merger both with, and
without, the inclusion of cost savings. This analysis applied TTM P/E
multiples of between 20.0x and 60.0x, in line with comparable public company
multiples for PLATINUM to estimated calendar 1998 EPS for the combined entity
(based on consensus analyst estimates for PLATINUM and management's internal
projections for Logic Works) and discounted the future share prices to today
using discount rates from 15.0% to 35.0%. Based on this analysis, Broadview
estimated present values of future share prices ranging from $8.16 to $28.24
in the case without cost savings and $8.39 to $29.01 in the case with cost
savings.
Consideration of the Discounted Cash Flows Valuation Methodology. While
discounted cash flows analysis is a commonly used valuation methodology,
Broadview did not employ such an analysis for the purposes of this opinion.
Discounted cash flows analysis is most appropriate for companies which exhibit
relatively steady or somewhat predictable streams of future cash flows. Given
the uncertainty in estimating both Logic Works' future cash flows and
sustainable long-term growth rate, Broadview considered a discounted cash
flows analysis inappropriate for valuing Logic Works.
The Logic Works Board selected Broadview as its financial advisor on the
basis of Broadview's reputation and experience in the Information Technology
sector and the computer software industry in particular, as well as
Broadview's historical relationship with Logic Works. Pursuant to the terms of
an engagement letter between Logic Works and Broadview, the fees payable by
Logic Works to Broadview upon completion of the Merger are based upon the
consideration to be received by Logic Works pursuant to the Merger. Broadview
will be reimbursed by Logic Works for certain of its expenses incurred in
connection with its engagement. The terms of the fee arrangement with
Broadview, which Logic Works and Broadview believe are customary in
transactions of this nature, were negotiated at arms' length between Logic
Works and Broadview, and the Logic Works Board
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was aware of the nature of the fee arrangement, including the fact that a
significant portion of the fees payable to Broadview is contingent upon
completion of the Merger.
The above summary of the presentations by Broadview to the Logic Works Board
does not purport to be a complete description of such presentations or of all
the advice rendered by Broadview. Broadview believes that its analyses and the
summary set forth above must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, could create an
incomplete view of the process underlying the analyses set forth in
Broadview's presentations to the Logic Works Board and in the Broadview
Opinion. The Broadview Opinion is necessarily based upon market, economic,
financial and other conditions as they existed and could be evaluated as of
the date of the Broadview Opinion. The Broadview Opinion expresses no opinion
as to the price at which PLATINUM Common Stock will trade at any time. In
performing its analyses, Broadview made numerous assumptions with respect to
software industry performance and general economic conditions, many of which
are beyond the control of Logic Works or PLATINUM. The analyses performed by
Broadview are not necessarily indicative of actual values or actual future
results, which may be significantly more or less favorable than suggested by
such analyses.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of Logic Works' Board with respect to the
Merger, stockholders of Logic Works should be aware that members of Logic
Works' management and Logic Works' Board of Directors have certain interests
in the Merger as holders of options to purchase Logic Works Common Stock that
are in addition to the interests of the stockholders of Logic Works generally.
Set forth below is a table showing the total number of options and the
number of currently unvested options held by the current executive officers
and directors of Logic Works. Unvested options held by an executive officer
will vest if such executive officer's employment is involuntarily terminated
(except for cause) during the 18 months following the Merger. All options held
by non-employee directors and granted pursuant to the automatic option grant
program of the Logic Works stock option plan will accelerate and become
exercisable in full or fully vested shares immediately prior to the Effective
Time.
<TABLE>
<CAPTION>
NUMBER OF UNVESTED AS OF
NAME TOTAL OPTIONS APRIL 20, 1998
---- ------------- --------------
<S> <C> <C>
Paul E. Blondin................................... 47,500 36,250
Benjamin C. Cohen................................. 0 0
Charles Federman.................................. 30,000 15,000
Richard A. Hosley................................. 50,000 25,000
Gregory A. Peters................................. 460,000 347,500
Flint A. Lane..................................... 150,000 130,420
Edward G. McLaughlin.............................. 145,000 133,000
Dan Shiffman...................................... 163,000 81,250
Frank T. Watts.................................... 150,000 117,500
</TABLE>
Logic Works entered into an agreement dated March 1998 with Gregory Peters,
the President, Chief Executive Officer and Chief Financial Officer, pursuant
to which, in the event of Mr. Peters' involuntarily termination (as defined),
Mr. Peters will be paid six months base salary as severance in six equal
monthly installments following the effective time of his termination. If such
termination is an involuntary termination in connection with or within
eighteen (18) months following a Change in Control (which, as defined,
includes the Merger), Mr. Peters will receive additional payments in an
aggregate amount equal to six months of his base salary in effect at such
termination. In addition, under this agreement, if by reason of the Merger,
Mr. Peters' benefits should constitute an excess parachute payment under
Section 280(G) of the Internal Revenue Code and any similar state or local
regulation, then Mr. Peters will receive a full tax gross-up with respect to
his parachute tax liability under Section 4999 of the Internal Revenue Code
and any similar state or local regulation. In addition, PLATINUM has entered
into an agreement with Mr. Peters pursuant to which (i) for a period of one
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year following the Effective Time, Mr. Peters will make himself available to
perform consulting services for which PLATINUM will pay Mr. Peters a monthly
fee of $9,583.00, and (ii) in consideration for $25,000 per month for the 12
months after the Effective Time, Mr. Peters will not compete with the business
of Logic Works during such one year period.
Each of Flint Lane, Edward McLaughlin, Daniel Shiffman and Frank Watts,
executive officers of Logic Works, and Kenneth Zeng, the Controller of Logic
Works, have entered into agreements dated March 1998 with Logic Works pursuant
to which upon an involuntary termination (as defined) in connection with or
within eighteen (18) months following a Change in Control (as defined), such
individuals (i) will receive severance payments in six equal monthly
installments following the effective time of termination in an aggregate
amount equal to six months base salary plus the pro-rated portion of their
maximum target bonus for the year in which they are terminated and (ii) will
be available to perform consulting services during the six month period
following the effective time of termination.
Broadview, the financial advisor of Logic Works in connection with the
transactions contemplated in the Merger Agreement, will be paid certain fees
in connection with the Merger. See "--Opinion of Logic Works' Financial
Advisor."
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain U.S. federal income tax consequences
of the Merger. This summary is not a complete description of all the tax
consequences relevant to a decision whether to vote in favor of the Merger
Agreement and the Merger. The discussion does not address the tax consequences
that may be relevant to particular categories of stockholders subject to
special treatment under certain federal income tax laws, such as dealers in
securities, banks, insurance companies and tax-exempt organizations. Each
stockholder's individual circumstances may affect the tax consequences of the
Merger to him or her. No information is provided herein with respect to the
tax consequences of the Merger under foreign, state or local laws or the tax
consequences of transactions effected prior to, concurrently with, or after
the Merger (whether or not such transactions are undertaken in connection with
the Merger). The consequences set forth below are, and the opinions referred
to below will be, based on the Internal Revenue Code of 1986, as amended (the
"Code"), currently applicable United States Treasury regulations promulgated
thereunder, judicial authority and administrative positions of the Internal
Revenue Service, all of which are subject to change either prospectively or
retroactively. Any such changes could affect the accuracy of the consequences
set forth below and the conclusions reached in such opinions.
Material U.S. Federal Income Tax Consequences. Subject to the limitations
and qualifications referred to herein, the material U.S. federal income tax
consequences of the Merger are as follows:
(i) the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and Logic Works, PT Acquisition and
PLATINUM will each be a party to such reorganization within the meaning
of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by PLATINUM, PT Acquisition or
Logic Works as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of Logic Works
upon the exchange of their shares of Logic Works Common Stock solely for
shares of PLATINUM Common Stock pursuant to the Merger, except with
respect to cash, if any, received in lieu of fractional shares of
PLATINUM Common Stock;
(iv) the aggregate tax basis of the shares of PLATINUM Common Stock
received solely in exchange for shares of Logic Works Common Stock
pursuant to the Merger (including fractional shares of PLATINUM Common
Stock for which cash is received) will be the same as the aggregate
tax basis of the shares of Logic Works Common Stock exchanged
therefor;
(v) the holding period for shares of PLATINUM Common Stock received solely
in exchange for shares of Logic Works Common Stock pursuant to the
Merger will include the holding period of the shares of
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Logic Works Common Stock exchanged therefor, provided such shares of
Logic Works Common Stock were held as a capital asset by the stockholder
at the Effective Time; and
(vi) a stockholder of Logic Works who receives cash in lieu of a fractional
share of PLATINUM Common Stock will recognize gain or loss equal to
the difference, if any, between such stockholder's tax basis in such
fractional share (as described in clause (iv) above) and the amount of
cash received.
The correctness of the consequences described above depend on the accuracy
as of the date hereof, and the continued accuracy as of the Effective Time (as
if made as of the Effective Time), of certain facts and of certain
representations of PLATINUM and Logic Works, including representations in
certain certificates dated on or about the date hereof delivered by PLATINUM
and Logic Works.
The consequences described above may not be applicable to stockholders of
Logic Works who, for U.S. federal income tax purposes, are nonresident alien
individuals, foreign corporations, foreign partnerships, foreign trusts or
foreign estates, or who acquired their shares of Logic Works Common Stock
pursuant to the exercise of employee stock options or otherwise as
compensation.
Conditions to Closing. It is a condition to PLATINUM's obligation to
consummate the Merger that PLATINUM receive an opinion from its counsel,
Katten Muchin & Zavis, and it is a condition to Logic Works's obligation to
consummate the Merger that Logic Works receive an opinion from its counsel,
Brobeck, Phleger & Harrison LLP, in each case dated as of the Effective Time,
to the effect that, among other things, the Merger will constitute a
reorganization under Section 368(a) of the Code (the "Tax Opinions"). The Tax
Opinions will neither bind the Internal Revenue Service nor preclude the
Internal Revenue Service from adopting a contrary position. The Tax Opinions
will be subject to certain assumptions and qualifications and will be based on
the truth and accuracy of certain representations of PLATINUM and Logic Works,
including representations in certain certificates each dated as of the
Effective Date to be delivered to counsel by PLATINUM and Logic Works. An
opinion of counsel only represents counsel's best legal judgment, and has no
binding effect or official status of any kind.
A successful Internal Revenue Service challenge to the status of the Merger
as a reorganization under Section 368(a) of the Code would result in the Logic
Works stockholders recognizing taxable gain or loss with respect to each share
of Logic Works Common Stock surrendered equal to the difference between the
stockholder's tax basis in such share of Logic Works Common Stock and the fair
market value, as of the Effective Time, of the PLATINUM Common Stock received
in exchange therefor. In such event, a stockholder's aggregate tax basis in
the PLATINUM Common Stock so received would equal its fair market value and
the holding period for such stock would begin the day after the Merger.
Stock Options. Holders of Logic Works Stock Options will receive Substitute
Options as described below under "THE MERGER AGREEMENT--Substitution of
Options." The holder of a Logic Works Stock Option that is converted into a
Substitute Option should not recognize gain or loss solely as a result of such
conversion. Such holder would, however, generally recognize ordinary
compensation income on the date such Substitute Option is exercised in an
amount equal to the excess of the aggregate fair market value on such date of
the shares of PLATINUM Common Stock acquired upon such exercise (plus any cash
received in lieu of a fractional share) over the aggregate exercise price for
such shares.
EACH HOLDER OF LOGIC WORKS COMMON STOCK OR LOGIC WORKS STOCK OPTIONS IS
URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO HIM OR HER, AND ALSO AS TO ANY STATE, LOCAL,
FOREIGN OR OTHER TAX CONSEQUENCES.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling of interests for accounting
purposes. Under this method of accounting, the assets and liabilities of
PLATINUM and Logic Works will be combined based on the respective
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carrying values of the accounts in the historical financial statements of each
entity. Results of operations of the combined company will include revenues
and expenses of PLATINUM and Logic Works for the entire fiscal period in which
the combination occurs, and the historical results of operation of the
separate companies for fiscal years prior to the Merger will be combined and
reported as the results of operations of the combined company.
The receipt by each of PLATINUM and Logic Works of a letter from its
respective independent public accountants with respect to pooling of interests
satisfactory to the other party is a condition precedent to the obligation of
each of Logic Works and PLATINUM to consummate the Merger. Certain events,
including certain transactions with respect to PLATINUM Common Stock or Logic
Works Common Stock by affiliates of PLATINUM or Logic Works, respectively, may
prevent the Merger from qualifying as a pooling of interests for accounting
and financial reporting purposes. To support the treatment of the Merger as a
pooling of interests, the affiliates of Logic Works and PLATINUM have entered
into agreements imposing certain resale limitations on their stock. See "--
Certain Federal Securities Law Consequences; Affiliates Agreements."
REGULATORY APPROVALS
The Merger is subject to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder, which
provide that certain acquisition transactions (including the Merger) may not
be consummated until certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the
Federal Trade Commission (the "FTC"), and certain waiting period requirements
have been satisfied. Logic Works and PLATINUM filed the required information
and materials with the Antitrust Division and the FTC and, on April 20, 1998,
received notice of early termination of the applicable waiting period.
Termination of the waiting period does not preclude the Antitrust Division,
the FTC, or any other party from challenging or seeking to delay or enjoin the
Merger on antitrust or other grounds. There can be no assurance that any such
challenge, if made, would not be successful; however, neither Logic Works nor
PLATINUM believes that the Merger will violate the antitrust laws. Any such
action taken or threatened prior to the consummation of the Merger could,
under certain circumstances, relieve Logic Works and PLATINUM of their
respective obligations to consummate the Merger. See "THE MERGER AGREEMENT--
Conditions to the Merger."
CERTAIN FEDERAL SECURITIES LAW CONSEQUENCES; AFFILIATES AGREEMENTS
The PLATINUM Common Stock to be issued in the Merger has been registered
under the Securities Act, thereby allowing such shares to be freely traded
without restriction; provided however that shares held by stockholders of
Logic Works or PLATINUM who are deemed to control, be controlled by or be
under common control with Logic Works or PLATINUM, respectively
("Affiliates"), will not be freely tradeable under the Securities Act.
Affiliates of Logic Works may not sell their shares of PLATINUM Common Stock
acquired in the Merger except pursuant to (i) an effective registration
statement under the Securities Act covering such shares, (ii) the resale
provisions of Rule 145 promulgated under the Securities Act or (iii) another
applicable exemption from the registration requirements of the Securities Act.
In general, Rule 145, as currently in effect, imposes restrictions on the
manner in which such Affiliates may make resales of PLATINUM Common Stock and
also on the number of shares of PLATINUM Common Stock that such Affiliates and
others (including persons with whom the Affiliates act in concert) may sell
within any three-month period. These restrictions will generally apply for at
least a period of one year after the Merger (or longer if the person is an
Affiliate of PLATINUM).
Each Affiliate has been informed that the treatment of the Merger as a
pooling of interests for accounting purposes and as a tax-free reorganization
under the Code is dependent upon the accuracy of certain representations and
warranties made by such Affiliate and compliance with the Affiliates Agreement
(as defined below). The pooling of interests method of accounting generally
will not be challenged on the basis of sales of shares by Affiliates of the
acquiring or acquired company if the Affiliates do not dispose of, or
otherwise reduce their risk with respect to, any of the shares of the
acquiring or acquired company that the Affiliates own or shares
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<PAGE>
of a corporation they receive in connection with a merger during the period
beginning 30 days before the consummation of the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined enterprise have been published.
All Affiliates of PLATINUM and Logic Works have delivered a written
agreement (the "Affiliates Agreement") pursuant to which they have agreed,
among other things, that, (i) during the 30 days prior to the Effective Time,
they will not sell, transfer or otherwise dispose of or reduce their risk with
respect to any shares of Logic Works Common Stock or any shares of PLATINUM
Common Stock held by them and (ii) until such time as financial results
covering at least 30 days of post-Merger combined operations of Logic Works
and PLATINUM have been published by PLATINUM, they will not sell, transfer or
otherwise dispose of or reduce their risk with respect to any shares of
PLATINUM Common Stock received by them pursuant to the Merger or any other
shares of the capital stock of PLATINUM. During the periods described above,
subject to providing written notice to PLATINUM and certain other
restrictions, and to the extent permitted under the pooling of interests
accounting rules and applicable securities laws, Affiliates will be permitted
to sell up to 10% of the PLATINUM Common Stock received by them or Logic Works
Common Stock owned by them or make charitable contributions or bona fide gifts
of the PLATINUM Common Stock received by them or Logic Works Common Stock
owned by them, subject to the same restrictions. Legends restricting the
transfer of such shares of PLATINUM Common Stock will be placed on all
certificates representing such shares.
NASDAQ NATIONAL MARKET LISTING
The shares of PLATINUM Common Stock to be issued in the Merger (including
the issuance of shares of PLATINUM Common Stock issuable upon exercise of
Substitute Options) will be listed on the Nasdaq National Market.
If the Merger is consummated, the Logic Works Common Stock will no longer be
traded on Nasdaq and will be deregistered under the Exchange Act.
NO APPRAISAL OR DISSENTERS' RIGHTS
Holders of Logic Works Common Stock will not be entitled to any dissenter or
appraisal rights under the DGCL in connection with the Merger.
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THE MERGER AGREEMENT
Following is a summary of certain provisions of the Merger Agreement. The
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached to this Proxy
Statement/Prospectus as Appendix A and incorporated herein by reference.
Statements in this Proxy Statement/Prospectus with respect to the terms of the
Merger are qualified in their entirety by reference to the Merger Agreement.
Logic Works stockholders are urged to read the full text of the Merger
Agreement.
CONVERSION OF SHARES IN THE MERGER
At the Effective Time, by virtue of the Merger and without any further
action on the part of Logic Works or PT Acquisition II or any holder of any of
the following securities:
(i) each share of Logic Works Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Logic Works
Common Stock owned by Logic Works, PLATINUM or PT Acquisition II, which
shares of Logic Works Common Stock will be canceled) will be converted into
0.5769 (the "Exchange Ratio") of a share of PLATINUM Common Stock; and
(ii) each issued and outstanding share of Common Stock of PT Acquisition
II will be converted into one share of Logic Works Common Stock as the
surviving corporation.
All shares of Logic Works Common Stock converted as provided in subparagraph
(i) of the preceding paragraph will no longer be outstanding and will
automatically be canceled and retired; and each holder of a Company
Certificate representing immediately prior to the Effective Time any such
shares of Logic Works Common Stock will cease to have any rights with respect
thereto, except the right to receive, as hereinafter described: (i)
certificates representing the number of whole shares of PLATINUM Common Stock
into which such shares of Logic Works Common Stock have been converted, (ii)
any cash in lieu of any fractional share of PLATINUM Common Stock and (iii)
certain dividends and other distributions. See "--Exchange Agent; Procedures
for Exchange of Certificates."
Holders of Logic Works Common Stock who dissent from the Merger are not
entitled to rights of appraisal under Section 262 of the DGCL by virtue of
Sections 262(b)(1) and (2) thereof.
SUBSTITUTION OF OPTIONS
At the Effective Time, each Logic Works Stock Option which is outstanding
immediately prior to the Effective Time pursuant to Logic Works' stock option
plans (other than any "stock purchase plan" within the meaning of Section 423
of the Code) in effect on the date of the Merger Agreement (the "Logic Works
Stock Plans") will be assumed by PLATINUM and be converted into an option to
purchase the number of shares of PLATINUM Common Stock (a "Substitute Option")
(rounded down to the nearest whole share) determined by multiplying (i) the
number of shares of Logic Works Common Stock subject to such Logic Works Stock
Option immediately prior to the Effective Time by (ii) the Exchange Ratio, at
an exercise price per share of PLATINUM Common Stock (rounded up to the
nearest tenth of a cent) equal to the exercise price per share of Logic Works
Common Stock immediately prior to the Effective Time divided by the Exchange
Ratio. PLATINUM shall pay cash to holders of Company Stock Options in lieu of
issuing fractional shares of PLATINUM Common Stock upon the exercise of
Substitute Options for shares of PLATINUM Common Stock, unless in the judgment
of PLATINUM such payment would adversely affect the ability to account for the
Merger under the pooling of interests method. After the Effective Time, each
Substitute Option will continue to be exercisable upon the same terms and
conditions as were applicable under the related Company Stock Option
immediately prior to the Effective Time except for the changes to the number
of shares subject to and the exercise price of the Substitute Options. The
Logic Works Stock Options granted under the automatic option grant program of
the Logic Works 1995 Stock Option/Stock Issuance Plan to Logic Works non-
employee directors will accelerate and become exercisable in full for all the
option shares as fully vested shares immediately prior to the Effective Time.
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FRACTIONAL SHARES
No certificates representing a fractional share of PLATINUM Common Stock
will be issued upon the surrender of Company Certificates for exchange. In
lieu of any such fractional share, each holder of Logic Works Common Stock who
would otherwise have been entitled thereto upon the surrender of Company
Certificates for exchange (after aggregating all fractional shares of PLATINUM
Common Stock to be received by such holder) will be paid an amount in cash
(without interest), rounded to the nearest whole cent, equal to the product of
(i) the fractional share to which such holder would otherwise be entitled,
multiplied by (ii) the average of the closing (last) prices for a share of
PLATINUM Common Stock, as reported on Nasdaq (as reported in The Wall Street
Journal, Midwest Edition), for the most recent ten (10) days that the shares
of PLATINUM Common Stock have traded (the "Share Value") ending on the trading
day immediately prior to the Effective Time.
ADJUSTMENT OF EXCHANGE RATIO
In the event of any reclassification, stock split or stock dividend with
respect to PLATINUM Common Stock, any change or conversion of PLATINUM Common
Stock into other securities or any other dividend or distribution with respect
to PLATINUM Common Stock (or if a record date with respect to any of the
foregoing should occur) prior to the Effective Time, appropriate and
proportionate adjustments, if any, will be made to the conversion Exchange
Ratio.
EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF LOGIC WORKS CERTIFICATES
Harris Trust and Savings Bank will act as Exchange Agent under the Merger
Agreement. Promptly after the Effective Time, PLATINUM will make available to
the Exchange Agent, through such reasonable procedures as PLATINUM may adopt,
the shares of PLATINUM Common Stock issuable pursuant to the Merger Agreement
in exchange for the outstanding shares of Logic Works Common Stock, and cash
sufficient for payment in lieu of a fractional share of PLATINUM Common Stock.
Promptly after the Effective Time, the Exchange Agent will cause to be
mailed to each holder of record of a certificate or certificates (the "Logic
Works Certificates") which immediately prior to the Effective Time represented
outstanding Logic Works Common Stock whose shares were converted into shares
of PLATINUM Common Stock pursuant to the Merger Agreement, (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to Logic Works Certificates shall pass, only upon delivery of Logic
Works Certificates to the Exchange Agent, such letter of transmittal to be in
such customary form and have such other provisions as PLATINUM may reasonably
specify, and (ii) instructions for use in effecting the surrender of Company
Certificates in exchange for certificates representing shares of PLATINUM
Common Stock. Upon surrender of a Logic Works Certificate for cancellation to
the Exchange Agent or to such other agent as may be appointed by PLATINUM,
together with such letter of transmittal, duly completed and validly executed,
the holder of such Logic Works Certificate will be entitled to receive in
exchange therefor a certificate representing the number of whole shares of
PLATINUM Common Stock into which the shares represented by the surrendered the
Logic Works Certificate will have been converted at the Effective Time
pursuant to the Merger Agreement, payment in lieu of fractional shares and
certain dividends and other distributions in accordance with the Merger
Agreement, and the Logic Works Certificate so surrendered will forthwith be
canceled. Until so surrendered, each outstanding certificate that, prior to
the Effective Time, represented a share of Logic Works Common Stock will be
deemed from and after the Effective Time, for all corporate purposes, other
than the payment of dividends or other distributions, to evidence the
ownership of the number of whole shares of PLATINUM Common Stock into which
such shares of Logic Works Common Stock will have been so converted and the
right to receive an amount in cash in lieu of the issuance of a fractional
share of PLATINUM Common Stock.
No dividends or other distributions declared or made after the date of the
Merger Agreement with respect to PLATINUM Common Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered Logic
Works Certificate with respect to the shares of PLATINUM Common Stock
represented thereby until the holder of record of such Logic Works Certificate
surrenders such Logic Works Certificate.
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Subject to applicable law, following surrender of any such Logic Works
Certificate, there will be paid to the record holder of the certificates
representing whole shares of PLATINUM Common Stock issued in exchange
therefor, without interest: (i) at the time of such surrender or as promptly
as practicable thereafter, the amount of any dividends or other distributions
theretofore paid with respect to the shares of PLATINUM Common Stock
represented by such new certificate and having a record date on or after the
Effective Time and a payment date prior to such surrender; (ii) at the
appropriate payment date or as promptly as practicable thereafter, the amount
of any dividends or other distributions theretofore payable with respect to
such shares of PLATINUM Common Stock and having a record date on or after the
Effective Time but prior to such surrender and a payment date on or subsequent
to such surrender; and (iii) at the time of such surrender or as promptly as
practicable thereafter, the amount of any cash payable with respect to a
fractional share of PLATINUM Common Stock to which such holder is entitled.
If any certificate for shares of PLATINUM Common Stock is to be issued in a
name other than that in which the Logic Works Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance
thereof that the Logic Works Certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have (i) paid to PLATINUM or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of PLATINUM Common Stock in any name
other than that of the registered holder of the Logic Works Certificate, or
(ii) established to the satisfaction of PLATINUM or any agent designated by it
that such tax has been paid or is not payable.
All shares of PLATINUM Common Stock issued in accordance with the terms of
the Merger Agreement (including any cash paid in respect thereof) will be
deemed to have been issued in full satisfaction of all rights pertaining to
the Logic Works Common Stock, and there will be no further registration of
transfers on the records of the Surviving Corporation of shares of Logic Works
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Logic Works Certificates are presented to the
Surviving Corporation for any reason, they will be canceled and exchanged as
provided in the Merger Agreement.
REPRESENTATIONS AND COVENANTS
Under the Merger Agreement, PLATINUM and Logic Works made certain
representations and warranties that each is duly organized and validly
existing and that each has authority to enter into the Merger Agreement.
PLATINUM and Logic Works also made a number of representations and warranties
to each other, including those regarding: (i) their respective capital
structure; (ii) corporate power and authority; (iii) required Commission
filings and financial statements; (iv) absence of certain changes or events;
(v) the absence of undisclosed liabilities; (vi) pooling of interests
accounting treatment; (vii) the absence of litigation; (viii) the Registration
Statement and Proxy Statement/Prospectus; (ix) employee benefits; (x)
intellectual property; (xi) Board approval; (xii) the absence of brokers' and
finders' fees; and (xiii) the receipt of a fairness opinion.
Logic Works also made certain representations regarding, among other things:
(i) obligations with respect to capital stock; (ii) taxes; (iii) restrictions
on business activities; (iv) absence of liens and encumbrances; (v) absence of
certain agreements, contracts and commitments; (vi) governmental
authorizations; (vii) insurance; (viii) labor matters; (ix) relationships with
related persons; (x) certain change of control payments; (xi) no defaults; and
(xii) state antitakeover statutes. All representations and warranties of Logic
Works and PLATINUM will terminate as of the Effective Time.
Under the Merger Agreement, the parties make certain agreements and
covenants with respect to actions to be taken in connection with the Merger.
Each of Logic Works and PLATINUM agrees to use its reasonable commercial
efforts to, in accordance with the terms of the Merger Agreement, (i) cause
the business combination to be effected by the Merger to be accounted for as a
pooling of interests; (ii) deliver to the other party the letter of its
independent public accountant regarding the Registration Statement; (iii)
deliver or cause to be delivered to the other party an executed Affiliates
Agreement from each of its Affiliates; (iv) comply with all legal requirements
imposed on it with respect to the consummation of the Merger (including, on
the part of
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PLATINUM, all federal and state securities laws applicable to the issuance of
the PLATINUM Common Stock pursuant to the Merger); (v) effectuate the
transactions contemplated by the Merger Agreement and fulfill or cause to be
fulfilled each of the conditions precedent to the consummation of the Merger;
and (vi) cause the Merger to be treated as a reorganization within the meaning
of Section 368 of the Code.
CONDUCT OF LOGIC WORKS' BUSINESS PRIOR TO THE MERGER
Under the Merger Agreement, Logic Works agreed, during the period from the
date of the Merger Agreement and continuing until the earlier of the
termination of the Merger Agreement pursuant to its terms and the Effective
Time, except to the extent that PLATINUM otherwise consents in writing, that
Logic Works will carry on its business in the usual, regular and ordinary
course in substantially the same manner as theretofore conducted, to timely
pay its debts and taxes when due, subject to good faith disputes over such
debts or taxes, to collect its receivables in the same manner and on the same
terms such receivables have historically been collected, to timely pay or
perform other material obligations when due, and to use commercially
reasonable efforts consistent with past practices and policies to preserve
intact Logic Works' present business organizations, to keep available the
services of its present officers and employees and preserve its relationships
with customers, suppliers, distributors, licensors, licensees, and others
having business dealings with Logic Works, to the end that Logic Works'
goodwill and ongoing business be unimpaired at the Effective Time. Among other
things, Logic Works agreed that, except as expressly provided for in the
Merger Agreement, it will not, without the prior written consent of PLATINUM,
which consent will not be unreasonably withheld or delayed: (i) except as
required by Logic Works' benefit plans and agreements, accelerate, amend or
change the period of exercisability of options or restricted stock, reprice
options granted under Logic Works Stock Option Plans, or authorize cash
payments in exchange for any options granted under such plans; (ii) enter into
partnership agreements, joint development agreements, or strategic alliance
agreements; (iii) except as required by Logic Works' Plans (as defined in the
Merger Agreement) grant any severance or termination pay (a) to any executive
officer or (b) to any other employee except payments made in connection with
the termination of employees who are not executive officers in amounts
consistent with Logic Works' policies and past practices or pursuant to
written agreements outstanding, or policies existing, on the date of the
Merger Agreement and as previously disclosed in writing to PLATINUM; (iv)
other than in the ordinary course of business consistent with past practices,
transfer or license to any person or entity or otherwise extend, amend or
modify any rights to Logic Works' Intellectual Property Rights (as defined in
the Merger Agreement) (including rights to resell or relicense Logic Works
Intellectual Property Rights), or enter into grants to future patent rights,
other than Logic Works' standard forms of End-User Licenses (as defined in the
Merger Agreement) entered into in the ordinary course of business consistent
with past practices; (v) commence any litigation other than for (a) routine
collection of bills, (b) for software piracy or (c) in such cases where Logic
Works in good faith determines that failure to commence suit would result in
the material impairment of a valuable aspect of Logic Works' business; (vi)
declare or pay any dividends on or make any other distributions (whether in
cash, stock or property) in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of the capital stock of Logic Works; (vii) repurchase or otherwise
acquire, directly or indirectly, any of its capital stock; (viii) with certain
exceptions as set forth in the Merger Agreement, issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, any shares of its
capital stock of any class or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or enter into other agreements or
commitments of any character obligating Logic Works to issue any such shares
or other convertible securities; (ix) cause, permit or propose any amendments
to the Logic Works Charter or Bylaws or amend any material contract; (x) sell,
lease, license, encumber or otherwise dispose of any of Logic Works'
properties or assets which are material, individually or in the aggregate, to
its business, except in the ordinary course of business; (xi) incur any
indebtedness for borrowed money, other than certain borrowings in the ordinary
course of business, consistent with past practice, or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire debt securities of Logic Works or guarantee any debt securities of
others; (xii) except as required by law, adopt or amend any Company Plan (as
defined in the Merger Agreement) or increase the salaries or wage rates of any
of its employees (except for wage increases in the ordinary course of business
consistent with past practices); (xiii) revalue any of Logic Works' assets
other than
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in the ordinary course of business consistent with past practice, or waive any
right of material value; (xiv) pay, discharge or otherwise satisfy in an
amount in excess of $100,000 (in any one case) or $250,000 (in the aggregate)
any claim, liability or obligation, other than in the ordinary course of
business; (xv) except as required by law, alter or make any material tax
election, materially change any tax accounting method or file any material tax
return or settle tax claims; (xvi) intentionally take any action which would
be reasonably likely to interfere with accounting for the Merger as a pooling
of interests; (xvii) enter into any Material Contract (as defined in the
Merger Agreement) other than in the usual, regular and ordinary course of
business consistent with past practices and policies; or (xviii) take, or
agree in writing or otherwise to take, any of the actions described in clauses
(i)-(xvii) above, or any action which would cause or would be reasonably
likely to cause any of the conditions to the Merger not to be satisfied.
CONDUCT OF PLATINUM'S BUSINESS PRIOR TO THE MERGER
Under the Merger Agreement, PLATINUM, during the period from the date of the
Merger Agreement and continuing until the earlier of the termination of the
Merger Agreement pursuant to the terms and the Effective Time, except to the
extent Logic Works otherwise consents in writing, which consent will not be
unreasonably withheld or delayed, will not adopt any amendments to its
Certificate of Incorporation, or take any other action requiring a vote of the
holders of PLATINUM Common Stock which, in either case, would materially
adversely affect the terms and provisions of PLATINUM Common Stock, or take,
or agree in writing or otherwise to take, any of the foregoing actions.
NO SOLICITATION
The Merger Agreement provides that from the date of the Merger Agreement
until the Effective Time or the earlier termination of the Merger Agreement,
subject to certain exceptions described below, Logic Works and its
subsidiaries will not, and will not permit their respective directors,
officers and investment bankers to, and will use their best efforts to cause
their respective employees, representatives and other agents not to, directly
or indirectly, (i) solicit, initiate, or encourage any inquiries or proposals
that constitute, or could reasonably be expected to lead to, any Acquisition
Proposal (as defined below), (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity in
connection with, any Acquisition Proposal, or (iii) agree to, approve, or
recommend or otherwise endorse or support any Acquisition Proposal. Under the
Merger Agreement, an "Acquisition Proposal" means any proposal relating to the
possible acquisition of Logic Works, whether by way of (i) merger, (ii)
purchase of capital stock of Logic Works representing twenty percent (20%) or
more of the voting power or equity of Logic Works, (iii) purchase of 50% or
more of the aggregate assets of Logic Works and its subsidiaries, taken as a
whole, (iv) any transaction in which any person or "group" shall acquire
beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange
Act), or the right to acquire beneficial ownership, of 20% or more of the
outstanding Logic Works Common Stock, (v) any liquidation, dissolution, or
other similar transaction, or (vi) any transaction which is similar in
substance, form or purpose to the above.
Notwithstanding the foregoing, prior to the approval of the Merger Agreement
by the stockholders of Logic Works at the Meeting, Logic Works or its Board of
Directors may (i) furnish non-public information to, or enter into discussions
with, any person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such party; provided that (a) such Acquisition
Proposal would, if consummated, in the good faith reasonable judgment of Logic
Works' Board, and based upon the advice of its financial advisors, result in a
transaction materially more favorable to the stockholders of Logic Works from
a financial point of view (including consideration of, among other matters,
the ability of the person or entity making such Acquisition Proposal to obtain
any financing necessary for the Acquisition Proposal) than the Merger (any
such materially more favorable Acquisition Proposal being referred to herein
as a "Superior Proposal"), (b) any non-public information is provided pursuant
to a confidentiality agreement at least as restrictive as the confidentiality
agreement between Logic Works and PLATINUM in all material respects and (c)
the failure to take such action would constitute a breach of the fiduciary
duties of Logic Works Board to Logic Works stockholders under
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Delaware law in the reasonable good faith judgment of the Board based upon the
advice of Logic Works outside corporate counsel, or (ii) comply with Rule 14d-
9 and Rule 14e-2 of the Exchange Act or other applicable law with regard to an
Acquisition Proposal. Notwithstanding the foregoing, the Logic Works will
provide to PLATINUM, within 24 hours of providing any non-public information
to any third party, such non-public information if Logic Works has not
previously provided such information to PLATINUM.
In the event Logic Works receives a Superior Proposal prior to the approval
of the Merger Agreement and the Merger at the Meeting, nothing contained in
the Merger Agreement shall prevent the Board of Logic Works from accepting or
approving such Superior Proposal or recommending such Superior Proposal to
Logic Works' stockholders, if the Board reasonably determines in good faith,
based upon the advice of Logic Works' outside corporate counsel, that the
failure to take such action would constitute a breach of the fiduciary duties
of the Logic Works' Board to Logic Works' stockholders under Delaware law; in
such case, the Board may amend, withhold or withdraw its recommendation of the
Merger. Notwithstanding the foregoing, Logic Works shall provide not less than
three (3) days prior written notice to PLATINUM before accepting or approving
a Superior Proposal.
Logic Works must notify PLATINUM within twenty-four (24) hours (i) if a bona
fide written Acquisition Proposal is made or is modified in any material
respect (including the principal terms and conditions of any such Acquisition
Proposal or modification and the identity of the offeror) or (ii) Logic Works
furnishes non-public information to, or enters into discussions or
negotiations with respect to an Acquisition Proposal with, any person or
entity.
INDEMNIFICATION
The Merger Agreement provides that, after the Effective Time, PLATINUM must,
and must cause Logic Works as the surviving corporation to, indemnify, defend
and hold harmless (and advance expenses to) all past and present officers,
directors and employees of Logic Works and of its subsidiaries to the same
extent such persons are indemnified as of the date of the Merger Agreement by
Logic Works pursuant to any agreements between Logic Works and any such person
and Logic Works' Second Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and Bylaws, for acts or omissions occurring at
or prior to the Effective Time, and must obtain, or continue the existing,
director and officer insurance for a period of three years after the Effective
Date with substantially the same coverage as provided on the Effective Date.
In the event of any dispute regarding whether a director, officer or employee
has met the standards of conduct set forth therein, such question will be
conclusively determined by the written opinion of reputable disinterested
legal counsel selected by Logic Works' Board. Any heirs or legal
representatives entitled to the benefits of such indemnification will be
deemed express third party beneficiaries of such indemnification.
CONDITIONS TO THE MERGER
In addition to the approval of the Merger Agreement by the stockholders of
Logic Works, the obligations of PLATINUM and Logic Works to consummate the
Merger will be subject to the satisfaction of a number of other conditions
including, among others: (i) effectiveness of the Registration Statement; (ii)
the absence of any stop order suspending the effectiveness of the Registration
Statement or any proceeding by the Commission for that purpose or any similar
proceeding in respect of the Proxy Statement; (iii) the absence of any
temporary restraining order, preliminary or permanent injunction or other
court order or other legal or regulatory restraint preventing the consummation
of the Merger; (iv) the expiration or termination of the applicable Hart-
Scott-Rodino Antitrust Improvements Act waiting period; (v) the receipt of
each party's respective accountants' letter in form and substance reasonably
satisfactory to the appropriate party with regard to pooling of interests
treatment; (vi) the authorization for listing on the Nasdaq National Market of
the shares of PLATINUM Common Stock issuable to stockholders of Logic Works
pursuant to the Merger; and (vii) the receipt of all necessary material
governmental consents or authorizations. Additionally, the obligations of
PLATINUM and Logic Works and PT Acquisition II will also be conditioned upon,
among others: (i) the accuracy as of the date of the Merger Agreement of the
representations and warranties made by the other party in all material
respects (with certain
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exceptions and qualifications); (ii) performance in all material respects by
the other party of its agreements and covenants (iii) the absence of any
Material Adverse Effect (as defined in the Merger Agreement) on PLATINUM or
Logic Works; provided that, no event, change or effect that results primarily
from the announcement or pending status of the Merger shall be deemed to have,
individually or in the aggregate, a Material Adverse Effect on Logic Works;
(iv) executed Affiliates Agreements and (v) the receipt of certain tax
opinions.
The obligations of PLATINUM and PT Acquisition II to consummate the Merger
are also subject to the receipt of all necessary third party consents.
TERMINATION
The Merger Agreement may be terminated (i) by mutual written consent of
Logic Works and PLATINUM; (ii) by either party if (a) there has been a
material breach by the other party of any representation, warranty, covenant
or other agreement set forth in the Merger Agreement such that the breach
causes certain conditions with respect to such representations, warranties or
agreements not to be satisfied upon consummation of the merger and such breach
has not been cured within twenty (20) business days after written notice
(provided that the party seeking termination is not in material breach of the
terms of the Merger Agreement; and provided further that no cure period is
required for a breach which by its nature cannot be cured), (b) the Merger is
not approved by Logic Works' stockholders at the Meeting, (c) the Merger is
not consummated by July 31, 1998, and the party seeking termination has not
caused the delay by willfully failing to fulfill any material obligation under
the Merger Agreement, and if the party seeking termination is Logic Works,
then not during a cure period for the breach of its obligations to call the
Meeting and recommend the Merger, (d) there is a final, non-appealable order
of a Federal or state court in effect preventing consummation of the Merger,
(e) there is any final action taken, or any statute, rule, regulation or order
enacted, promulgated or issued and deemed applicable to the Merger by any
governmental entity which would make consummation of the Merger illegal or
which would prohibit PLATINUM's ownership or operation of all or a material
portion of Logic Works' business, or compel PLATINUM to dispose of or hold
separate all or a material portion of the business or assets of Logic Works or
PLATINUM, or (f) Logic Works' Board of Directors accepts or approves a
Superior Proposal, or recommends a Superior Proposal to Logic Works'
stockholders, provided that Logic Works may not terminate under this provision
if it is in violation of its non-solicitation obligations set forth above;
(iii) by PLATINUM if (a) the Logic Works Board of Directors adversely amends,
withholds or withdraws its recommendation of the Merger or shall have resolved
or publicly announced its intention to recommend or enter into an agreement
with respect to an Acquisition Proposal, (b) a tender offer or exchange offer
for twenty percent (20%) or more of the outstanding shares of Logic Works
Common Stock shall have been commenced or a registration statement with
respect thereto shall have been filed (other than by PLATINUM or an affiliate
thereof) and Logic Works' Board of Directors shall have (x) recommended that
Logic Works' stockholders tender their shares in such tender or exchange offer
or (y) publicly announced its intention to take no position with respect to
such tender offer, (c) Logic Works breaches any provisions of the Merger
Agreement with respect to non-solicitation, or (d) the Merger is not submitted
to Logic Works' stockholders in accordance with the Merger Agreement and such
breach has not been cured after twenty (20) days written notice from PLATINUM
(provided that PLATINUM is not in material breach of the Merger Agreement); or
(iv) by Logic Works if the Share Value, at any time from the date of the
Merger Agreement and prior to the date of the Meeting, is less than $22.00.
Clauses (iii)(a), (iii)(b) and (iii)(c) above shall each constitute a "Logic
Works Negative Event."
EXPENSES AND TERMINATION FEE
Whether or not the Merger is consummated, except as described below, each
party will bear its own costs and expenses in connection with the Merger
Agreement and the transactions provided for therein. However, if there is a
claim, dispute, disagreement or other conflict involving the enforcement of
Article V of the Merger Agreement, the prevailing party will be reimbursed by
the other party for all reasonable attorneys' fees and costs and expenses
associated with such conflict.
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If the Merger Agreement is terminated because Logic Works' stockholders do
not approve the Merger and a Logic Works Negative Event has not occurred on or
prior to such termination, then, so long as PLATINUM is not in material breach
of the terms of the Merger Agreement, Logic Works must pay to PLATINUM, within
ten (10) days following PLATINUM's written request therefor, an amount equal
to the reasonable out-of-pocket expenses of PLATINUM, including but not
limited to attorneys' fees, accounting fees, financial printer fees, filing
fees and fees and expenses of financial advisors, in each case incurred in
connection with the Merger Agreement and the Merger, but in no event in excess
of $1,500,000 in the aggregate ("Expenses") by wire transfer of immediately
available funds to an account designated by PLATINUM. No fee or Expenses shall
be payable by Logic Works to PLATINUM pursuant to the foregoing provisions if
either (i) Share Value of PLATINUM common stock, at any time between the date
of the Merger Agreement and the date of the Meeting, is less than $22.00 or
(ii) the closing (last) price for a share of PLATINUM common stock is less
than $22.00 on the trading date immediately preceding the Meeting.
If the Merger Agreement is terminated because (1) (a) a Logic Works Negative
Event has occurred, (b) Logic Works has not taken all action necessary in
accordance with the Delaware Law and the Logic Works Charter and Bylaws to
convene the Meeting and Logic Works has not cured such breach within twenty
(20) days written notice from PLATINUM, or (c) Logic Works' Board accepts or
approves a Superior Proposal or recommends a Superior Proposal to the
stockholders of Logic Works, or (2) Logic Works' stockholders do not approve
the Merger at the Meeting and a Company Negative Event has occurred on or
prior to such termination, then so long as PLATINUM is not then in material
breach of the terms of the Merger Agreement, Logic Works must pay to PLATINUM,
within ten (10) days following PLATINUM's written request therefor, the
aggregate sum equal to $6,000,000 plus Expenses, by wire transfer of
immediately available funds to an account designated by PLATINUM.
EMPLOYEE BENEFITS
PLATINUM has agreed to cause Logic Works as the surviving corporation from
and after the Effective Time to honor all employee benefit plans and
arrangements and all employee agreements applicable to Logic Works' employees
entered into prior to the date of the Merger Agreement. As soon as practicable
following the Effective Time, PLATINUM will offer to employees who remain
employed by Logic Works employee benefit and fringe benefit plans, programs,
policies and arrangements that are substantially the same as PLATINUM
maintains for its similarly situated employees.
AMENDMENT OF MERGER AGREEMENT
The Merger Agreement may be amended at any time by execution of an
instrument in writing signed on behalf of each of the parties thereto.
EXTENSION; WAIVER
At any time prior to the Effective Time, any party to the Merger Agreement
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties thereto, (ii) waive
any inaccuracies in the representations and warranties made to such party
contained in the Merger Agreement or in any document delivered pursuant
thereto and (iii) waive compliance with any of the agreements or conditions
for the benefit of such party contained in the Merger Agreement. However, any
agreement on the part of a party to the Merger Agreement to any such extension
or waiver will be valid only if set forth in an instrument in writing signed
on behalf of such party.
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COMPARATIVE PER SHARE MARKET PRICE DATA
LOGIC WORKS
Logic Works Common Stock is traded on Nasdaq under the symbol "LGWX."
PLATINUM Common Stock is traded on Nasdaq under the symbol "PLAT."
The table below sets forth, for the periods indicated, the reported high and
low closing sale prices for Logic Works Common Stock and high and low sale
prices PLATINUM Common Stock on Nasdaq.
<TABLE>
<CAPTION>
PRO FORMA
PRICE
PER SHARE OF
LOGIC WORKS
LOGIC WORKS COMMON PLATINUM
COMMON STOCK STOCK(1) COMMON STOCK
------------- ------------- -------------
FISCAL PERIOD HIGH LOW HIGH LOW HIGH LOW
- ------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1996
Quarter ended March 31(2)............. $18.50 $11.25 $10.82 $ 6.49 $18.75 $11.25
Quarter ended June 30................. 21.25 12.00 10.82 7.36 18.75 12.75
Quarter ended September 30............ 13.00 7.75 9.16 5.34 15.88 9.25
Quarter ended December 31............. 8.63 5.50 8.94 6.13 15.50 10.63
1997
Quarter ended March 31................ 8.13 5.50 10.31 6.27 17.88 10.88
Quarter ended June 30................. 7.00 4.88 8.55 6.06 14.81 10.50
Quarter ended September 30............ 9.88 5.81 14.42 7.28 25.00 12.63
Quarter ended December 31............. 12.75 7.94 17.78 11.61 30.81 20.13
1998
Quarter ended March 31................ 14.06 7.75 17.96 12.76 31.13 22.13
Quarter beginning April 1
(through April 20, 1998)............. 15.13 12.75 16.37 12.98 28.38 22.50
</TABLE>
- --------
(1) Determined by multiplying the applicable prices for PLATINUM Common Stock
by the Exchange Ratio of 0.5769.
(2)Shares of LGWX started trading on October 17, 1995.
As of March 13, 1998, the last trading day before the announcement of the
Merger, the last reported sales price on Nasdaq for the Logic Works Common
Stock was $13.56 and for the PLATINUM Common Stock was $26.56. On April 20,
1998, the latest practicable trading day before the printing of this Proxy
Statement/Prospectus, the last reported sales price on Nasdaq for the Logic
Works Common Stock was $15.00 and for the PLATINUM Common Stock was $26.56.
As of April 20, 1998, there were approximately 115 record holders of Logic
Works Common Stock. Logic Works has not paid any cash dividends on the Logic
Works Common Stock in the last two fiscal years and does not currently intend
to pay any cash dividends in the foreseeable future. As of April 20, 1998,
there were approximately 917 record holders of PLATINUM Common Stock. PLATINUM
has not paid dividends on the PLATINUM Common Stock, and the PLATINUM Board
intends to continue a policy of retaining earnings to finance its growth and
for general corporate purposes. PLATINUM does not anticipate paying any cash
dividends in the foreseeable future.
41
<PAGE>
PLATINUM SELECTED CONSOLIDATED FINANCIAL DATA (1)
The selected consolidated financial data set forth below has been derived
from the historical financial statements of PLATINUM. The selected
consolidated financial data should be read in conjunction with "PLATINUM
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes
thereto incorporated by reference herein. See "Available Information" and
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
--------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenues........ $ 623,503 $468,065 $ 326,411 $243,607 $190,623
Operating income
(loss)............... (115,792)(2) (79,404)(3) (127,377)(4) (517)(5) 3,062(6)
Net income (loss)..... (117,784)(2) (64,922)(3) (111,567)(4) (1,562)(5) 126(6)
Net income (loss) per
share................ $ (1.90)(2) $ (1.14)(3) $ (2.50)(4) $ (0.04)(5) $ -- (6)
Shares used in per
share calculation.... 62,042 56,968 44,671 41,294 39,375
Other Operating Data:
Ratio of earnings to
fixed
charges (7).......... -- (2)(8) -- (3)(8) -- (4)(8) 7.49 (5) 10.47(6)
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
--------- -------- --------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents
and investments...... $ 261,288 $185,673 $ 136,737 $126,215 $ 71,148
Working capital....... 288,349 217,157 127,990 90,500 43,672
Total assets.......... 834,177 618,572 452,267 273,333 176,064
Long-term obligations
and acquisition-
related payables,
less current portion. 285,144 118,305 11,389 9,080 3,465
Total stockholders'
equity............... $ 243,560 $295,760 $ 290,213 $160,126 $ 93,350
</TABLE>
- --------
(1) The selected consolidated financial data give retroactive effect to the
acquisitions of ATR as of January 31, 1997 and I&S as of February 28,
1997, each of which has been accounted for as a pooling of interests for
financial reporting purposes. As a result, the financial position and
results of operations are presented as if the combining companies had been
consolidated for all periods presented.
(2) Reflects a pre-tax charge for acquired in-process technology of
$67,904,000 relating to PLATINUM's acquisitions of GEJAC and ProMetrics,
the purchase of certain product technologies and other intangible assets
from Intel and the purchase of certain other product technologies. Also
reflects a pre-tax charge for merger costs of $8,927,000 relating to
PLATINUM's acquisitions of ATR, I&S and Vayda and a pre-tax charge of
$57,319,000 for restructuring costs.
(3) Reflects a pre-tax charge for acquired in-process technology of
$48,456,000 relating to PLATINUM's acquisitions of AST, Software
Alternatives, Grateful Data and VREAM; substantially all of the assets of
Access Manager; and certain product technologies. Also reflects a pre-tax
charge for merger costs of $5,782,000 relating primarily to PLATINUM's
acquisitions of Prodea, Paradigm and Axis.
(4) Reflects a pre-tax charge for acquired in-process technology of
$88,493,000 relating primarily to PLATINUM's acquisitions of ASC, SQL,
Reltech, Protellicess, AIB and BMS and the net assets of ViaTech,
BrownStone and ProtoSoft and to certain product acquisitions. Also
reflects a pre-tax charge for merger costs of $30,819,000 relating to
PLATINUM's acquisitions of SII, Answer, Locus, Altai, Trinzic and Softool.
42
<PAGE>
(5) Reflects a pre-tax charge for acquired in-process technology of
$24,594,000 relating primarily to PLATINUM's acquisitions of Dimeric and
the net assets of Aston Brooke and AutoSystems.
(6) Reflects a pre-tax charge for acquired in-process technology of $8,735,000
relating primarily to PLATINUM's acquisition of Datura and a pre-tax
charge of $4,659,000 relating to Trinzic and Locus restructuring costs.
(7) 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
expense plus capitalized interest and the portion of rental expense which
represents interest).
(8) Earnings available for fixed charges of $(89,933,000), $(72,342,000) and
$(122,465,000) were inadequate to cover fixed charges of $9,130,000,
$1,825,000 and $782,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
43
<PAGE>
LOGIC WORKS SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected historical financial data for Logic
Works for each of the five years in the period ended December 31, 1997, which
data has been derived from Logic Works' audited consolidated financial
statements contained in Logic Works' Annual Report on Form 10-K for the year
ended December 31, 1997. Such Logic Works selected historical financial data
should be read in conjunction with the audited consolidated financial
statements, including the notes thereto, and other financial information
contained in Logic Works' Annual Report on Form 10-K for the year ended
December 31, 1997, incorporated by reference herein. See "Available
Information" and "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
License fees......................... $37,161 $33,017 $25,255 $11,639 $3,855
Maintenance & service fees........... 13,353 9,523 5,433 1,663 370
Total revenues....................... 50,514 42,540 30,688 13,302 4,225
Operating income (loss).............. 6,017 (4,796) 2,152 1,161 678
Net income (loss).................... 4,606 (3,062) 1,407 701 413
Diluted earnings (loss) per common
share............................... $ 0.36 $ (0.27) $ 0.14 $ 0.07 $ 0.05
Shares used in per share
computation(1)...................... 12,859 11,335 10,373 9,721 7,716
BALANCE SHEET DATA:
Working capital...................... $37,168 $28,297 $30,896 $ 1,300 $1,647
Total assets......................... 59,450 48,369 43,891 6,551 2,923
Total debt........................... -- -- -- -- --
Redeemable preferred stock........... -- -- -- 1,801 1,709
Total stockholders' equity........... $43,298 $34,315 $33,517 $ 1,010 $ 131
</TABLE>
- --------
(1) For an explanation of the number of shares used to compute diluted
earnings (loss) per share, see Note 2 of Notes to Consolidated Financial
Statements of Logic Works contained in the Logic Works Annual Report on
Form 10-K for the year ended December 31, 1997 incorporated by reference
herein.
44
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL DATA
The following unaudited pro forma condensed combined financial data are
qualified in their entirety by reference to, and should be read in conjunction
with, the historical consolidated financial statements of PLATINUM and Logic
Works and notes thereto that are included elsewhere or incorporated by
reference in this Proxy Statement/Prospectus.
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PLATINUM LOGIC WORKS
HISTORICAL HISTORICAL PRO FORMA
DECEMBER 31, DECEMBER 31, PRO FORMA DECEMBER 31,
ASSETS 1997 1997 ADJUSTMENTS 1997
- ------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents. $178,138 $26,186 $ -- $204,324
Short-term investments
securities............... 57,597 12,188 -- 69,785
Trade accounts receivable,
net...................... 212,731 11,211 -- 223,942
Installment accounts
receivable, net.......... 30,043 -- -- 30,043
Other current assets...... 32,679 3,735 -- 36,414
-------- ------- ------ --------
Total current assets.... 511,188 53,320 -- 564,508
-------- ------- ------ --------
Non-current investment
securities................. 25,553 -- -- 25,553
Property and equipment, net. 77,842 4,305 -- 82,147
Purchased and developed
software, net.............. 116,717 496 -- 117,213
Excess of cost over net
assets acquired, net....... 52,759 -- -- 52,759
Non-current installment
receivables, net........... 21,912 -- -- 21,912
Other assets................ 28,206 1,354 -- 29,560
-------- ------- ------ --------
Total assets............ $834,177 $59,475 $ -- $893,652
======== ======= ====== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C> <C> <C>
Current liabilities:
Acquisition-related
payables................. $ 15,717 $ -- $ -- $ 15,717
Accounts payable.......... 16,091 1,923 -- 18,014
Accrued restructuring
costs.................... 6,308 247 -- 6,555
Other accrued liabilities. 67,030 7,176 -- 74,206
Current maturities of
long-term obligations.... 1,319 -- -- 1,319
Deferred revenue.......... 116,374 6,806 -- 123,180
-------- ------- ------ --------
Total current
liabilities............ 222,839 16,152 -- 238,991
-------- ------- ------ --------
Acquisition-related
payables................... 18,320 -- -- 18,320
Deferred revenue............ 60,435 -- -- 60,435
Deferred rent............... 6,197 -- -- 6,197
Accrued restructuring costs. 16,002 -- -- 16,002
Long-term obligations, net
of current maturities...... 266,824 -- -- 266,824
-------- ------- ------ --------
Total liabilities....... 590,617 16,152 -- 606,769
-------- ------- ------ --------
Total stockholders' equity.. 243,560 43,323 -- 286,883
-------- ------- ------ --------
Total liabilities and
stockholders' equity... $834,177 $59,475 $ -- $893,652
======== ======= ====== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combining financial
statements.
45
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PLATINUM LOGIC WORKS
HISTORICAL HISTORICAL PRO FORMA
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, PRO FORMA DECEMBER 31,
1997 1997 ADJUSTMENTS 1997
------------ ------------ ----------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Software products......... $ 357,223 $37,161 $ -- $ 394,384
Maintenance............... 125,245 10,789 -- 136,034
Professional services..... 141,035 2,564 -- 143,599
--------- ------- ------ ---------
Total revenues.......... 623,503 50,514 -- 674,017
--------- ------- ------ ---------
Costs and expenses:
Professional services..... 127,499 2,246 -- 129,745
Product development and
support.................. 187,383 8,398 -- 195,781
Sales and marketing....... 228,387 27,707 -- 256,094
General and
administrative........... 61,876 6,146 -- 68,022
Restructuring charges..... 57,319 -- -- 57,319
Merger costs.............. 8,927 -- -- 8,927
Acquired in-process
technology............... 67,904 -- -- 67,904
--------- ------- ------ ---------
Total costs and
expenses............... 739,295 44,497 -- 783,792
--------- ------- ------ ---------
Operating income (loss)..... (115,792) 6,017 -- (109,775)
Other income, net........... 16,729 1,346 -- 18,075
--------- ------- ------ ---------
Income (loss) before income
taxes...................... (99,063) 7,363 -- (91,700)
Income taxes................ 18,721 2,757 -- 21,478
--------- ------- ------ ---------
Net income (loss)........... $(117,784) $ 4,606 $ -- $(113,178)
========= ======= ====== =========
Net income (loss) per share. $ (1.90) $ 0.38 $ -- $ (1.64)
========= ======= ====== =========
Shares used in computing net
income (loss) per share.... 62,042 12,125 -- 69,037
</TABLE>
See accompanying notes to unaudited pro forma condensed combining financial
statements.
46
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PLATINUM LOGIC WORKS
HISTORICAL HISTORICAL PRO FORMA
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, PRO FORMA DECEMBER 31,
1996 1996 ADJUSTMENTS 1996
------------ ------------ ----------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Software products......... $243,938 $33,017 $ -- $276,955
Maintenance............... 102,364 6,717 -- 109,081
Professional services..... 121,763 2,806 -- 124,569
-------- ------- ------- --------
Total revenues.......... 468,065 42,540 -- 510,605
-------- ------- ------- --------
Costs and expenses:
Professional services..... 116,133 2,448 -- 118,581
Product development and
support.................. 155,277 7,384 -- 162,661
Sales and marketing....... 182,597 26,355 -- 208,952
General and
administrative........... 39,224 7,951 -- 47,175
Restructuring charges..... -- 2,203 -- 2,203
Merger costs.............. 5,782 -- -- 5,782
Acquired in-process
technology............... 48,456 995 -- 49,451
-------- ------- ------- --------
Total costs and
expenses............... 547,469 47,336 -- 594,805
-------- ------- ------- --------
Operating loss.............. (79,404) (4,796) -- (84,200)
Other income, net........... 5,237 916 -- 6,153
-------- ------- ------- --------
Loss before income taxes.... (74,167) (3,880) -- (78,047)
Income taxes................ (9,245) (818) -- (10,063)
-------- ------- ------- --------
Net loss.................... $(64,922) $(3,062) $ -- $(67,984)
======== ======= ======= ========
Net loss per share.......... $ (1.14) $ (0.27) $ -- $ (1.07)
======== ======= ======= ========
Shares used in computing net
loss per share............. 56,968 11,335 -- 63,507
</TABLE>
See accompanying notes to unaudited pro forma condensed combining financial
statements.
47
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PLATINUM LOGIC WORKS
HISTORICAL HISTORICAL PRO FORMA
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, PRO FORMA DECEMBER 31,
1995 1995 ADJUSTMENTS 1995
------------ ------------ ----------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Software products......... $ 158,597 $ 25,255 $ -- $ 183,852
Maintenance............... 76,498 3,665 -- 80,163
Professional services..... 91,316 1,768 -- 93,084
--------- -------- ------ ---------
Total revenues.......... 326,411 30,688 -- 357,099
--------- -------- ------ ---------
Costs and expenses:
Professional services..... 92,374 1,801 -- 94,175
Product development and
support.................. 94,027 4,949 -- 98,976
Sales and marketing....... 113,978 18,501 -- 132,479
General and
administrative........... 34,097 3,285 -- 37,382
Merger costs.............. 30,819 -- -- 30,819
Acquired in-process
technology............... 88,493 -- -- 88,493
--------- -------- ------ ---------
Total costs and
expenses............... 453,788 28,536 -- 482,324
--------- -------- ------ ---------
Operating income (loss)..... (127,377) 2,152 -- (125,225)
Other income, net........... 4,130 121 -- 4,251
--------- -------- ------ ---------
Income (loss) before income
taxes...................... (123,247) 2,273 -- (120,974)
Income taxes................ (11,680) 866 -- (10,814)
--------- -------- ------ ---------
Net income (loss)........... $(111,567) $ 1,407 $ -- $(110,160)
========= ======== ====== =========
Net income (loss) per share. $ (2.50) $ 0.16 $ -- $ (2.22)
========= ======== ====== =========
Shares used in computing net
income (loss) per share.... 44,671 8,595 -- 49,629
</TABLE>
See accompanying notes to unaudited pro forma condensed combining financial
statements.
48
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
NOTE A--DESCRIPTION OF MERGER
On March 14, 1998, PLATINUM signed a definitive agreement to acquire all of
the outstanding capital stock of Logic Works in exchange for shares of
PLATINUM Common Stock (approximately 7,328,000 shares as of April 20, 1998)
and to assume stock options which will convert into options to purchase shares
of PLATINUM Common Stock (approximately 1,234,000 shares as of April 20,
1998). PLATINUM will exchange 0.5769 of a share of PLATINUM Common Stock for
each share of Logic Works Common Stock. Logic Works will become a wholly-owned
subsidiary of PLATINUM. The closing of the Merger is subject to approval by
the stockholders of Logic Works as well as the satisfaction of conditions
customary in such agreements. It is expected that the Merger will qualify as a
tax-free reorganization and will be accounted for as a pooling of interests.
The unaudited pro forma combined financial data are not necessarily
indicative of the operating results that would have been achieved had the
transactions been in effect as of the beginning of the periods presented and
should not be construed as representative of future operations.
PLATINUM and Logic Works estimate that they will incur merger-related
expenses of approximately $7,000,000, consisting primarily of transaction
costs for financial advisory fees, attorneys, accountants, financial printing
and one-time charges related to the transaction. These nonrecurring expenses
will be charged to operations in the fiscal quarter in which the merger is
consummated. Such charges have not been reflected in the pro forma financial
statements.
The following table summarizes the assumed average shares outstanding used
in computing pro forma net loss per share, using the exchange ratio of 0.5769,
for the years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------
1997 1996 1995
------ ------ ------
(AMOUNTS IN
THOUSANDS)
<S> <C> <C> <C>
PLATINUM average shares outstanding.................. 62,042 56,968 44,671
Logic Works assumed average shares outstanding 6,995 6,539 4,958
------ ------ ------
Pro forma average shares outstanding................. 69,037 63,507 49,629
====== ====== ======
</TABLE>
NOTE B--EARNINGS PER SHARE
The historical Logic Works net income per share for the year ended December
31, 1995 is presented before the effects of preferred stock cash dividends and
the accretion of preferred stock redemption requirements.
NOTE C--RECLASSIFICATIONS
Certain Logic Works historical amounts have been reclassified to conform to
PLATINUM's historical presentation for the pro forma financial statements.
NOTE D--SUBSEQUENT EVENTS
See Note 18 to PLATINUM's audited consolidated financial statements, which
are incorporated by reference herein from PLATINUM's Annual Report on Form 10-
K for the year ended December 31, 1997, and which includes a discussion of the
transactions entered into by PLATINUM subsequent to December 31, 1997. Also
included is a summary of the pro forma effects of the proposed acquisitions of
Learmonth and Burchett Management Systems Plc, Mastering, Inc. and Logic Works
on revenues and net income (loss) for the years ended December 31, 1997, 1996
and 1995.
49
<PAGE>
PRO FORMA COMBINED COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of PLATINUM
and Logic Works and combined per share data on an unaudited pro forma basis
after giving effect to the Merger on a pooling-of-interests basis utilizing
the Exchange Ratio discussed in Note (4) below, as if the Merger had been
effective for all periods presented. This data should be read in conjunction
with the selected financial data, the unaudited pro forma condensed combining
financial statements and the separate historical financial statements of
PLATINUM and Logic Works and notes thereto, included elsewhere or incorporated
by reference in this Proxy Statement/Prospectus. The unaudited pro forma
combined financial data are not necessarily indicative of the operating
results that would have been achieved had the transactions been in effect as
of the beginning of the periods presented and should not be construed as
representative of future operations.
<TABLE>
<CAPTION>
EQUIVALENT
HISTORICAL LOGIC WORKS
HISTORICAL LOGIC PRO FORMA PRO FORMA
PLATINUM WORKS(2) COMBINED(3) COMBINED(4)
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income (Loss) Per
Share
Years ended December
31:
1997................ $(1.90) $ 0.38 $(1.64) $(0.95)
1996................ (1.14) (0.27) (1.07) (0.62)
1995................ (2.50) 0.16 (5) (2.22) (1.28)
Book Value Per Share:
(1)
December 31, 1997..... 3.81 3.43 4.03 2.32
</TABLE>
- --------
(1) Book value per share reflects PLATINUM and Logic Works at December 31,
1997 and is computed by dividing stockholders' equity by the number of
shares of common stock outstanding at the respective date.
(2) Historical Logic Works per share data reflect basic earnings per share for
each period.
(3) Pro forma combined per share amounts reflect the Merger.
(4) The equivalent Logic Works pro forma combined per share amount is
calculated by multiplying the pro forma combined per share amount by the
Exchange Ratio of 0.5769.
(5) Represents historical Logic Works net income per share for the year ended
December 31, 1995 before the effects of preferred stock cash dividends and
the accretion of a preferred stock redemption requirement.
50
<PAGE>
INFORMATION REGARDING PLATINUM
OVERVIEW
PLATINUM develops, markets and supports software products, and provides
related professional services, that help organizations manage and improve
their information technology ("IT") infrastructures, which consist of data,
systems and applications. PLATINUM'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. PLATINUM's products typically perform fundamental functions such as
automating operations, maintaining the operating efficiency of systems and
applications, and ensuring data access and integrity. PLATINUM 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, PLATINUM'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.
PLATINUM 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, PLATINUM 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, PLATINUM assembled the competencies to create complete infrastructure
management solutions. Devoting substantial resources to integrating its
products and technologies, PLATINUM 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 PLATINUM; 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 PLATINUM'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 PLATINUM's customers for comprehensive
solutions, PLATINUM completed 102 transactions of over $1 million during 1997,
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.
PLATINUM is focusing on the development of products and services that offer
its customers maximum flexibility and functionality. PLATINUM'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 PLATINUM's integration efforts is POEMS (PLATINUM Open
Enterprise Management Services), an internally developed set of shared
components that give PLATINUM'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 PLATINUM products, the newly acquired and
previously installed products can begin working together immediately. In
February 1998, PLATINUM released for general availability its ProVision suite
of integrated systems and database management tools, which is PLATINUM'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.
PLATINUM is also creating solutions for the needs of specific industries, as
well as general business needs. PLATINUM 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, PLATINUM
formed specialty consulting practice groups within its professional services
business unit, including groups dedicated to Year 2000 solutions and
internet/intranet technologies.
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DESCRIPTION OF PLATINUM'S CAPITAL STOCK
The authorized capital stock of PLATINUM consists of 180,000,000 shares of
Common Stock, $0.001 par value per share (the "PLATINUM Common Stock"), and
10,000,000 shares of Class II Preferred Stock, $0.01 par value per share (the
"Preferred Stock"), 1,000,000 shares of which (subject to adjustment upward or
downward by PLATINUM's Board of Directors) have been designated as Series A
Junior Participating Preferred Stock, and 1,775,000 of which (subject to
adjustment upward or downward in accordance with PLATINUM's Restated
Certificate of Incorporation, as amended (the "PLATINUM Charter")) have been
designated as Series B Preferred Stock. As of April 20, 1998, 64,891,936
shares of PLATINUM Common Stock were issued and outstanding; 1,768,421 shares
of Series B Preferred Stock were issued and outstanding, and no shares of the
Series A Junior Participating Preferred Stock were issued or outstanding. The
following description is a summary and is qualified in its entirety by
reference to the provisions of the PLATINUM Charter and the PLATINUM Bylaws,
copies of which have been filed with and are available from the Commission and
PLATINUM upon request.
COMMON STOCK
Holders of PLATINUM Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. Holders
of a majority of the shares of PLATINUM Common Stock represented at a meeting
can elect all of the directors to be elected at that meeting. Holders of
PLATINUM Common Stock are not permitted to act by written consent. Subject to
preferences that may be applicable to any then outstanding Preferred Stock,
holders of PLATINUM Common Stock are entitled to receive ratably such
dividends as may be declared by the PLATINUM Board of Directors out of funds
legally available therefor. See "Comparative Per Share Market Price Data--
PLATINUM." In the event of a liquidation, dissolution, or winding up of
PLATINUM, holders of the PLATINUM Common Stock are entitled to share ratably
in all assets remaining after payment of liabilities and the liquidation
preference of any then outstanding Preferred Stock. Holders of PLATINUM Common
Stock have no preemptive rights and have no right to convert their PLATINUM
Common Stock into any other securities. There are no redemption or sinking
fund provisions applicable to the PLATINUM Common Stock. All outstanding
shares of PLATINUM Common Stock are, and any shares of PLATINUM Common Stock
which are issued in connection with the Merger, when so issued, will be, fully
paid and nonassessable.
PREFERRED STOCK
The PLATINUM Board of Directors has the authority, without further action by
the stockholders, to issue up to 8,231,579 shares of Preferred Stock in one or
more series and to fix the voting powers, designations, preferences, and
relative, participating, optional, or other special rights, and
qualifications, limitations, and restrictions thereof, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation
preferences, and the number of shares constituting any series. Because the
PLATINUM Board of Directors has the power to establish the preferences and
rights of the shares of any such series of Preferred Stock, it may afford
holders of any Preferred Stock preferences, powers, and rights (including
voting rights), senior to the rights of holders of PLATINUM Common Stock,
which could adversely affect the rights of holders of PLATINUM Common Stock
and could have the effect of delaying, deferring or preventing a change in
control of PLATINUM.
SERIES B PREFERRED STOCK
Holders of shares of Series B Preferred Stock have voting rights only with
respect to actions by PLATINUM which will materially and adversely change any
of the rights, privileges and preferences of the Series B Preferred Stock.
Shares of Series B Preferred Stock may only be transferred to PLATINUM, or any
person or entity that, directly or indirectly, controls, is controlled by, or
is under common control with the holder of such shares. Shares of Series B
Preferred Stock are convertible, at any time, into shares of PLATINUM Common
Stock at the rate of one-for-one (subject to certain adjustments).
Furthermore, each share of Series B Preferred Stock will
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automatically be converted into shares of PLATINUM Common Stock at the rate of
one-for-one (subject to certain adjustments) upon the improper transfer of any
shares of Series B Preferred Stock by any holder thereof. In the event of any
liquidation, dissolution, or winding up of PLATINUM, holders of Series B
Preferred Stock are entitled to receive up to an amount equal to (i) $23.75
per share for each share of Series B Preferred Stock then held by them, plus
(ii) the amount of declared but unpaid dividends thereon.
PREFERRED STOCK PURCHASE RIGHTS
The registered holders of PLATINUM Common Stock have the right (a "Right")
to purchase from PLATINUM, for each share of PLATINUM Common Stock owned, one-
hundredth of a share of Class II Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Rights Shares"), of PLATINUM
at a price of $125.00 per one one-hundredth of a Preferred Rights Share (the
"Rights Purchase Price"), subject to adjustment. Each one one-hundredth of a
Preferred Rights Share is entitled to one vote, a dividend equal to the
dividend per share paid on the PLATINUM Common Stock, and a liquidation
payment equal to the liquidation payment per share paid on the PLATINUM Common
Stock. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between PLATINUM and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
The Rights are not exercisable until the earlier of (i) the close of
business on the tenth business day after the first public announcement that a
person or group of affiliated or associated persons have acquired beneficial
ownership of 15% or more of the outstanding shares of PLATINUM Common Stock
(an "Acquiring Person"), or (ii) the close of business on the tenth business
day (or such later date as may be determined by action of the PLATINUM Board
of Directors prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by such person or group of 15% or more of the outstanding
shares of PLATINUM Common Stock (the earlier of such dates being called the
"Distribution Date"). Until the Distribution Date, the Rights will be
evidenced by the certificates for the PLATINUM Common Stock, will be
transferable only by the transfer of the shares of PLATINUM Common Stock
(including a transfer to PLATINUM) will constitute a transfer of the Rights.
As described below, after a person or group becomes an Acquiring Person, the
Rights may not be redeemed or amended. The Rights will expire on January 5,
2006 (the "Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are redeemed earlier by PLATINUM, in each case,
as described below. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of PLATINUM as a result of the ownership
of the Right, including, without limitation, the right to vote or to receive
dividends.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), certificates for the PLATINUM Common Stock issued upon the transfer
or new issuance of shares of PLATINUM Common Stock will contain a legend
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of PLATINUM Common Stock will also
constitute the transfer of Rights associated with the shares of PLATINUM
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to the holders of record of shares of PLATINUM
Common Stock as of the close of business on the Distribution Date, and such
separate Rights Certificates alone will evidence the Rights.
At any time after the Distribution Date, each holder of a Right (other than
those described in the next sentence) will thereafter have the right to
receive, upon exercise and in lieu of Preferred Rights Shares, shares of
PLATINUM Common Stock (or, in certain circumstances, cash, property or other
securities of PLATINUM) having a value equal to two times the Rights Purchase
Price. All Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be
void.
At any time after the first date of public announcement by PLATINUM or an
Acquiring Person that an Acquiring Person has become such (a "Shares
Acquisition Date"), if (i) PLATINUM is the surviving
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corporation in a merger with any other company or entity, (ii) PLATINUM is
acquired in a merger or other business combination transaction, or (iii) 50%
or more of PLATINUM's consolidated assets or earning power are sold, each
holder of a Right (other than those whose rights have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current Rights Purchase Price and in lieu of Preferred Rights Shares, that
number of shares of common stock of the surviving or acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of such Right.
At any time after a person or group becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding
shares of PLATINUM Common Stock, the Board of Directors of PLATINUM may
exchange the Rights (other than Rights owned by such person or group which
have become void), in whole or in part, without any additional payment, for
shares of PLATINUM Common Stock at an exchange ratio equal to one share of
PLATINUM Common Stock (or a share of a class or series of PLATINUM's preferred
shares having equivalent rights, preferences and privileges) per Right,
subject to adjustment.
With certain exceptions, no adjustment in the Rights Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Rights Purchase Price. No fractional Rights Preferred Shares will be
issued (other than fractions which are integral multiples of one one-hundredth
of a Rights Preferred Share, which may, at the election of PLATINUM, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Rights Preferred Shares on the
last trading day prior to the date of exercise.
At any time prior to the Shares Acquisition Date, the Board of Directors of
PLATINUM may redeem all, but not less than all, of the Rights at a price of
$.01 per Right (the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis and with such conditions as the
PLATINUM Board of Directors in its sole discretion may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Any provisions of the Rights may be amended by the Board of Directors of
PLATINUM prior to the Shares Acquisition Date. After the Shares Acquisition
Date, the provisions of the Rights Agreement may be amended by the Board of
Directors of PLATINUM in order to cure any ambiguity or to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person).
A copy of the Rights Agreement is available free of charge from PLATINUM.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
The Rights have certain anti-takeover effects. The Rights should not
interfere with any merger or business combination approved by the Board of
Directors of PLATINUM because the Rights may be redeemed by PLATINUM at the
Redemption Price prior to the time that a person or group has acquired
beneficial ownership of 15% or more of the outstanding shares of PLATINUM
Common Stock. However, by causing substantial dilution to a person or group
that attempts to acquire PLATINUM on terms not approved by PLATINUM's Board of
Directors, the Rights may interfere with certain acquisitions, including
acquisitions that may offer a premium over market price to some or all of
PLATINUM's stockholders. The PLATINUM Board of Directors has stated that the
Rights are not intended to prevent an acquisition of PLATINUM on terms that
are favorable and fair to all stockholders.
CERTAIN PLATINUM CHARTER AND BYLAWS PROVISIONS
The PLATINUM Charter and the Bylaws contain a number of provisions relating
to corporate governance and to the rights of PLATINUM stockholders. Certain of
these provisions may be deemed to have a potential "anti-takeover" effect in
that such provisions may delay, defer or prevent a change of control of
PLATINUM. These provisions include (i) the classification of PLATINUM's Board
of Directors into three classes, each class
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serving for staggered three year terms; (ii) restrictions on the removal of
directors; (iii) a requirement that special meetings of PLATINUM stockholders
may be called only by the Board of Directors of PLATINUM and that PLATINUM
stockholder action may be taken only at PLATINUM stockholder meetings and not
by written consent; (iv) the authority of the Board of Directors of PLATINUM
to issue series of Preferred Stock with such voting rights and other powers as
it may determine; (v) a requirement that the affirmative vote of greater than
80% of the voting power of shares entitled to vote generally for the election
of directors is required to amend provisions of the PLATINUM Charter relating
to (a) the classification of PLATINUM's Board of Directors, (b) removal of
directors, and (c) the inability of PLATINUM stockholders to call special
meetings and to take action by written consent; (vi) a requirement that the
Bylaws may only be amended (other than by PLATINUM's Board of Directors) by
the vote of the holders of 66% of the shares entitled to vote generally for
the election of directors; and (vii) notice requirements in the Bylaws
relating to nominations to the Board of Directors of PLATINUM and to the
raising of business matters at PLATINUM stockholder meetings.
DELAWARE GENERAL CORPORATION LAW
PLATINUM is subject to the provisions of Section 203 of the DGCL ("Section
203"). Pursuant to Section 203, with certain exceptions, a Delaware
corporation may not engage in any of a broad range of business combinations,
such as mergers, consolidations and sales of assets with an "interested
stockholder" for a period of three years from the date that such person became
an interested stockholder, unless (i) the transaction that results in the
person becoming an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before the person
becomes an interested stockholder, (ii) upon consummation of the transaction
which results in the stockholder becoming an interested stockholder, the
interested stockholder owns 85% or more of the voting stock of the corporation
outstanding at the time the transaction commenced (other than certain excluded
shares), or (iii) on or after the date the person becomes an interested
stockholder, the business combination is approved by the corporation's board
of directors and by holders of at least two-thirds of the corporation's
outstanding voting stock, excluding shares owned by the interested
stockholder, at a meeting of stockholders. Under Section 203, an "interested
stockholder" is defined as any person, other than the corporation and any
direct or indirect majority-owned subsidiaries of the corporation, that is (i)
the owner of 15% or more of the outstanding voting stock of the corporation or
(ii) an affiliate or associate of the corporation and the owner of 15% or more
of the outstanding voting stock of the corporation at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. The provisions of
Section 203 may encourage persons interested in acquiring PLATINUM to
negotiate in advance with PLATINUM's Board of Directors because the
stockholder approval requirement would be avoided if a majority of the
PLATINUM's directors then in office approve either the business combination or
the transaction which results in the person becoming an interested
stockholder. Such provisions also may have the effect of preventing changes in
management of PLATINUM. It is possible that such provisions could make it more
difficult to accomplish transactions that stockholders may otherwise deem to
be in their best interests.
TRANSFER AGENT
The transfer agent and registrar for the PLATINUM Common Stock is Harris
Trust and Savings Bank, Chicago, Illinois.
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INFORMATION REGARDING LOGIC WORKS
Logic Works is a leading provider of client/server database design and
business process modeling software. Logic Works' Windows-based products allow
customers to realize the benefits of client/server systems by enabling easy,
rapid and high-quality design, deployment and management of relational
databases and related applications. Logic Works' award-winning products have
been licensed to approximately 50,000 users in 7,000 organizations worldwide,
including, AT&T Corp., Barnett Banks, Inc., The Coca-Cola Company, Dell
Computer Corporation, GTE Corporation, Hewlett-Packard Company, Intel
Corporation, ITT Corporation, JP Morgan & Co., Johnson & Johnson, Merck & Co.,
Inc., Microsoft Corporation, Monsanto Corporation, Republic National Bank of
New York, Union Pacific Railroad Company, Universal Studios, Inc., Visa
International and the United States Army. Logic Works' principal executive
offices are located at 111 Campus Drive, Princeton, New Jersey 08540. Its
telephone number at that address is (609) 514-1177, and its Web site is
located at http://www.logicworks.com. Logic Works' website is not a part of
this Proxy Statement/Prospectus.
COMPARISON OF STOCKHOLDER RIGHTS
The statements set forth under this heading with respect to the DGCL, the
PLATINUM Charter, the PLATINUM Bylaws, the Logic Works Charter and the Logic
Works Bylaws (copies of which have been filed as Exhibits to the Registration
Statement) are brief summaries thereof and do not purport to be complete; such
statements are subject to the detailed provisions of the DGCL, the PLATINUM
Charter, the PLATINUM Bylaws, the Logic Works Charter and the Logic Works
Bylaws. See "AVAILABLE INFORMATION."
GENERAL
The following summary compares certain rights of the holders of PLATINUM
Common Stock to the rights of the holders of Logic Works Common Stock. The
rights of Logic Works Stockholders are governed principally by the DGCL, the
Logic Works Charter and the Logic Works Bylaws. Upon consummation of the
Merger, such stockholders will become holders of PLATINUM Common Stock, and
their rights will be governed principally by the DGCL, the PLATINUM Charter
and the PLATINUM Bylaws. In most respects, the rights of PLATINUM stockholders
are similar to those of Logic Works stockholders. The following summarizes the
material differences between the rights of holders of PLATINUM Common Stock
and Logic Works Common Stock.
DIVIDENDS
Under the DGCL, a corporation may pay dividends out of surplus (defined as
the excess, if any, of net assets over capital) or, if no such surplus exists,
out of its net profits for the fiscal year in which such dividends are
declared and/or for its preceding fiscal year, provided that dividends may not
be paid out of net profits if the capital of such corporation is less than the
aggregate amount of capital represented by the outstanding stock of all
classes having a preference upon distribution of assets. Each of the PLATINUM
Charter and Bylaws and the Logic Works Charter and Bylaws contains provisions
relating to the declaration and payment of dividends consistent with the DGCL.
However, neither PLATINUM nor Logic Works currently pays dividends to their
respective stockholders.
VOTING RIGHTS
Each share of PLATINUM Common Stock and each share of Logic Works Common
Stock is entitled to one vote on each matter submitted to a vote of
stockholders. Neither the holders of PLATINUM Common Stock nor the holders of
Logic Works Common Stock have cumulative voting rights in the election of
directors.
DIRECTORS
Number of Directors. Under the DGCL, the charter document or bylaws of a
corporation may specify the number of directors. The PLATINUM Charter and
Bylaws provide the PLATINUM Board shall consist of not less than six nor
greater than 11 directors elected for staggered three year terms, with the
exact number determined by the PLATINUM Board. The current size of the
PLATINUM Board is seven. Section 223 of the DGCL provides that vacancies and
newly created directorships may be filled by a majority of the directors then
in office (even though less than a quorum) unless (i) otherwise provided in
the certificate of incorporation or bylaws of the corporation (PLATINUM's
Charter and Bylaws do not provide otherwise) or (ii) the certificate of
incorporation directs that a particular class is to elect such director, in
which case any other directors elected by
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such class, or a sole remaining director, shall fill such vacancy (PLATINUM's
Charter does not have such a provision). In addition, if, at the time of
filling any vacancy or newly created directorship, the directors then in
office constitute less than a majority of the whole board, the Delaware Court
of Chancery may, upon application of stockholders holding at least ten percent
(10%) of shares outstanding at the time and entitled to vote for such
directors, summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors chosen by the
directors then in office. Such elections are to be conducted in accordance
with the procedures provided by the DGCL. Unless otherwise provided in the
certificate of incorporation or bylaws, when one or more directors resign from
the board, a majority of directors then in office, including those who have so
resigned, may vote to fill the vacancy. PLATINUM's Bylaws limit this provision
with respect to directors that have resigned such that it applies only where
the director has resigned, effective at a future date.
The Logic Works Charter specifies that the Logic Works Board size shall be
determined by resolution of the Logic Works Board or by the Logic Works
Stockholders at an Annual or Special Meeting. The Logic Works Board shall
consist of not less than five directors elected for staggered three year
terms. The current size of the Logic Works Board is five. Vacancies and newly
created directorships may be filled by the Logic Works Board. In addition, if
at the time of filling any vacancy or newly created directorship the directors
then in office shall constitute less than a majority of the whole board,
holders of ten percent (10%) or more of the outstanding voting capital stock
of Logic Works may petition the Delaware Court of Chancery to summarily order
an election to be held to fill any such vacancy or newly created directorship,
or to replace the directors chosen by the directors then in office.
Classification. Directors of both PLATINUM and Logic Works serve staggered
terms of office. Both the PLATINUM Charter and Bylaws and the Logic Works
Charter and Bylaws provide that their respective boards of directors shall be
divided, with respect to the terms of office for the individual directors,
into three classes, as nearly equal in number as possible, with each class to
serve a staggered three year term.
Removal. Under Section 141 of the DGCL, any director or the entire board of
directors may be removed, with or without cause, by the holders of a majority
of the shares entitled to vote at an election of directors, except that (i)
unless the certificate of incorporation otherwise provides, in the case of a
corporation having a classified board, stockholders may effect such removal
only for cause, and (ii) in the case of a corporation having cumulative
voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the
entire board of directors. PLATINUM's Charter provides that directors may be
removed only with cause by a vote of a majority of the combined voting power
of PLATINUM's outstanding stock. The Logic Works Bylaws provide that any
director or the entire Logic Works Board may be removed with or without cause
by the holders of a majority of Logic Works Common Stock entitled to vote at
an election of directors.
Nominations. Each of the Logic Works Bylaws and the PLATINUM Bylaws provide
that nominations for directors may be made only by or at the direction of the
Logic Works Board or the PLATINUM Board (as the case may be) or by a
stockholder entitled to vote for the election of directors at a stockholders'
meeting. With respect to stockholder nominations, written notice of such
stockholders' intent to make such nominations at such meeting must be received
by the Secretary of Logic Works or PLATINUM, as the case may be, in a manner
and within the time period specified in the respective Bylaws of PLATINUM and
Logic Works.
Fiduciary Duties of Directors. Under Delaware law, directors have a
fiduciary relationship with their corporation and its stockholders and, as
such, are required to discharge their duties in good faith and in a manner
reasonably believed to be in the best interests of such corporation and its
stockholders. They are required to use such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence would use under
similar circumstances. Absent a breach of fiduciary duty, a lack of good faith
or self-dealing, any act of the board of directors, a committee thereof or an
individual director is presumed to be in the best interests of such
corporation. Delaware courts have held that the duty of care requires
directors to exercise an informed business judgment, which requires that they
have informed themselves of all material information reasonably available.
Delaware courts have imposed a heightened standard of conduct on directors who
are responding to a proposed change of control or are engaging in a sale or
auction of their corporation.
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LIMITATION ON DIRECTORS LIABILITY; INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 102 of the DGCL allows a corporation to include in its certificate
of incorporation a provision that limits or eliminates the personal liability
of directors of the corporation and its stockholders for monetary damages for
breach of fiduciary duty as a director. Section 102 of the DGCL does not,
however, permit a corporation to limit or eliminate the personal liability of
a director for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
intentional or negligent payments of unlawful dividends or unlawful stock
purchases or redemption or (iv) any transaction from which the director
derives an improper personal benefit. Each of the PLATINUM Charter and the
Logic Works Charter provide for limitations on directors' liability to the
fullest extent permitted by the DGCL.
Section 145 of the DGCL permits a corporation to indemnify any person who
was or is a party or is threatened to be made a party to: (i) any action, suit
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) against expenses
(including attorneys' fees), judgments, fines and reasonable settlement
amounts if such person acted in good faith and reasonably believed that his or
her actions were in or not opposed to the best interests of such corporation
and, with respect to any criminal proceeding, had no reasonable cause to
believe that his or her conduct was unlawful; (ii) any derivative action or
suit on behalf of such corporation against expenses (including attorneys'
fees) actually and reasonably incurred in connection with the defense or
settlement of such action or suit, if such person acted in good faith and
reasonably believed that his or her actions were in or not opposed to the best
interest of such corporation. With respect to derivative suits and actions, in
the event that a person is adjudged to be liable to the corporation, the DGCL
prohibits indemnification unless, and then only to the extent that, either the
Delaware Court of Chancery or the court in which such derivative action or
suit was brought determines that such person is entitled to indemnification
for those expenses which that court deems proper. To the extent that a
representative of a corporation has been successful on the merits or otherwise
in the defense of a third party or derivative action, indemnification for
actual and reasonable expenses incurred is mandatory.
The PLATINUM Charter provides that PLATINUM shall indemnify PLATINUM
directors to the maximum extent permitted by the DGCL. The PLATINUM Charter
provides that PLATINUM may, at the discretion of the PLATINUM Board, indemnify
officers and employees of PLATINUM.
The Logic Works Charter and Bylaws provide for the indemnification of
directors and officers of Logic Works to the maximum extent permitted by the
DGCL.
CALL OF SPECIAL MEETINGS
Under Section 211 of the DGCL, special meetings of stockholders may be
called by the board of directors and by such other person or persons
authorized to do so by the corporation's certificate of incorporation or
bylaws. Under PLATINUM's Bylaws, a special meeting of stockholders may be
called only by the PLATINUM Board. Under Logic Works' Bylaws, a special
meeting of the stockholders may be called by the president or by a majority of
the Logic Works Board.
ACTION OF STOCKHOLDERS WITHOUT A MEETING
The DGCL permits the stockholders of a corporation to consent in writing to
any action without a meeting, unless the certificate of incorporation of such
corporation provides otherwise; provided such consent is signed by the
stockholders having at least the minimum number of votes required to authorize
such action at a meeting. Each of the PLATINUM Charter and the Logic Works
Charter contains a prohibition that prevents PLATINUM's stockholders and Logic
Works' stockholders, respectively, from taking any action without a meeting.
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STOCKHOLDER PROPOSALS
The PLATINUM Bylaws provide that, to be timely, a stockholder must deliver
written notice to, or mail such written notice so that it is received by, the
Secretary of PLATINUM at the principal executive offices of PLATINUM, not less
than 120 nor more than 150 days prior to the first anniversary of the date of
PLATINUM's consent solicitation or proxy statement released to stockholders in
connection with the previous year's election of directors or meeting of
stockholders, except that if no annual meeting of stockholders or election by
consent was held in the previous year or if the date of the meeting has been
changed from the previous year's meeting date, a proposal must be received
within 10 days after the meeting date has been "publicly disclosed." Under the
Logic Works Charter and Logic Works Bylaws, to be timely, the stockholder must
deliver written notice to the Secretary at the principal executive offices of
Logic Works not later than 120 days nor earlier than 150 days prior to the
first anniversary of the date of the proxy statement delivered to stockholders
in connection with the preceding year's annual meeting, except that if either
(i) the date of the annual meeting is more than thirty days before or more
than sixty days after such an anniversary date or (ii) no proxy statement was
delivered to stockholders in connection with the preceding year's annual
meeting, notice by the stockholder to be timely must be so delivered not
earlier than the ninetieth day prior to such annual meeting and not later than
the sixtieth day prior to such annual meeting or the close of business on the
tenth day following the day on which public announcement of the date of such
meeting is first made by Logic Works.
AMENDMENT TO CHARTER
Under the DGCL, the charter of a corporation may be amended by resolution of
the board of directors and the affirmative vote of the holders of a majority
of the outstanding shares of voting stock entitled to vote thereon. With
respect to any amendment to the charter of a corporation that would adversely
affect a particular class or series of stock, the DGCL requires the separate
approval by the holders of the affected class or series of stock, voting
together as a single class. Any amendment to the PLATINUM Charter relating to
the creation of a classified board of directors or affecting the prohibition
on stockholder action by written consent requires the approval of eighty
percent (80%) of the outstanding shares of voting capital stock of PLATINUM.
Amendments to the Logic Works Charter are subject to the requirements of the
DGCL.
AMENDMENT TO BYLAWS
Section 109 of the DGCL provides that the power to adopt, amend or repeal
bylaws shall be in the stockholders entitled to vote, provided that a
corporation may, in its certificate of incorporation, confer such powers on
the board of directors. In accordance with the PLATINUM Charter, the PLATINUM
Board is expressly authorized to make, alter, amend or repeal the Bylaws of
PLATINUM; provided, however, that if such action is to be taken by
stockholders, the affirmative vote of 66 2/3% of the total votes eligible to
be cast by stockholders is required.
In accordance with the Logic Works Charter, and the Logic Works Bylaws,
Logic Works' Bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or the Board of Directors.
CONFLICT OF INTEREST
The PLATINUM Bylaws and the Logic Works Bylaws provide that no contract
entered into between such corporation and one or more of its directors or
officers or between such corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be
void or voidable solely because the director or officer is present or
participates in a meeting which authorizes the contract or transaction, or
solely because his or her votes are counted for such purpose, if: (i) the
director or officer's relationship or interest in the contract or transaction
are disclosed to the disinterested directors and the disinterested directors
in good faith authorize the contract or transaction; (ii) the material facts
as to the director or officer's relationship or interest in the contract are
disclosed to the stockholders entitled to vote thereon, and a contract is
approved in good faith by the vote of the stockholders; or (iii) the contract
is fair as to the corporation as of the time it is authorized by the Board of
Directors or by the stockholders.
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ANTI-TAKEOVER PROVISIONS
Section 203 of the DGCL prohibits, in general, a publicly held Delaware
corporation from engaging, under certain circumstances and subject to certain
exceptions, in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless either (i) prior to the date at
which the person becomes an interested stockholder, the board of directors
approves the transaction or business combination which results in the
stockholder becoming an interested stockholder; (ii) upon consummation of the
transaction which results in the stockholder becoming an interested
stockholder, the stockholder acquires more than eighty-five percent (85%) of
the outstanding shares of voting capital stock of the corporation (excluding
shares held by directors who are officers or held in certain employee stock
plans); or (iii) the business combination is approved by the board of
directors and by holders of two-thirds of the outstanding voting capital stock
of the corporation (excluding shares held by the interested stockholder) at a
meeting of stockholders (and not by written consent). An "interested
stockholder" is a person (other than the corporation or a majority-owned
subsidiary of such corporation) who, together with affiliates and associates,
owns (or at any time within the prior three years did own) fifteen percent
(15%) or more of the corporation's outstanding voting capital stock, subject
to certain exceptions. Section 203 of the DGCL defines a "business
combination" to include, without limitation, mergers, consolidations, stock
sales and asset-based transactions and other transactions resulting in a
financial benefit to the interested stockholder.
Except as described above under "--Conflict of Interest," neither the
PLATINUM Charter or Bylaws nor the Logic Works Charter or Bylaws contains any
provisions which modify Section 203 of the DGCL.
PLATINUM's Charter, Bylaws and the PLATINUM Rights Agreement as well as
Logic Works' Charter and Bylaws contain a number of provisions which may be
deemed to have potential anti-takeover effects. See "Description of Platinum's
Capital Stock" and certain documents incorporated by reference which describe
the Logic Works Charter and Logic Works Bylaws.
ELECTION OF CLASS III DIRECTOR TO THE LOGIC WORKS BOARD
Unless otherwise directed, the persons appointed in the accompanying form of
proxy intend to vote at the Meeting for the election of the nominee named
below as Class III Director of Logic Works to serve until the third annual
meeting following such nominee's election or until such nominee's successor is
duly elected and qualified. The Logic Works Board does not currently
anticipate that the nominee will be unable to be a candidate for election. If
the proposal to approve the Merger Agreement is approved and adopted by the
stockholders of Logic Works and the Merger is consummated, the current members
of Logic Works Board including any director elected at the Meeting, will be
replaced by the directors of PT Acquisition Corporation at the effective time
of the Merger.
In accordance with the terms of Logic Works Charter, the Logic Works Board
has been divided into three classes, denominated Class I, Class II and Class
III, with members of each class holding office for staggered three-year terms.
At each annual meeting of stockholders commencing with the 1996 annual
meeting, the successors to the Directors whose terms expire are elected to
serve from the time of their election and qualification until the third annual
meeting of stockholders following their election and until a successor has
been duly elected and qualified. The affirmative vote of a plurality of the
shares present in person or represented by proxy and voting at the annual
meeting is required to elect the Directors.
The Logic Works Board currently has five members, one of whose terms expires
at the Meeting and is a nominee for re-election. Mr. Richard A. Hosley, II is
a Class III Director whose term expires at the Meeting. Messrs. Benjamin C.
Cohen and Gregory A. Peters, who was appointed by the Logic Works Board to
fill a vacancy on the Logic Works Board in October 1997, are Class I Directors
whose terms expire at the 1999 annual meeting. Messrs. Charles Federman and
Paul E. Blondin are Class II Directors whose terms expire at the 2000 annual
meeting (in all cases subject to the election and qualification of their
successors or to their earlier death, resignation or removal).
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INFORMATION REGARDING THE NOMINEE FOR ELECTION AT THE 1998 ANNUAL MEETING
(CLASS III DIRECTOR)
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of the nominee has been furnished to Logic Works by such nominee. Except
as indicated, the nominee has had the same principal occupation for the last
five years.
Mr. Richard A. Hosley, II, 53, has been a director of Logic Works since
August 1995. Mr. Hosley has been a private investor since 1990. From 1980 to
1990, Mr. Hosley served in various executive positions, including President
and Chief Executive Officer and Vice Chairman of BMC Software, Inc., a
mainframe systems software company. Mr. Hosley serves as a Director of
Peregrine Systems, Inc. a helpdesk software company, Axent Technologies, Inc.,
a network security software company, and Silvon Software, Inc., an enterprise
application management software company.
THE LOGIC WORKS BOARD RECOMMENDS THE ELECTION OF RICHARD A. HOSLEY, II
INFORMATION REGARDING DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AT THE 1998
ANNUAL MEETING
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of each Director who is not a nominee for election at the Meeting has
been furnished to Logic Works by such Director. Except as indicated each of
these Directors has had the same principal occupation for the last five years.
Class I Directors (Term expires at the 1999 Annual Meeting)
Mr. Benjamin C. Cohen, 46, founder of Logic Works, has served as Chairman of
the Board of Directors of Logic Works since its inception in 1985 and served
as its President and Chief Executive Officer from Logic Works' inception to
April 1997. Mr. Cohen is currently President and Chief Executive Officer of
Tacit Communications, a company which he co-founded in January 1998 to develop
an e-mail based knowledge management product.
Mr. Gregory A. Peters, 37, has been a Director of Logic Works and has served
as President and Chief Executive Officer of Logic Works since October 1997.
Mr. Peters joined Logic Works as Chief Financial Officer and Executive Vice
President, Finance and Operations in August 1996 and was named Acting
President and Chief Executive Officer in April 1997. From April 1994 to August
1996, Mr. Peters served as Chief Financial Officer, Treasurer and Senior Vice
President, and from 1992 to March 1994, as Controller and Treasurer, at
Micrografx, Inc., a windows-based graphics software company. From 1990 to
1992, Mr. Peters held various financial positions at DSC Communications
Corporation, a telecommunications company. Mr. Peters is a certified public
accountant.
Class II Directors (Term expires at the 2000 Annual Meeting)
Mr. Charles Federman, 42, has been a Director of Logic Works since May 1995.
Mr. Federman has been a Managing Director of the BRM Group ("BRM"), a venture
capital firm, since January 1998. From 1983 to December 1997, Mr. Federman
held a number of positions, including Chairman of the Executive Committee, at
Broadview, an investment bank providing merger and acquisition advice in the
information technology industry and a financial advisor to Logic Works in
connection with the Merger. Prior to joining Broadview, Mr. Federman co-
founded Bird & Company, an information technology mergers and acquisitions
firm. Mr. Federman serves as a Director of Phoenix Technologies Ltd., a
systems and applications software company, MathSoft, Inc. an application
software company, and International Microcomputer Software, Inc., an
applications software company.
Mr. Paul E. Blondin, 47, has been a Director of Logic Works since September
1996. Mr. Blondin is currently President and Chief Executive Officer of
NETECT, Inc., a network security software company. From March 1993 to June
1997, Mr. Blondin was Vice President, Finance and Administration, Treasurer
and Chief
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Financial Officer of Cascade Communications, a company engaged in broadband
data communications. From 1991 to March 1993, Mr. Blondin served as Vice
President and Controller of Proteon, Inc., a leading worldwide manufacturer of
internetworking and LAN products.
COMMITTEES OF THE BOARD
The Audit Committee of the Logic Works Board (the "Audit Committee")
consists of Messrs. Blondin and Federman, and its functions include
recommending to the Logic Works Board the selection of Logic Works' auditors
and reviewing with such auditors the plan and results of their audit and the
adequacy of Logic Works' systems of internal accounting controls and
management information systems. In addition, the Audit Committee reviews the
independence of the auditors and their fees for services rendered to Logic
Works. Mr. Robert E. Davoli served on the Audit Committee until his
resignation as director in October 1997, when he was replaced by Mr. Blondin.
The Compensation Committee of the Logic Works Board (the "Compensation
Committee") consists of Messrs. Blondin and Federman, and its functions
include recommending, reviewing and overseeing salaries and benefits relating
to Logic Works' employees, consultants, directors and other individuals
compensated by Logic Works. Mr. Robert E. Davoli served on the Compensation
Committee until his resignation as director in October 1997, when he was
replaced by Mr. Blondin. The Compensation Committee also administers various
incentive compensation, stock option and benefit plans, including the 1995
Plan. In December 1997, the Board established a secondary compensation
committee (the "Secondary Compensation Committee") to administer the 1995 Plan
with respect to those individuals who are neither officers nor directors of
Logic Works subject to the short-swing profit restrictions of the federal
securities laws. The Secondary Compensation Committee, which currently
consists of Mr. Peters, has authority to make all option grants under the 1995
Plan to such individuals and to otherwise administer all the terms and
provisions of the 1995 Plan with respect to such individuals, subject to
guidelines established from time to time by the Logic Works Board.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During 1997, the Logic Works Board held seven meetings and each Director
attended all meetings of the Logic Works Board. The Compensation Committee and
the Audit Committee held two meetings and one meeting, respectively, during
1997 and each member attended all meetings of such Committees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, Logic Works' Directors,
executive officers, and any persons holding more than ten percent of Logic
Works' Common Stock are required to report their ownership of Logic Works'
Common Stock and any changes in that ownership to the Securities and Exchange
Commission and the Nasdaq National Market Surveillance Department. Specific
due dates for these reports have been established and Logic Works is required
to report in this Proxy Statement/Prospectus any failure to file by these
dates during 1997. Based solely on its review of such forms received by it
from such persons for their fiscal year 1997 transactions, Logic Works
believes that all such Directors, officers, and greater than ten percent
beneficial owners have complied with all filing requirements applicable to
such persons.
COMPENSATION OF DIRECTORS
Cash Compensation. Directors do not receive a fee for attending Logic Works
Board or committee meetings, but are reimbursed for expenses incurred in
connection with performing their respective duties.
Stock Option Grant. Under the automatic option grant program of the 1995
Plan, each non-employee director first elected or appointed to the Board of
Directors after the initial public offering of Logic Works' Common Stock will
automatically be granted an option for 25,000 shares of Common Stock on the
date of his
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or her election or appointment to the Logic Works Board, provided such
individual has not been in the prior employ of Logic Works. In addition, at
each annual meeting of stockholders, each individual with at least six months
of Board service who will continue to serve as a non-employee director
following the meeting will automatically be granted an option for 2,500 shares
of Logic Works Common Stock, even if such individual has been in the prior
employ of Logic Works or joined the Logic Works Board prior to the initial
public offering.
Each option granted under the Automatic Option Grant Program of the 1995
Plan will have an exercise price equal to 100% of the fair market value of the
Logic Works Common Stock on the automatic grant date and a maximum term of ten
years, subject to earlier termination upon the optionee's cessation of service
as a director of Logic Works. Each automatic option will be immediately
exercisable; however, any shares purchased upon exercise of the option will be
subject to repurchase by Logic Works should the optionee's service as a non-
employee Director of Logic Works cease prior to vesting in the shares. The
initial 25,000-share option will vest in successive equal annual installments
over the optionee's initial four-year period of service on the Logic Works
Board; each annual option will vest upon completion of one (1) year of Board
service measured from the option grant date. However, each outstanding option
will immediately vest upon (i) certain changes in the ownership or control of
Logic Works or (ii) the death or disability of the optionee while serving on
the Logic Works Board. In May 1997, in connection with Logic Works' 1997
annual meeting of stockholders, Logic Works granted to each of Messrs.
Blondin, Federman and Hosley an option to purchase 2,500 shares of Logic Works
Common Stock at $5.375 per share in accordance with the automatic option grant
program of the 1995 Plan. In accordance with the 1995 Plan, each of Messrs.
Blondin, Cohen, Federman, and Hosley, provided that each continues to serve as
a nonemployee director following the Meeting, will receive options to purchase
2,500 shares of Logic Works Common Stock with an exercise price equal to the
fair market value of Logic Works' Common Stock on the date of the Meeting.
Each of Messrs. Blondin, Cohen, Federman and Hosley have agreed that the
options issued in connection with the Meeting will not accelerate in
connection with the Merger and will automatically be cancelled and terminate
upon consummation of the Merger.
LOGIC WORKS EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS OF LOGIC WORKS
The executive officers of Logic Works as of April 20, 1998 were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gregory A. Peters........ 38 President and Chief Executive Officer
Flint A. Lane............ 31 Executive Vice President, Research and Development
Edward G. McLaughlin..... 32 Executive Vice President, Marketing
Daniel M. Shiffman....... 43 Executive Vice President, Business Development
Frank T. Watts........... 51 Executive Vice President, Worldwide Sales
</TABLE>
INFORMATION CONCERNING LOGIC WORKS' EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
OF LOGIC WORKS
Flint A. Lane, who joined Logic Works as a Director of Development in April
1996, was named a Vice President of Product Development in May 1997 and was
promoted to Executive Vice President, Research and Development in January
1998. Prior to joining Logic Works, Mr. Lane was Senior Product Architect at
PLATINUM from December 1994 until April 1996 and Vice President of Development
at Brownstone Solutions, Inc., a data dictionary software company, from 1990
until December 1994.
Edward G. McLaughlin joined Logic Works as Director of
Erwin(R)/ModelMart(TM) Product Marketing in July 1995 and was named Executive
Vice President of Marketing of Logic Works in February 1998. From February
1993 to July 1995, Mr. McLaughlin was Director of Software Tools at Actium
Corporation, a systems integrator provider, where he had full business unit
responsibility for the software reseller unit. From November 1987 until
February 1993, Mr. McLaughlin was Manager of EDI Services for Information and
Financial Services, Inc., a provider of turnkey software solutions.
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<PAGE>
Daniel M. Shiffman has served as Executive Vice President, Business
Development of Logic Works since January 1998 and served as Executive Vice
President, Product Development of Logic Works from May 1995 to December 1997.
Prior to joining Logic Works, Mr. Shiffman served as Director of Engineering
of Sybase, Inc., a database solutions company, from August 1993 to April 1995.
At Sybase, Mr. Shiffman led both the engineering group in the business
information tools business unit and the West Coast engineering group for the
former Powersoft Corporation's new technology group. From 1989 to August 1993,
Mr. Shiffman was the co-founder and Engineering Manager at Cooperative
Solutions, Inc., an enterprise applications software company, where he
developed an application development environment for mission critical
client/server applications.
Frank T. Watts has been Executive Vice President, Worldwide Sales of Logic
Works since January 1997 and provided consulting services to Logic Works from
February to December 1996. From 1985 to October 1996, Mr. Watts headed a
consulting business specializing in sales and sales management programs for
technology oriented companies, including Sun Microsystems, Inc., Oracle
Corporation, Printronix, Inc., Arthur Anderson & Co., S.C., and Hewlett
Packard Company. Prior to 1985, Mr. Watts held previous senior management
positions at Wang Laboratories, Inc., MAI Basic Four and SHL Systemhouse. From
1988 to 1993, Mr. Watts authored several articles including a Sales
Productivity Column in VARbusiness magazine.
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation earned
for the fiscal years ended December 31, 1995, 1996, and 1997 by those persons
who served as Logic Works' Chief Executive Officer during 1997, the executive
officers of Logic Works, other than the CEO, whose total compensation during
fiscal 1997, exceeded $100,000 and who were serving as such at the end of
fiscal 1997 and one other officer who resigned during fiscal 1997
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
---------------- ------------
AWARDS
------------
FISCAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING COMPENSATION
- --------------------------- ------ -------- ------- OPTIONS ------------
<S> <C> <C> <C> <C> <C>
Gregory A. Peters.......... 1997 $222,692 $55,500 210,000 $ 75,000(3)
President and Chief 1996 68,674 20,813 250,000 --
Executive Officer(2)
Benjamin C. Cohen(4)....... 1997 235,000 14,375 -- --
1996 229,000 -- -- --
1995 170,000 180,638 -- 3,435(5)
Daniel M. Shiffman......... 1997 125,000 100,000 50,000 --
Executive Vice President, 1996 125,000 42,500 -- --
Research and Development 1995 83,333 25,000 125,000 --
Frank T. Watts............. 1997 100,000 168,142 140,000 --
Executive Vice President,
Worldwide Sales
John P. Bantleman(6)....... 1997 86,539 19,133 -- 112,500(7)
1996 37,500 16,668 225,000 --
</TABLE>
- --------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted the lesser of $50,000
or 10% of the total annual salary and bonus for the executive officer for
such year. For information regarding option grants and exercises see "--
Option/SAR Grants in Last Fiscal Year" and "--Aggregated Option Exercises
in Last Fiscal Year and Fiscal Year-End Option Values."
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(2) Mr. Peters joined Logic Works in August 1996. His base salary for fiscal
year 1996 was $185,000 and his target bonus was $55,500.
(3) Represents relocation payments.
(4) Mr. Cohen served as President and Chief Executive Officer of Logic Works
from 1985 to April 1997.
(5) Represents premiums paid for a whole life insurance policy.
(6) Mr. Bantleman served as Executive Vice President, Marketing from November
1996 to May 1997.
(7) Represents severance payments.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding option grants
to the Named Executive Officers during fiscal year 1997. No stock appreciation
rights were granted to any Named Executive Officers during fiscal year 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(4)
------------------------------------------------ ---------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE
OPTIONS FISCAL PRICE EXPIRATION 5% 10%
NAME GRANTED(#)(1) YEAR(2) ($/SH)(3) DATE ($) ($)
---- ------------- ------------- --------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Peters....... 50,000 5.08% $5.38 5/6/07 $168,957 $ 428,136
160,000 16.27 7.94 11/23/07 798,697 2,024,053
Benjamin C. Cohen....... -- -- -- -- -- --
Daniel M. Shiffman...... 50,000 5.08 5.38 5/6/07 168,957 428,136
Frank T. Watts.......... 100,000 10.17 5.50 1/1/07 345,892 876,558
40,000 4.07 7.88 8/7/07 198,033 501,816
John P. Bantleman....... -- -- -- -- -- --
</TABLE>
- --------
(1) Each option set forth in the table above has a maximum term of ten (10)
years measured from the grant date, subject to earlier termination upon
the executive officer's termination of service with Logic Works. Each
option will become exercisable for 25% of the option shares upon
completion of one year of service measured from the grant date and will
become exercisable for the remaining shares in equal annual installments
over the next three years of service thereafter. The option will
immediately become exercisable for all of the option shares upon (i) an
acquisition of Logic Works by merger or asset sale unless the options are
assumed by the successor corporation or (ii) upon the optionee's
involuntary termination within 18 months following an acquisition or
certain changes in control of Logic Works. The 50,000-share option to Mr.
Peters and the option to Mr. Shiffman were granted on May 7, 1997; the
160,000-share option to Mr. Peters was granted on November 24, 1997; the
100,000 share option to Mr. Watts was granted on January 2, 1997; and the
40,000-share option to Mr. Watts was granted on August 8, 1997.
(2) Based on options for a total of 983,350 shares granted to employees during
fiscal year 1997.
(3) The exercise price may be paid in cash, in shares of Logic Works Common
Stock valued at fair market value on the exercise date or through a
cashless purchase procedure involving a same-day sale of the purchased
shares. Logic Works may also finance the option exercise by loaning the
optionee sufficient funds to pay the exercise price for the purchased
shares and the federal and state income tax liability incurred by the
optionee in connection with such exercise.
(4) There can be no assurance provided to any executive officer or any other
holder of Logic Works' securities that the actual stock price appreciation
over the 10-year option term will be at the assumed 5% and 10% compounded
annual rates or at any other defined level. Unless the market price of
Logic Works Common Stock appreciates over the option term, no value will
be realized from the option grants made to the Named Executive Officers.
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<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to the Named
Executive Officers regarding the exercise of stock options by such persons
during fiscal year 1997. No stock appreciation rights were exercised by any
Named Executive Officer during fiscal year 1997 and no stock appreciation
rights were outstanding as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END FISCAL YEAR-END(1)
------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gregory A. Peters........... 112,500 347,500 $267,187 $546,563
Benjamin C. Cohen........... -- -- -- --
Daniel Shiffman............. 81,750 81,250 390,356 299,219
Frank T. Watts.............. 7,500 142,500 17,813 313,438
John P. Bantleman........... -- -- -- --
</TABLE>
- --------
(1) Amounts calculated by subtracting the exercise price of the options from
the market value of the underlying Logic Works Common Stock using the
closing selling price on the Nasdaq National Market of $8.375 per share of
Logic Works Common Stock on December 31, 1997.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Logic Works and Benjamin C. Cohen are parties to a Settlement Agreement and
Mutual Release, dated January 1998. The terms of this agreement provide for
the termination of Mr. Cohen's employment with Logic Works and the payment of
an aggregate of $470,000 in severance over a two-year period. Pursuant to the
terms of Mr. Cohen's previous employment agreement with Logic Works, dated
April 1997, Mr. Cohen received 1997 base annual compensation of $235,000 and
was eligible to receive a bonus of up to $115,000, of which he received
$14,375, in 1997. Mr. Cohen continues to serve as Chairman of the Logic Works
Board.
Logic Works and Gregory A. Peters entered into an agreement, dated March
1998, pursuant to which, in the event of Mr. Peters' involuntarily termination
(as defined), Mr. Peters will be paid six months of base salary in effect at
such termination as severance in six (6) equal monthly installments following
the effective time of termination. If such termination is an involuntary
termination in connection with or within eighteen (18) months following a
change in control, Mr. Peters will receive additional payments in an aggregate
amount equal to six months of his base salary in effect at such termination.
In addition, under this Agreement, if by reason of the Merger, Mr. Peters'
benefits payable to him under the agreement or any of his outstanding stock
options are deemed to constitute an excess parachute payment under Section
280(G) of the Internal Revenue Code, then Mr. Peters will receive a full tax
gross-up with respect to his parachute tax liability under Section 4999 of the
Internal Revenue Code and any similar state or local regulation.
Logic Works and each of Flint A. Lane, Edward G. McLaughlin, Daniel Shiffman
and Frank T. Watts have entered into agreements, dated March 1998, pursuant to
which upon an "involuntary termination" (as defined in such agreements) in
connection with or within eighteen (18) months following a "change in control"
(as defined in such agreements), such individuals (i) will receive severance
payments in six (6) equal monthly installments following the effective time of
termination in an aggregate amount equal to six months of base salary plus the
pro-rated portion of their maximum target bonus for the year in which they
were terminated, and (ii) will be available to perform consulting services
during the six month period following the effective time of termination.
Logic Works and Frank C. Cicio, its former Executive Vice President, Sales
and Marketing, are parties to a Separation, Waiver and Release Agreement,
dated April 1997, pursuant to which Mr. Cicio's employment was terminated
effective November 1996. Pursuant to this agreement, Logic Works accelerated
the vesting period on an option to purchase 45,000 shares of Logic Works
Common Stock, in addition to extending the exercise period for such option.
Mr. Cicio exercised this option and other options between February and July
1997.
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Logic Works and John P. Bantleman, its former Executive Vice President,
Marketing, are parties to a Waiver and Release Agreement, dated May 1997,
pursuant to which Mr. Bantleman's employment was terminated effective May
1997. Pursuant to this agreement, Mr. Bantleman received six (6) months of his
annual base salary in severance payments. In addition, Logic Works forgave the
balance of approximately $7,800, which was owed against an advance of $20,000
made to Mr. Bantleman.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Logic Works Compensation Committee consists of Messrs. Blondin and
Federman and its functions include recommending, reviewing and overseeing
salaries, benefits and stock option plans relating to Logic Works' employees,
consultants, directors and other individuals compensated by Logic Works. Mr.
Robert E. Davoli served on the Logic Works Compensation Committee until his
resignation as director of Logic Works in October 1997, when he was replaced
by Mr. Blondin. The Logic Works Compensation Committee also administers
various incentive compensation, stock option and benefit plans. Certain
members of Logic Works Board are parties to transactions with Logic Works. See
"Certain Transactions Relating to Logic Works."
The Secondary Compensation Committee of Logic Works, formed in December
1997, consists of Mr. Peters and administers the 1995 Plan with respect to
those individuals who are neither officers nor directors of Logic Works
subject to the short-swing profit restrictions of the federal securities laws.
The Secondary Compensation Committee of Logic Works has the authority to make
all option grants under the Plan to such individuals and to otherwise
administer all the terms and provisions of the Plan with respect to such
individuals, subject to guidelines established from time to time by Logic
Works Board.
LOGIC WORKS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Logic Works Compensation Committee advises the Chief Executive Officer
of Logic Works and the Logic Works Board on matters of Logic Works'
compensation philosophy and the compensation of executive officers and other
individuals compensated by Logic Works. The Logic Works Compensation Committee
also is responsible for the administration of Logic Works' 1995 Plan under
which option grants and direct stock issuances may be made to executive
officers. The Logic Works Compensation Committee has reviewed and is in accord
with the compensation paid to executive officers in 1997.
GENERAL COMPENSATION POLICY. The fundamental policy of the Logic Works
Compensation Committee is to provide Logic Works' executive officers with
competitive compensation opportunities based upon their contribution to the
development and financial success of Logic Works and their personal
performance. It is the Logic Works Compensation Committee's objective to have
a portion of each executive officer's compensation contingent upon Logic
Works' performance as well as upon such executive officer's own level of
performance. Accordingly, the compensation package for each executive officer
is comprised of three elements: (i) base salary, (ii) bonus which reflects
both individual performance and the performance of Logic Works which, together
with base salary, is designed primarily to be competitive with salary and
bonus levels in the industry and (iii) long-term, stock-based incentive awards
which strengthen the mutuality of interests between the executive officers and
Logic Works' stockholders.
FACTORS. The principal factors which the Logic Works Compensation Committee
considered with respect to each executive officer's compensation package for
fiscal year 1997 are summarized below. The Logic Works Compensation Committee
may, however, in its discretion apply entirely different factors in advising
the Chief Executive Officer of Logic Works and the Logic Works Board with
respect to executive compensation for future years.
. BASE SALARY. The suggested base salary for each executive officer is
determined on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions within
and without the industry and internal base salary comparability
considerations. The weight given to each of these factors differs from
individual to individual, as the Logic Works Compensation Committee deems
appropriate.
67
<PAGE>
. BONUS. The compensation of executive officers is closely related to Logic
Works and individual performance. A large portion of the cash
compensation of executive officers consists of contingent compensation.
Bonus awards are based on, among other things, Logic Works' budgeted
versus actual earnings per share, relationship between budgeted versus
actual profits, as well as specified individual performance objectives
and goals that are tailored to the responsibilities and functions of key
executives.
. LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided
through grants of stock options. The grants are designed to align the
interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage Logic
Works from the perspective of an owner with an equity stake in Logic
Works. Each option generally becomes exercisable in installments over a
four or five year period, contingent upon the executive officer's
continued employment with Logic Works. Accordingly, the option grant will
provide a return to the executive officer only if the executive officer
remains employed by Logic Works during the vesting period, and then only
if the market price of the underlying shares appreciates.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the executive
officer's current position with Logic Works, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term and the individual's
personal performance in recent periods. The Logic Works Compensation Committee
also considers the number of unvested options held by the executive officer in
order to maintain an appropriate level of equity incentive for that
individual. However, the Logic Works Compensation Committee does not adhere to
any specific guidelines as to the relative option holdings of Logic Works'
executive officers. There were options to purchase 538,000 shares of Logic
Works Common Stock granted to executive officers of Logic Works in 1997.
Through Logic Works' Employee Stock Purchase Plan, Logic Works offers
additional opportunities for equity ownership to executive officers and other
employees.
CEO COMPENSATION. In advising the Board of Directors with respect to the
compensation payable to Logic Works' Chief Executive Officer, the Logic Works
Compensation Committee seeks to achieve two objectives: (i) establish a level
of base salary competitive with that paid by companies within the industry
which are of comparable size to Logic Works and by companies outside of the
industry with which Logic Works competes for executive talent and (ii) make a
significant percentage of the total compensation package contingent upon Logic
Works' performance and stock price appreciation.
The respective base salaries established for Messrs. Cohen and Peters on the
basis of the foregoing criteria were intended to provide a level of stability
and certainty each year. Accordingly, this element of compensation was not
affected to any significant degree by Logic Works' performance factors.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). As a result of Section
162(m) of the Internal Revenue Code of 1986, as amended, which was enacted
into law in 1993, Logic Works will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive
officers which is not considered to be performance based. Compensation which
does qualify as performance-based compensation will not have to be taken into
account for purposes of this limitation. The 1995 Plan contains certain
provisions which are intended to assure that any compensation deemed paid in
connection with the exercise of stock options granted under that plan with an
exercise price equal to the market price of the option shares on the grant
date will qualify as performance-based compensation.
The Compensation Committee does not expect that the non-performance based
compensation to be paid to Logic Works' executive officers for 1998 will
exceed the $1 million limit per officer.
The Logic Works Compensation
Committee
Paul E. Blondin
Charles Federman
68
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LOGIC WORKS STOCK PERFORMANCE GRAPH
Set forth below is a graph comparing the annual percentage change in Logic
Works' cumulative total stockholder return on Logic Works Common Stock from
October 16, 1995 (the date public trading of Logic Works' stock commenced) to
the last day of Logic Works' last completed fiscal year (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (B) the excess of
Logic Works' share price at the end over the price at the beginning of the
measurement period, by (ii) the share price at the beginning of the
measurement period) with the cumulative total return so calculated of the
Nasdaq Stock Market-U.S. Index and a line-of-business index consisting of
companies reporting under the Standard Industrial Classification ("SIC") Code
737 (Nasdaq Computer & Data Processing Services Stocks).
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG SIC CODE 737, NASDAQ STOCK MARKET--U.S. INDEX AND LOGIC WORKS
Nasdaq Stock
Measurement Period SIC Code Market--
(Fiscal Year Covered) 737 U.S. Index LOGIC WORKS
- --------------------- ---------- ------------ -----------
Measurement Pt-
10/17/95 $100 $100 $100
FYE 12/31/95 $105.80 $102.04 $113.64
FYE 12/31/96 $130.66 $125.52 $ 51.14
FYE 12/31/97 $160.44 $154.09 $ 76.14
Notwithstanding anything to the contrary set forth in any of Logic Works'
previous filings under the Securities Act or the Exchange Act which might
incorporate future filings made by Logic Works under those statutes, the
preceding Logic Works Compensation Committee Report on Executive Compensation
and Logic Works' Stock Performance Graph will not be incorporated by reference
into any of those prior filings, nor will such report or graph be incorporated
by reference into any future filings made by Logic Works under those statutes.
69
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT OF LOGIC WORKS
The following table sets forth certain information regarding the beneficial
ownership of Logic Works Common Stock as of April 20, 1998, by (i) each
Director and nominee for Director of Logic Works, (ii) each of the Named
Executive Officers, (iii) each person (or group of affiliated persons) who is
known by Logic Works to own beneficially five percent or more of the
outstanding shares of Logic Works Common Stock, and (iv) all directors and
executive officers of Logic Works as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
LOGIC WORKS COMMON PERCENTAGE OF
STOCK SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(1)
- ------------------------------------ --------------------- --------------
<S> <C> <C>
Paul E. Blondin........................... 36,500(2) *
Benjamin C. Cohen......................... 1,816,833(3) 14.3%
Charles Federman.......................... 30,158(4) *
Richard A. Hosley, II..................... 27,500(5) *
Gregory A. Peters......................... 142,287(6) 1.1
Daniel M. Shiffman........................ 141,000(7) 1.1
Frank T. Watts............................ 32,500(8) *
John P. Bantleman......................... -- --
George D. Bjurman & Associates............ 1,096,390(9) 8.6
All current directors and executive
officers as a group (9 persons).......... 2,277,894(10) 17.4
</TABLE>
- --------
*Represents beneficial ownership of less than one percent of the Common Stock.
(1) Gives effect to the shares of Logic Works Common Stock issuable within 60
days of April 20, 1998 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date. Unless
otherwise indicated, the persons named in the table have sole voting and
sole investment control with respect to all shares beneficially owned.
Applicable percentage of ownership as of April 20, 1998 is based upon
12,702,222 shares of Logic Works Common Stock outstanding. Beneficial
ownership is determined in accordance with the rules of the Commission,
and includes voting and investment power with respect to shares.
(2) Includes 13,750 shares of Logic Works Common Stock issuable upon the
exercise of stock options.
(3) Includes 1,000,000 shares of Logic Works Common Stock owned by COHRAM
Limited Partnership, of which Mr. Cohen is a general partner.
(4) Includes 23,750 shares of Logic Works Common Stock issuable upon the
exercise of stock options.
(5) Includes 27,500 shares of Logic Works Common Stock issuable upon the
exercise of stock options.
(6) Includes 125,000 shares of Logic Works Common Stock issuable upon the
exercise of stock options.
(7) Includes 125,500 shares of Logic Works Common Stock issuable upon the
exercise of stock options.
(8) Includes 32,500 shares of Logic Works Common Stock issuable upon the
exercise of stock options.
(9) Based solely on the information contained in Amendment No. 1 to a
Schedule 13G filed by George D. Bjurman & Associates ("GDBA") with the
Commission as of April 6, 1998, pursuant to the Exchange Act. The address
for GDBA is 10100 Santa Monica Boulevard, Suite 1200, Los Angeles,
California 90067.
(10) See Notes (2) through (8).
CERTAIN TRANSACTIONS RELATING TO LOGIC WORKS
From 1983 to December 1997, Mr. Charles Federman, a director of Logic Works,
held various positions with Broadview Associates, LLC, the financial advisor
of Logic Works in connection with the transactions contemplated in the Merger
Agreement pursuant to the terms of the Broadview Agreement. See "THE MERGER--
Background of the Merger" and "ELECTION OF CLASS III DIRECTOR TO THE LOGIC
WORKS BOARD--Information Regarding Directors Who Are Not Nominees for Election
at the 1998 Annual Meeting."
70
<PAGE>
No stock options or stock appreciation rights were granted to any Named
Executive Officers or Directors of Logic Works during fiscal year 1997, except
to Messrs. Peters, Shiffman and Watts and to Logic Works' non-employee
directors. See "LOGIC WORKS EXECUTIVE COMPENSATION AND OTHER INFORMATION--
Option/SAR Grants in Last Fiscal Year" and "ELECTION OF CLASS III DIRECTOR TO
THE LOGIC WORKS BOARD--Compensation of Directors." In addition, Mr. Lane was
granted, in May 1997, a stock option to purchase 10,000 shares of Logic Works
Common Stock with an exercise price of $5.375 and, in November 1997, stock
options to purchase 105,000 shares of Logic Works Common Stock with an
exercise price of $7.9375.
For information regarding Logic Works' employment and severance agreements
with its executive officers, see "LOGIC WORKS EXECUTIVE COMPENSATION AND OTHER
INFORMATION--Employment and Severance Agreements."
RATIFICATION OF ACCOUNTANTS FOR LOGIC WORKS
Upon the recommendation of the Audit Committee of Logic Works, the Logic
Works Board appointed Ernst & Young LLP, independent public accountants and
auditors of Logic Works since 1993, as auditors of Logic Works to serve for
the year ending December 31, 1998, subject to the ratification of such
appointment by the stockholders at the Meeting. A majority of the votes of the
outstanding shares of Logic Works Common Stock is required to ratify the
appointment of the auditors. Abstentions will be counted as an "against" vote
and broker non-votes will be disregarded and will have no outcome on the vote.
Even if the selection is ratified, the Logic Works Board, in its discretion,
may direct the appointment of a different independent accounting firm at any
time if the Logic Works Board determines that such a change would be in the
best interests of Logic Works and its stockholders. In addition, if the
proposal to approve the Merger Agreement is approved and adopted by the
stockholders of Logic Works and the Merger is consummated, Ernst & Young LLP
will not continue as independent auditors of Logic Works. A representative of
Ernst & Young LLP will attend the Meeting with the opportunity to make a
statement if he or she so desires and will also be available to answer
inquiries.
THE LOGIC WORKS BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF
ERNST & YOUNG LLP AS LOGIC WORKS' INDEPENDENT AUDITORS.
EXPERTS
The consolidated financial statements and related financial statement
schedule of PLATINUM, as of December 31, 1997 and 1996, and for each of the
years in the three-year period ended December 31, 1997, have been incorporated
by reference in this Proxy Statement/Prospectus in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements and schedule of Logic Works, Inc.
appearing in Logic Works, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting and to be available to respond to appropriate questions.
LEGAL MATTERS
The validity of the PLATINUM Common Stock offered hereby and certain federal
income tax matters relating to the Merger will be passed upon for PLATINUM by
Katten Muchin & Zavis, Chicago, Illinois. Certain federal income tax matters
relating to the Merger will be passed upon for Logic Works by Brobeck, Phleger
& Harrison LLP, New York, New York.
71
<PAGE>
PROXY SOLICITATION
The cost of soliciting proxies will be paid by Logic Works. Proxies may be
solicited without extra compensation by certain directors, officers and
regular employees of Logic Works by mail, telegram or personally. Brokers,
nominees, fiduciaries and other custodians will be requested to forward
soliciting materials to the beneficial owners of Logic Works Common Stock and
will be reimbursed by Logic Works for their reasonable expenses in forwarding
such materials. Logic Works may use the services of Morrow & Company to
solicit proxies pursuant to customary contractual terms, with total estimated
fees of approximately $7,500 plus reimbursement of expenses.
Stockholders of Logic Works are urged to return their proxies without delay.
PROPOSALS BY LOGIC WORKS STOCKHOLDERS
FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
If the Merger is not consummated, Logic Works will hold a 1999 Annual
Meeting of Stockholders. In order for proposals of Logic Works stockholders to
be considered for inclusion in the proxy statement relating to its 1999 Annual
Meeting, such proposals must have been received by the Secretary of Logic
Works, in writing not later than December 22, 1998, at its principal office,
111 Campus Drive, Princeton, New Jersey, 08540.
OTHER MATTERS
The Logic Works Board is not aware of any matters to be presented at the
Meeting other than those listed in the notice of the Meeting. If any other
matters do come before the Meeting, it is intended that the holder of proxies
solicited by the Logic Works Board will vote on such other matters in their
discretion in accordance with their best judgments.
72
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
PLATINUM TECHNOLOGY, INC.
PT ACQUISITION CORPORATION II
AND
LOGIC WORKS, INC.
DATED AS OF MARCH 14, 1998
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. THE MERGER.............................................................. A-7
1.1The Merger............................................................ A-7
1.2Effective Time........................................................ A-7
1.3Effect of the Merger.................................................. A-7
1.4Name; Certificate of Incorporation; Bylaws............................ A-8
1.5Directors and Officers................................................ A-8
1.6Effect on Capital Stock............................................... A-8
1.7No Dissenters' Rights................................................. A-9
1.8Surrender of Certificates............................................. A-9
1.9No Further Ownership Rights in Company Capital Stock.................. A-10
1.10Lost, Stolen or Destroyed Certificates............................... A-10
1.11Tax and Accounting Consequences...................................... A-11
1.12Taking of Necessary Action; Further Action........................... A-11
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... A-11
2.1Organization of the Company........................................... A-11
2.2Company Capital Structure............................................. A-11
2.3Obligations With Respect to Capital Stock............................. A-12
2.4Authority; No Conflicts............................................... A-12
2.5SEC Filings; Company Financial Statements............................. A-13
2.6Absence of Certain Changes of Events.................................. A-14
2.7Liabilities........................................................... A-14
2.8Taxes................................................................. A-14
2.9Restrictions on Business Activities................................... A-15
2.10Absence of Liens and Encumbrances.................................... A-15
2.11Intellectual Property................................................ A-16
2.12Agreements, Contracts and Commitments................................ A-18
2.13No Default........................................................... A-19
2.14Governmental Authorization........................................... A-19
2.15Litigation........................................................... A-19
2.16Insurance............................................................ A-19
2.17Labor Matters........................................................ A-19
2.18Employee Benefits.................................................... A-20
2.19Relationships with Related Persons................................... A-21
2.20State "Anti-Takeover" Statutes....................................... A-21
2.21Pooling of Interests................................................. A-21
2.22Change of Control Payments........................................... A-21
2.23Registration Statements; Proxy Statements/Prospectus................. A-22
2.24Board Approval....................................................... A-22
2.25Fairness Opinion..................................................... A-22
2.26Brokers and Finders' Fees............................................ A-22
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................. A-22
3.1Organization of Parent................................................ A-22
3.2Absence of Certain Changes of Events.................................. A-23
3.3Capital Structure..................................................... A-23
3.4Authority; No Conflict ............................................... A-24
3.5SEC Filings; Parent Financial Statements.............................. A-25
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
3.6Liabilities........................................................... A-25
3.7Intellectual Property................................................. A-25
3.8Litigation............................................................ A-26
3.9Employee Benefits..................................................... A-26
3.10Pooling of Interests................................................. A-26
3.11Registration Statement; Proxy Statement/Prospectus................... A-26
3.12Board Approval....................................................... A-27
3.13Fairness Opinion..................................................... A-27
3.14Brokers' and Finders' Fees........................................... A-27
4. CONDUCT PRIOR TO THE EFFECTIVE TIME..................................... A-27
4.1Conduct of Business of the Company.................................... A-27
4.2Conduct by Parent..................................................... A-29
5. ADDITIONAL AGREEMENTS................................................... A-29
5.1Proxy Statement/Prospectus; Registration Statement.................... A-29
5.2Meeting of Stockholders............................................... A-29
5.3Access to Information; Confidentiality................................ A-30
5.4No Solicitation....................................................... A-30
5.5Expenses.............................................................. A-31
5.6Break-Up Fee.......................................................... A-31
5.7Public Disclosure..................................................... A-32
5.8Pooling Accounting.................................................... A-32
5.9Auditors' Letters..................................................... A-32
5.10Affiliate Agreements................................................. A-32
5.11Legal Requirements................................................... A-33
5.12Blue Sky Laws........................................................ A-33
5.13Reasonable Commercial Efforts and Further Assurances................. A-33
5.14Certain Benefit Plans................................................ A-33
5.15Tax-Free Reorganization.............................................. A-34
5.16Nasdaq Listing....................................................... A-34
5.17Indemnification...................................................... A-34
5.18Notification......................................................... A-34
5.19Company Stock Options; Employee Stock Purchase Plan.................. A-34
6. CONDITIONS TO THE MERGER................................................ A-35
6.1Conditions to Obligations of Each Party to Effect the Merger.......... A-35
6.2Additional Conditions to Obligations of The Company................... A-36
6.3Additional Conditions to Obligations of Parent and Merger Sub......... A-36
7. TERMINATION, AMENDMENT AND WAIVER....................................... A-38
7.1Termination........................................................... A-38
7.2Effect of Termination................................................. A-39
7.3Notice of Termination................................................. A-39
7.4Amendment............................................................. A-39
7.5Extension; Waiver..................................................... A-39
8. GENERAL PROVISIONS...................................................... A-39
8.1Non-Survival of Representations and Warranties........................ A-39
8.2Notices............................................................... A-40
8.3Interpretation........................................................ A-40
8.4Counterparts.......................................................... A-40
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C>
8.5Entire Agreement...................................................... A-40
8.6Severability.......................................................... A-41
8.7Other Remedies........................................................ A-41
8.8Governing Law......................................................... A-41
8.9Rules of Construction................................................. A-41
8.10Assignment........................................................... A-41
</TABLE>
A-4
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<S> <C>
"Acquisition Proposal"............................................. Section 5.4
"Affiliates"....................................................... Section 5.10
"Agreement"........................................................ Introduction
"Broadview Engagement Letter"...................................... Section 2.26
"Certificate of Merger"............................................ Section 1.2
"Certificates"..................................................... Section 1.8
"Closing".......................................................... Section 1.2
"Closing Date"..................................................... Section 1.2
"Code"............................................................. Recital D
"Commercial Software".............................................. Section 2.11
"Company".......................................................... Introduction
"Company Affiliate Agreement"...................................... Section 5.10
"Company Affiliate Agreements"..................................... Section 5.10
"Company Balance Sheet"............................................ Section 2.5
"Company Capital Stock"............................................ Section 1.6
"Company December 31st Financials"................................. Section 2.5
"Company Employees"................................................ Section 5.14
"Company Ex-U.S. Pension Plan"..................................... Section 2.18
"Company Financials"............................................... Section 2.5
"Company Intellectual Property Rights"............................. Section 2.11
"Company Negative Event"........................................... Section 5.6
"Company Permits".................................................. Section 2.14
"Company Plan"..................................................... Section 2.18
"Company Schedules"................................................ Section 2
"Company SEC Reports".............................................. Section 2.5
"Company Stock Option"............................................. Section 5.19
"Company Stock Option Plan"........................................ Section 5.19
"Company Stockholders' Meeting".................................... Section 2.23
"Confidentiality Agreements"....................................... Section 5.3
"Conversion Shares"................................................ Section 1.6
"Delaware Law"..................................................... Section 1.1
"Design Documentation"............................................. Section 2.11
"Effective Time"................................................... Section 1.2
"Embedded Products"................................................ Section 2.11
"End-User Licenses"................................................ Section 2.11
"ERISA"............................................................ Section 2.18
"ERISA Affiliate".................................................. Section 2.18
"Exchange Act"..................................................... Section 2.4
"Exchange Agent"................................................... Section 1.8
"Exchange Ratio"................................................... Section 1.6
"Expenses"......................................................... Section 5.6
"Governmental Entity".............................................. Section 2.4
"HSR Act".......................................................... Section 2.4
"Material Adverse Effect".......................................... Sections 2.1
and 3.1
"Material Contract"................................................ Section 2.12
"Merger"........................................................... Recital A
"Merger Sub"....................................................... Introduction
"Millennial Dates"................................................. Section 2.11
"Parent"........................................................... Introduction
</TABLE>
A-5
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<S> <C>
"Parent Affiliate Agreement"....................................... Section 5.10
"Parent Balance Sheet"............................................. Section 3.5
"Parent Common Stock".............................................. Section 1.6
"Parent December 31st Financials".................................. Section 3.5
"Parent Financials"................................................ Section 3.5
"Parent Intellectual Property Rights".............................. Section 3.7
"Parent Plan"...................................................... Section 3.9
"Parent-Provided Plans"............................................ Section 5.14
"Parent Rights".................................................... Section 3.3
"Parent Rights Agreement".......................................... Section 3.3
"Parent Schedules"................................................. Section 3
"Parent SEC Reports"............................................... Section 3.5
"Proxy Statement".................................................. Section 2.23
"Registration Statement"........................................... Section 3.11
"Related Persons".................................................. Section 2.19
"Returns".......................................................... Section 2.8
"Rule 145"......................................................... Section 5.10
"Securities Act"................................................... Section 2.3
"Share Value"...................................................... Section 1.6
"Significant Tax Agreement"........................................ Section 2.8
"Stock Purchase Plan".............................................. Section 5.19
"Substitute Option"................................................ Section 5.19
"Superior Proposal"................................................ Section 5.4
"Surviving Corporation"............................................ Section 1.1
"Tax".............................................................. Section 2.8
"Third Party Intellectual Property Rights"......................... Section 2.11
</TABLE>
A-6
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of March 14, 1998 among PLATINUM technology, inc., a Delaware
corporation ("Parent"), PT Acquisition Corporation II, a Delaware corporation
and wholly-owned subsidiary of Parent ("Merger Sub"), and Logic Works, Inc., a
Delaware corporation (the "Company").
RECITALS
A. The Board of Directors of each of the Company, Parent and Merger Sub
believes that it is in the best interests of each company and their respective
stockholders that the Company and Merger Sub combine into a single company
through the merger of Merger Sub with and into the Company (the "Merger") and,
in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares of
Common Stock of the Company shall be converted into shares of Common Stock of
Parent at the rate determined herein.
C. The Company, Parent and Merger Sub desire to make certain representations
and warranties and other agreements in connection with the Merger.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
E. The parties intend that the Merger shall be recorded for accounting
purposes as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
2. THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
("Delaware Law"), Merger Sub shall be merged with and into the Company, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation. The Company as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 Effective Time. Subject to the provisions of this Agreement, the parties
hereto shall cause the Merger to be consummated by filing the certificate of
merger of Merger Sub and the Company (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in accordance with the relevant
provisions of Delaware Law (the time of such filing being the "Effective
Time") as soon as practicable on or after the Closing Date (as herein
defined). The closing of the Merger (the "Closing") shall take place at the
offices of Parent at a time and date to be specified by the parties, which
shall be no later than the second business day after the satisfaction or
waiver (if permissible) of the conditions set forth in Article VI, or at such
other time, date and location as the parties hereto agree (the "Closing
Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger
Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
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1.4 Name; Certificate of Incorporation; Bylaws.
(a) The name of the Surviving Corporation will be Company's name.
(b) The Certificate of Incorporation of the Company shall be the
Certificate of Incorporation of the Surviving Corporation, except that the
following amendments to the provisions thereof shall be made at the
Effective Time:
(i) Paragraph A of Article IV shall be deleted in its entirety and
replaced with the following:
"A. The total number of shares of all classes of stock which the
corporation shall have authority to issue is 1,000, all of which
shall consist of Common Stock, $.01 par value per share."
(ii) Article V shall be deleted in its entirety and replaced with the
following:
"A. All shares of Common Stock will be identical and will entitle
the holders thereof to the same rights, powers and privileges.
B. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the
Board of Directors.
C. In the event of any dissolution, liquidation or winding up of
the affairs of the corporation, whether voluntary or involuntary,
each issued and outstanding share of Common Stock shall entitle the
holder thereof to receive an equal portion of the net assets of the
corporation available for distribution to the holders of Common
Stock.
D. Except as otherwise required by law or this Certificate of
Incorporation, each holder of Common Stock shall have one vote in
respect of each share of stock held of record by such holder on the
books and records of the corporation for the election of directors
and on all matters submitted to a vote of stockholders of the
corporation. There shall be no cumulative voting.
E. The Common Stock is not redeemable."
(iii) Article XI shall be deleted in its entirety and replaced with
the following:
"The number of directors of the corporation shall be fixed from
time to time by a bylaw or amendment thereof duly adopted by the
Board of Directors or by the stockholders."
(c) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. The directors of Merger Sub shall be the initial
directors of the Surviving Corporation, until their respective successors are
duly elected or appointed and qualified. The officers of Merger Sub shall be
the initial officers of the Surviving Corporation, until their respective
successors are duly elected or appointed and qualified.
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, the Company or the holders
of any of the following securities:
(a) Conversion of Company Capital Stock. Subject to the provisions of
subsections (d) and (e) of this Section 1.6, each share of Common Stock,
par value $.01 per share, of the Company (the "Company Capital Stock")
issued and outstanding immediately prior to the Effective Time (other than
any shares of Company Capital Stock to be canceled pursuant to Section
1.6(b)) will be converted automatically into .5769 shares (the "Conversion
Shares") of Common Stock, par value $0.001 per share, of Parent (the
"Parent Common Stock"). All shares of Company Capital Stock, when
converted, shall no longer be outstanding and shall automatically be
canceled and retired and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the
right to receive (a) any dividends and other distributions in accordance
with Section 1.8(d), (b) certificates representing the shares of Parent
Common Stock into which such shares are converted and (c) any cash, without
interest, in lieu of fractional shares to be issued or paid in
consideration therefor upon the surrender of such certificates in
accordance with Section 1.6(e). The ratio of Conversion Shares per share of
Company Capital Stock is sometimes hereinafter referred to as the "Exchange
Ratio."
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(b) Cancellation of Parent-Owned Stock. Each share of Company Capital
Stock owned by the Company, Merger Sub, Parent, or any direct or indirect
subsidiary of Parent or the Company, including without limitation, any
shares of Company Capital Stock held as treasury stock of the Company or
any direct or indirect subsidiary of the Company, immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) Capital Stock of Merger Sub. Each share of Common Stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one (1) validly issued, fully
paid and nonassessable share of Common Stock, par value $.01 per share, of
the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall be deemed to evidence ownership of such
shares of capital stock of the Surviving Corporation.
(d) Adjustments to the Exchange Ratio. In the event of any
reclassification, stock split or stock dividend with respect to Parent
Common Stock, any change or conversion of Parent Common Stock into other
securities or any other dividend or distribution with respect to Parent
Common Stock (or if a record date with respect to any of the foregoing
should occur) prior to the Effective Time, appropriate and proportionate
adjustments, if any, shall be made to the Exchange Ratio, and all
references to the Exchange Ratio in this Agreement shall be deemed to be to
the Exchange Ratio as so adjusted.
(e) Fractional Shares. No fraction of a share of Parent Common Stock will
be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Capital Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock to be received by such holder)
shall receive from Parent an amount of cash (rounded to the nearest whole
cent) equal to the product of (i) such fraction, multiplied by (ii) the
Share Value as of the Effective Time. For purposes of this Agreement, the
"Share Value" means, as of any date of determination, the average of the
closing (last) prices for a share of Parent Common Stock, as reported on
the Nasdaq National Market (as reported in The Wall Street Journal, Midwest
Edition), for the most recent ten (10) days that the shares of Parent
Common Stock have traded ending on the trading day immediately prior to
such date of determination.
1.7 No Dissenters' Rights. Holders of shares of Company Capital Stock who
dissent from the Merger are not entitled to rights of appraisal under Section
262 of the Delaware Law by virtue of Sections 262(b)(1) and (2) of the
Delaware Law.
1.8 Surrender of Certificates.
(a) Exchange Agent. The Harris Trust and Savings Bank, or another similar
institution selected by Parent and reasonably acceptable to the Company,
shall act as the exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, through such reasonable procedures as
Parent may adopt, the shares of Parent Common Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of Company Capital Stock,
and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(e).
(c) Exchange Procedures. Promptly after the Effective Time, the Exchange
Agent shall cause to be mailed to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Company Capital Stock whose shares
were converted into shares of Parent Common Stock pursuant to Section 1.6,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall be in
such customary form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
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Parent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of Parent Common Stock
into which the shares represented by the surrendered Certificate shall have
been converted at the Effective Time pursuant to this Article I, payment in
lieu of fractional shares which such holder has the right to receive
pursuant to Section 1.6 and certain dividends and other distributions in
accordance with Section 1.8(d), and the Certificate so surrendered shall
forthwith be canceled. Until so surrendered, each outstanding certificate
that, prior to the Effective Time, represented a share of Company Capital
Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends or other distributions, to
evidence the ownership of the number of full shares of Parent Common Stock
into which such shares of Company Capital Stock shall have been so
converted and the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6(e).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time
will be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest: (i) at
the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with
respect to the shares of Parent Common Stock represented by such new
certificate and having a record date on or after the Effective Time and a
payment date prior to such surrender; (ii) at the appropriate payment date
or as promptly as practicable thereafter, the amount of any dividends or
other distributions payable with respect to such shares of Parent Common
Stock and having a record date on or after the Effective Time but prior to
such surrender and a payment date on or subsequent to such surrender; and
(iii) at the time of such surrender or as promptly as practicable
thereafter, the amount of any cash payable with respect to a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 1.6(e).
(e) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have (i) paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name
other than that of the registered holder of the Certificate surrendered, or
(ii) established to the satisfaction of Parent or any agent designated by
it that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Parent Common Stock
or Company Capital Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Company Capital Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of
Company Capital Stock in accordance with the terms hereof (including any cash
paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Capital Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event any certificates
evidencing shares of Company Capital Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof,
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such shares of Parent Common Stock, cash for fractional shares, if any, as may
be required pursuant to Section 1.6(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
1.8(d); provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver a customary bond in such sum as it
may reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
1.11 Tax and Accounting Consequences. It is intended by the parties hereto
that the Merger shall (i) constitute a reorganization within the meaning of
Section 368 of the Code and (ii) qualify for accounting treatment as a pooling
of interests.
1.12 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and
directors of the Surviving Corporation are fully authorized in the name of and
on behalf of the Company and Merger Sub to take, and will take, all such
lawful and necessary action, so long as such action is consistent with this
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, subject to the
exceptions disclosed in writing in the disclosure letter supplied by the
Company to Parent (the "Company Schedules") which identifies the Section
numbers hereof to which the disclosures pertain and which is dated as of the
date hereof, as follows:
2.1 Organization of the Company. Each of the Company and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its property and to carry on its business
as now being conducted, and is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction in which such
qualification is required by virtue of the nature of the activities conducted
by it, except to the extent that the failure to be so qualified and in good
standing could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company (as hereinafter defined).
The Company Schedules contain a true and complete list of all of the Company's
subsidiaries as of the date hereof and the jurisdiction of incorporation of
each subsidiary. The Company owns, directly or indirectly through one or more
subsidiaries, 100% of the capital stock of each of its subsidiaries and there
are no securities exchangeable into or exercisable for any capital stock of
any such subsidiary issued, reserved for issuance or outstanding. Except as
set forth in the Company Schedules, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any interest in, any corporation,
partnership, joint venture or other business association or entity. The
Company has delivered or made available to Parent a true and correct copy of
the Certificate of Incorporation and Bylaws of the Company and similar
governing instruments of each of its subsidiaries, each as amended to the date
hereof. In this Agreement, the term "Material Adverse Effect" used in
reference to the Company or any of its subsidiaries means any event, change or
effect materially adverse to the Company and its subsidiaries, taken as a
whole.
2.2 Company Capital Structure. The authorized capital stock of the Company
consists of 35,000,000 shares of Common Stock, $.01 par value, of which there
were 12,709,698 shares issued and outstanding as of March 12, 1998 (not
including any shares issued on such date upon exercise of options outstanding
on such date) and 2,000,000 shares of Preferred Stock, $.01 par value
("Company Preferred Stock"). No shares of the Company Preferred Stock are
issued and outstanding as of the date hereof and there will be no such shares
outstanding as of the Effective Time. All outstanding shares of Company
Capital Stock are duly authorized, validly issued, fully paid and non-
assessable and are not subject to preemptive rights created by statute, the
Certificate of Incorporation or Bylaws of the Company or any agreement or
document to which the Company is a party or by which it is bound. As of the
date hereof, the Company had reserved 4,933,630 shares of Company
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Capital Stock, net of exercises, for issuance to employees pursuant to the
Company Stock Option Plan (as hereinafter defined), under which options are
outstanding for 2,257,138 shares of Company Capital Stock minus any options
exercised on the date hereof. All shares of Company Capital Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. The Company Schedules include a
list for each outstanding option as of the date hereof, of the following: (i)
the name of the holder of such option, (ii) the number of shares subject to
such option, and (iii) the exercise price of such option. Except for the
repricing of options that occurred on October 21, 1996, no repricing of
options has taken place since December 31, 1995. For the purchase period
ending April 30, 1998, if all current participants continue to contribute at
current levels (assuming the purchase price of such shares to be 85% of the
fair market value of the Company Capital Stock on the first day of the current
offering period), there would be an aggregate of 59,238 shares issuable for
such purchase period pursuant to the Stock Purchase Plan (as hereinafter
defined).
2.3 Obligations with Respect to Capital Stock. Except as set forth in
Section 2.2 hereof, as of the date hereof, there are no equity securities of
any class of the Company, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except
for securities the Company owns, directly or indirectly through one or more
subsidiaries, there are no equity securities of any class of any subsidiary of
the Company, or any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding. Except as set forth
in Section 2.2 hereof and the Company Schedules, as of the date hereof, except
for the vesting of options under the Company Stock Option Plans in connection
with a change in control, and except for obligations of the Company under the
Stock Purchase Plan, there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which the Company or any
of its subsidiaries is a party or by which it is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any of
its subsidiaries or obligating the Company or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option,
warrant, equity security, call, right, commitment or agreement. To the
knowledge of the Company, there are no voting trusts, proxies or other
agreements or understandings with respect to the shares of capital stock of
the Company. No existing rights with respect to the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of shares of
Company Capital Stock, including, but not limited to, demand rights or piggy-
back registration rights, shall apply with respect to any shares of Parent
Common Stock issuable in connection with the Merger.
2.4 Authority; No Conflicts.
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject to obtaining requisite stockholder
approval, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company, subject only to the approval of the
Merger by the vote of the holders of at least a majority of the Company
Capital Stock voting together as one class. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity.
(b) The execution and delivery of this Agreement by the Company does not,
and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation, as
amended, or Bylaws, as amended, of the Company or similar governing
instruments of any of its subsidiaries or (ii) any mortgage, indenture,
lease, contract or other agreement to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or the assets of the Company or any of its subsidiaries is bound, except
for any such conflict, violation, default, right or loss which could not
reasonably be expected to have, individually or in the aggregate, a
Material
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Adverse Effect on the Company, or (iii) any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, any of its subsidiaries or their
respective properties or assets, except for any such conflict, violation,
default, right or loss which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality ("Governmental Entity"),
is required by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except (i) in
connection, or in compliance, with the provisions of the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended ("HSR Act"), the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (ii) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities
of other states in which the Company or any of its subsidiaries is
qualified to do business, (iii) applicable requirements, if any, of The
Nasdaq National Market and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of
which to be obtained or made could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
2.5 SEC Filings; Company Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since October 1995. All such required forms, reports and
documents are referred to herein as the "Company SEC Reports." As of their
respective dates, the Company SEC Reports (i) complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
None of the Company's subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports (the
"Company Financials"), including any Company SEC Reports filed after the
date hereof until the Closing, and the consolidated audited balance sheet
of the Company and its subsidiaries as of December 31, 1997 and the
consolidated audited statement of operations for the twelve month period
then ended, true and correct copies of which were delivered to the Parent
prior to the date hereof (the "Company December 31st Financials"), (x)
complies or complied, as the case may be, as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (y) was prepared (or will be prepared, as the case may be) in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be
indicated therein or in the notes thereto) and (z) fairly presented (or
will fairly present, as the case may be) in all material respects the
consolidated financial position of the Company and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited
financial statements do not include footnote disclosure of the type
associated with audited financial statements and were or are subject to
normal and recurring year-end adjustments and to any other adjustments
described therein. The consolidated audited balance sheet of the Company
and its subsidiaries included in the Company December 31st Financials is
hereinafter referred to as the "Company Balance Sheet."
(c) As of the date hereof, there are no material amendments or
modifications to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the
Securities Act or the Exchange Act or any other agreements, documents or
other instruments, which have not yet been filed with the SEC but which are
or will be required to be filed by the Company.
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2.6 Absence of Certain Changes of Events. Since the date of the Company
Balance Sheet, except with respect to the actions contemplated by this
Agreement, each of the Company and its subsidiaries has conducted its business
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (i) as of the date hereof, any Material
Adverse Effect on the Company or any development that could reasonably be
expected to have a Material Adverse Effect on the Company; (ii) any property
damage, destruction or loss (whether or not covered by insurance) on the
Company or any of its subsidiaries that has had or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company; (iii) any material change by the Company or any of its
subsidiaries in its accounting methods, principles or practices; (iv) any
material revaluation by the Company or any of its subsidiaries of any of its
assets, including, without limitation, writing down the value of capitalized
software or inventory or deferred tax assets or writing off notes or accounts
receivable other than in the ordinary course of business; (v) any labor
dispute or charge of unfair labor practice, which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company, or any activity or proceeding by a labor union or representative
thereof to organize any employee of the Company or any of its subsidiaries or
any campaign being conducted to solicit authorization from employees to be
represented by such labor union; (vi) any waiver by the Company or any of its
subsidiaries of any rights of material value; or (vii) any other action or
event that would have required the consent of the Parent pursuant to Section
4.1 had such action or event occurred after the date of this Agreement.
2.7 Liabilities. Except (a) for normal or ordinary recurring liabilities
incurred in the ordinary course of business consistent with past practice, (b)
for transaction expenses incurred in connection with this Agreement, (c) for
liabilities set forth on the Company Balance Sheet, or (d) as set forth in the
Company Schedules, since December 31, 1997, neither the Company nor any of its
subsidiaries has incurred any liabilities that either (i) would be required to
be reflected or reserved against in a consolidated balance sheet of the
Company and its subsidiaries prepared in accordance with generally accepted
accounting principles as applied in preparing the Company Balance Sheet, or
(ii) could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
2.8 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign, taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and including
any liability for taxes of a predecessor entity. For purposes of this
Agreement, a "Significant Tax Agreement" is any agreement to which the
Company or any subsidiary of the Company is a party under which the Company
or such subsidiary could reasonably be expected to be liable to another
party under such agreement in an amount in excess of $10,000 in respect of
Taxes payable by such other party to any taxing authority.
(b) Tax Returns and Audits. Except as set forth in the Company Schedules:
(i) The Company and each of its subsidiaries has timely filed all
federal, state, local and foreign returns, information statements and
reports relating to Taxes ("Returns") required by applicable Tax law to
be filed by the Company and each of its subsidiaries, except for any
such failures to file that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company. All Taxes owed by the Company or any of its subsidiaries to a
taxing authority, or for which the Company or any of its subsidiaries
is liable, whether to a taxing authority or to other persons or
entities under a Significant Tax Agreement, as of the date hereof, have
been paid and, as of the Effective Time, will have been paid, except
for any such failure to pay that could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
the Company. The Company has made (A) accruals for Taxes on the Company
Balance Sheet and (B) with respect to periods after the date of the
Company Balance Sheet, provisions on a periodic basis consistent with
past practice on the Company's or one of its subsidiaries' books and
records or financial statements, in
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each case which are adequate to cover any Tax liability of the Company
and each of its subsidiaries determined in accordance with generally
accepted accounting principles through the date of the Company Balance
Sheet or the date of the provision, as the case may be, except where
failures to make such accruals or provisions could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company.
(ii) Except to the extent that any such failure to withhold could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, the Company and each of its
subsidiaries have withheld with respect to its employees all federal
and state income taxes, FICA, FUTA and other Taxes required to be
withheld.
(iii) There is no Tax deficiency outstanding, proposed or assessed
against the Company or any of its subsidiaries, except any such
deficiency that, if paid, could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company. Neither the Company nor any of its subsidiaries has executed
or requested any waiver of any statute of limitations on or extending
the period for the assessment or collection of any federal or material
state Tax.
(iv) No federal or state Tax audit or other examination of the
Company or any of its subsidiaries is presently in progress, nor has
the Company or any of its subsidiaries been notified in writing of any
request for such federal or material state Tax audit or other
examination, except in all cases for Tax audits and other examinations
which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(v) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Company.
(vi) Neither the Company nor any of its subsidiaries is a party to
(A) any agreement with a party other than the Company or any of its
subsidiaries providing for the allocation or payment of Tax liabilities
or payment for Tax benefits with respect to a consolidated, combined or
unitary Return which Return includes or included the Company or any
subsidiary or (B) any Significant Tax Agreement other than any
Significant Tax Agreement described in (A).
(vii) Except for the group of which the Company and its subsidiaries
are now presently members, neither the Company nor any of its
subsidiaries has ever been a member of an affiliated group of
corporations within the meaning of Sections 1504 of the Code.
(viii) Neither the Company nor any of its subsidiaries has agreed to
make nor is it required to make any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise.
(ix) The Company is not, and has not at any time been, a "United
States Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
(x) Neither the Company nor any of its subsidiaries has made any
payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments, that will not be deductible under Section 280G of the
Code.
2.9 Restrictions on Business Activities. Except as set forth in the Company
Schedules, there is no agreement, judgment, injunction, order or decree
binding upon the Company or its subsidiaries or their properties (including,
without limitation, their intellectual properties) which has or could
reasonably be expected to have the effect of prohibiting or materially
impairing the conduct of any business by the Company or any of its
subsidiaries.
2.10 Absence of Liens and Encumbrances. Each of the Company and its
subsidiaries has good, valid, and marketable title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its
properties and assets (whether real, personal or mixed, and whether tangible
or intangible), necessary for the conduct of its business, free and clear of
any liens and encumbrances, except (i) as reflected in the Company
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Balance Sheet, (ii) liens for Taxes not yet due and payable, and (iii) such
liens and encumbrances that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
2.11 Intellectual Property.
(a) Except as set forth in the Company Schedules, the Company or its
subsidiaries owns, or is licensed, or otherwise possesses legally
enforceable rights, to use, sell or license, as applicable, all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, maskworks, schematics, technology, trade secrets, know-how,
computer software (in both source code and object code form), and tangible
or intangible proprietary information or material (excluding in each case
Commercial Software (as defined below)) that are material to the business
of the Company or its subsidiaries as currently conducted (the "Company
Intellectual Property Rights"). Except as disclosed in the Company
Schedules, each of the Company and its subsidiaries has licenses for all
Commercial Software used in its business and neither the Company nor any
subsidiary has any obligation to pay fees, royalties or other amounts in
excess of $1,000 at any time after the date hereof pursuant to any such
license, other than customary annual maintenance fees. "Commercial
Software" means commercially available software programs generally
available to the public which have been licensed to the Company or any of
its subsidiaries pursuant to end-user licenses and which are used in the
Company's or any of its subsidiaries' respective businesses.
(b) The Company Schedules set forth a complete list of all licenses,
sublicenses and other agreements as to which the Company or any of its
subsidiaries is a party (as licensor, licensee or otherwise) and pursuant
to which the Company or any of its subsidiaries or any other person is
authorized to use, sell, distribute or license any Company Intellectual
Property Rights (excluding (i) object code end-user licenses granted to
end-users pursuant to the Company's standard forms of end-user license, or
any other document that is substantially similar to such forms, in the
ordinary course of business that permit use and configuration of software
products without a right to modify, distribute or sublicense the same
("End-User Licenses") and (ii) licenses, sublicenses or other agreements
with resellers and distributors that grant non-exclusive rights to use or
modify and resell or sublicense object code which (A) did not in any
individual case represent $50,000 or more of revenues to the Company in
1997 on a consolidated basis, and (B) the Company has no reason to believe
it will be material to the Company's or any of its subsidiaries' business).
Neither the Company nor any of its subsidiaries is in violation of any such
license, sublicense or agreement, except for such violations that could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(c) Except for Embedded Products (as defined below) for which the Company
has valid non-exclusive licenses which are disclosed in the Company
Schedules and which are adequate for the Company and its subsidiaries'
business as currently conducted, and, except as otherwise disclosed in the
Company Schedules, the Company or one of its subsidiaries is the sole and
exclusive owner of the Company Intellectual Property Rights (free and clear
of any liens or encumbrances), and has sole and exclusive rights to the use
and distribution therefor or the material covered thereby in connection
with the services or products in respect of which such Company Intellectual
Property Rights are currently being used, sold, licensed or distributed.
The Company Schedules list all material written licenses, sublicenses and
other agreements as to which Company or any of its subsidiaries is a party
and pursuant to which Company or any such subsidiary is authorized to use
any third party patents, patent rights, trademarks, service marks, trade
secrets or copyrights, including software ("Third Party Intellectual
Property Rights") which are incorporated in any existing product or service
of Company or any of its Subsidiaries ("Embedded Products"). Neither the
Company nor any of its subsidiaries is contractually obligated to pay
compensation to any third party with respect to any Company Intellectual
Property Rights, except pursuant to the agreements disclosed on the Company
Schedules.
(d) To the Company's knowledge, neither the Company nor any of its
subsidiaries has infringed on any intellectual property rights of any third
persons, except for infringements that could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
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(e) Except as disclosed in the Company Schedules, no claims with respect
to the Company Intellectual Property Rights are pending or, to the
knowledge of the Company, threatened by the Company or any third party, (i)
alleging that the manufacture, sale, licensing or use of any Company
Intellectual Property Rights as now manufactured, sold, licensed or used by
the Company or any of its subsidiaries or any third party infringes on any
intellectual property rights of any third party or the Company, or (ii)
challenging the ownership, by the Company or any of its subsidiaries, or
the validity or effectiveness, of any such Company Intellectual Property
Rights; provided, however, no disclosure pursuant to this paragraph (e)
shall be required with respect to any Company Intellectual Property Rights
which are licensed to the Company or any of its subsidiaries on a non-
exclusive basis, unless the Company has actual knowledge of a pending or
threatened claim and such claim, if true, could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(f) Except as disclosed in the Company Schedules, neither the Company nor
any of its subsidiaries has entered into any agreement under which the
Company or its subsidiaries is restricted from selling, licensing or
otherwise distributing any products to any class or type of customers, in
any geographic area or during any period of time.
(g) The Company or one of its subsidiaries has taken reasonable security
measures to safeguard and maintain their respective property rights in, all
Company Intellectual Property Rights owned by the Company or any of its
subsidiaries. Except as disclosed in the Company Schedules, all officers,
employees and consultants of the Company or any of its subsidiaries who
have access to proprietary information have executed and delivered to the
Company or one of its subsidiaries an agreement regarding the protection of
proprietary information, and the assignment to or ownership by the Company
or one of its subsidiaries of all Company Intellectual Property Rights
arising from the services by such persons performed for the Company or any
of its subsidiaries. To the knowledge of the Company, no current or prior
officers, employees or consultants of the Company or any of its
subsidiaries claim, and neither the Company nor any of its subsidiaries is
aware of any grounds that would form the reasonable basis to claim, any
ownership interest in any Company Intellectual Property Right as a result
of having been involved in the development of such property while employed
by or consulting to the Company or one of its subsidiaries, or otherwise.
Except as disclosed in the Company Schedules and except for Embedded
Products, all of the computer software products within the Company
Intellectual Property Rights have been developed by employees of the
Company or its subsidiaries within the scope of their employment or by
consultants who have assigned all rights to such products to the Company or
its subsidiaries.
(h) To the knowledge of the Company, as of the date hereof, there are no
defects in the Company's or any of its subsidiaries' software products, and
there are no errors in any documentation, specifications, manuals, user
guides, promotional material, internal notes and memos, technical
documentation, drawings, flow charts, diagrams, source language statements,
demo disks, benchmark test results, and other written materials related to,
associated with or used or produced in the development of the Company's or
any of its subsidiaries' software products (collectively, the "Design
Documentation"), which defects or errors would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Except as disclosed in the Company Schedules, the occurrence in or
use by any computer software included in the Company Intellectual Property
Rights, of dates on or after January 1, 2000 (the "Millennial Dates") will
not adversely affect the performance of such software with respect to date
dependent data, computations, output or other functions (including without
limitation, calculating, computing and sequencing) and such software will
create, sort and generate output data related to or including Millennial
Dates that are properly entered without any material errors or omissions;
provided, however that the foregoing warranty does not apply to any
Millennial Date defect or any other deficiency in any product (other than
Embedded Products) or other item or service not developed, acquired, sold,
provided or performed by the Company or its subsidiaries.
(i) No government funding or university or college facilities were used
in the development of the computer software programs or applications owned
by the Company or one of its subsidiaries.
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(j) To the knowledge of the Company, neither the Company nor any of its
subsidiaries has made any material written representations or warranties
with respect to its products or services other than those set forth in End-
User Licenses or agreements disclosed in any of the Company Schedules.
2.12 Agreements, Contracts and Commitments. Except as set forth in the
Company Schedules or in the Exhibits to the Company SEC Reports filed prior to
the date of this Agreement, as of the date of this Agreement neither the
Company nor any of its subsidiaries is a party to nor is it or its assets
bound by any Material Contract. For purposes of this Agreement, "Material
Contract" means:
(a) any collective bargaining agreements;
(b) any employment or consulting agreement, contract or binding
commitment (including royalty agreements with employees) providing for
compensation or payments in excess of $50,000 in any year not terminable by
the Company or its subsidiary on thirty days notice without liability,
except to the extent general principles of wrongful termination or other
employment law may limit the Company's or its subsidiary's ability to
terminate employees at will;
(c) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan, or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of
which will be accelerated or the right to benefits will be created, by the
occurrence of any of the transactions contemplated by this Agreement;
(d) any agreement of indemnification or guaranty not entered into in the
ordinary course of business with any party in excess of $100,000
individually or in the aggregate, and any agreement of indemnification or
guarantee between the Company or any of its subsidiaries and any of its
officers or directors, irrespective of the amount of such agreement or
guarantee;
(e) Any agreement, contract or binding commitment containing any covenant
directly or indirectly limiting the freedom of the Company or any of its
subsidiaries to engage in any line of business, compete with any person, or
sell any product, or following the consummation of the Merger would so
limit Parent, the Company or any of Company's subsidiaries;
(f) any agreement, contract or binding commitment relating to capital
expenditures and involving future obligations in excess of $250,000;
(g) any agreement, contract or binding commitment relating to the
disposition or acquisition of assets not in the ordinary course of business
(since March 1, 1996) or any ownership interest in any corporation,
partnership, joint venture or other business enterprise;
(h) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of
money or extension of credit (other than extensions of credit in the
ordinary course of business from vendors);
(i) any joint marketing or development agreement (including any
agreements with independent contractors);
(j) other than in connection with the transactions contemplated by this
Agreement, any other agreement, contract or binding commitment (excluding
real and personal property leases) which involves payment by the Company or
any of its subsidiaries of $100,000 or more in any twelve (12) month period
or $250,000 in the aggregate and which cannot be Terminated on 30 days
notice without cost or expense to the Company or its subsidiaries;
(k) any escrow agreements involving Company Intellectual Property Rights
(including source codes);
(l) any agreements to register its securities; or
(m) any other material agreements, contracts or binding commitments.
The numerical thresholds set forth in this Section 2.12 shall not be deemed
in any respects to define materiality for other purposes of this Agreement.
The Company has provided or made available to Parent true and complete copies
of all Material Contracts as amended to date.
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2.13 No Default. Except as set forth in the Company Schedules, neither the
Company nor any of its subsidiaries has breached, or received in writing any
claim or threat that it has breached, in any material respect, any Material
Contract. Each Material Contract that has not expired or been terminated in
accordance with its terms is in full force and effect, except for such
Material Contracts for which the failure to be in full force and effect could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
2.14 Governmental Authorization. Each of the Company and its subsidiaries
holds all permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities which are material to the operation of its business
as currently conducted (the "Company Permits"). Neither the Company nor any of
its subsidiaries is in violation of the terms of the Company Permits, except
for violations which could not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company. The business of
the Company and its subsidiaries is not being, and the business of the Company
and its subsidiaries (and any prior subsidiaries (but only with respect to the
period prior to the disposition of such subsidiary)) currently or previously
conducted has not been, conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations which could not
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. No material investigation or review by any
Governmental Entity with respect to the Company or any of its subsidiaries is
pending or, to the knowledge of the Company, threatened.
2.15 Litigation. Except as set forth in the Company Schedules, there is no
suit, action, arbitration, demand, claim or proceeding pending, or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, except for suits, actions, arbitrations, demands, claims and
proceedings which could not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company; nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. The Company has made available to
Parent or its counsel correct and complete copies of all correspondence
prepared by its counsel for the Company's auditors in connection with the last
two completed audits of the Company's financial statements and any such
correspondence since the date of the last such audit.
2.16 Insurance. The Company and each of its subsidiaries maintains in full
force and effect insurance on its assets and its business and operations
against loss or damage, risks, hazards, and liabilities of any kinds on and in
the amounts customarily insured against by corporations engaged in the same or
similar businesses.
2.17 Labor Matters. Each of the Company and its subsidiaries has complied
with all applicable laws, and there is no allegation, charge or complaint or
proceeding pending or, to the Company's knowledge, threatened against the
Company, its subsidiaries or any of their officers, directors or employees,
relating to the employment of labor, including with respect to employment,
equal employment opportunity, discrimination, harassment, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
other taxes, workers compensation or long term disability, except, in each
case, for any such non-compliance, allegations, charges, complaints or
proceedings which could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company. Except as set forth
in the Company Schedules, there has never been, there is not presently pending
or existing, and to the Company's knowledge there is not threatened, any labor
arbitration, or proceeding in respect of the grievance of any employee, or
other labor dispute against or affecting the Company or any of its
subsidiaries, except, in each case, for any of the foregoing which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, or, to the knowledge of the Company, any
strike, slowdown, picketing, work stoppage, organizational activity or
application or complaint filed by an employee or union with the National Labor
Relations Board or any comparable governmental authority. No application for
certification of a collective bargaining agent is pending or, to the Company's
knowledge, threatened. There is no lockout of any employees by the Company or
any of its subsidiaries, and no such action is contemplated by the Company or
any of its
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subsidiaries. As of the date hereof, neither the Company nor any of its
subsidiaries has given to or received from any current officer, employee at
the level of director or Vice President, or director of the Company or any of
its subsidiaries written notice of termination of employment or has the
knowledge that any such officer, manager, key employee or director intends to
terminate such employment.
2.18 Employee Benefits.
(a) The Company Schedules contain a list of each Company Plan (as
hereinafter defined) maintained by the Company or any of its subsidiaries.
With respect to each Company Plan, the Company has delivered to Parent
prior to the date hereof, to the extent applicable, a true and correct copy
of (i) such Company Plan and all amendments thereto, (ii) each trust
agreement, insurance contract or administration agreement relating to such
Company Plan, (iii) the most recent summary plan description for each
Company Plan for which a summary plan description is required, (iv) the
most recent annual report (Form 5500) filed with the IRS, (v) the most
recent actuarial report or valuation relating to a Company Plan subject to
Title IV of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (vi) the most recent determination letter, if any, issued by the
IRS with respect to any Company Plan intended to be qualified under section
401(a) of the Code, (vii) any request for a determination currently pending
before the IRS and (viii) all correspondence with the IRS, the Department
of Labor or the Pension Benefit Guaranty Corporation relating to any
outstanding controversy. Except as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company, (i) each Company Plan complies with ERISA, the Code and all other
applicable statutes and governmental rules and regulations, (ii) no
"reportable event" (within the meaning of Section 4043 of ERISA) has
occurred within the past three years with respect to any Company Plan which
is likely to result in liability to the Company and (iii) no action has
been taken, or is currently being considered, to terminate any Company Plan
subject to Title IV of ERISA. At no time has the Company or any of its
ERISA Affiliates (as hereinafter defined) been required to contribute to,
or otherwise had any liability with respect to, a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA).
(b) There has been no failure to make any contribution or pay any amount
due to any Company Plan as required by Section 412 of the Code, Section 302
of ERISA, or the terms of any such Plan, and no Company Plan, nor any trust
created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived.
(c) There are no actions, suits or claims pending or, to the knowledge of
the Company, threatened (other than routine claims for benefits) with
respect to any Company Plan which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Neither the Company nor any of its ERISA Affiliates has incurred or could
reasonably be expected to incur any material liability under or pursuant to
Title IV of ERISA, including, without limitation, any material liability in
the event of the involuntary termination of any Company Plan subject to
Title IV of ERISA. No prohibited transactions described in Section 406 of
ERISA or Section 4975 of the Code have occurred which could reasonably be
expected to result in material liability to the Company or its
subsidiaries. All Company Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so
qualified, and, to the Company's knowledge, there is no reason why any
Company Plan is not so qualified in operation. Neither the Company nor any
of its ERISA Affiliates has any liability or obligation under any welfare
plan to provide life insurance or medical benefits after termination of
employment to any employee or dependent other than as required by Part 6 of
Title I of ERISA or as disclosed in the Company Schedules.
(d) As used herein, (i) "Company Plan" means a "pension plan" (as defined
in Section 3(2) of ERISA), a "welfare plan" (as defined in Section 3(1) of
ERISA), or any bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
vacation, severance, death benefit, insurance or other plan, arrangement or
understanding, in each case established, maintained or contributed to by
the Company or any of its ERISA Affiliates or as to which the Company or
any of its ERISA Affiliates or otherwise may have any liability and (ii)
with respect to any person, "ERISA Affiliate" means any trade or business
(whether or not incorporated) which is under
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common control or would be considered a single employer with such person
pursuant to Section 414(b), (c), (m) or (o) of the Code and the regulations
promulgated under those sections or pursuant to Section 4001(b) of ERISA
and the regulations promulgated thereunder.
(e) The Company Schedules contain a list of each Company Ex-U.S. Pension
Plan and the Company has made available to Parent prior to the date hereof
a copy of any written plan document with respect thereto. Except for non-
compliance that could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company, each such plan
has been maintained in compliance with all applicable laws, orders and
regulations, and the fair market value of the assets of each such plan
which is intended to be a funded plan or arrangement equals or exceeds the
value of the accrued benefits. "Company Ex-U.S. Pension Plan" shall mean
any arrangement providing retirement pension benefits that is established
or maintained by the Company or any of its subsidiaries exclusively for the
benefit of employees who are or were employed outside the United States.
(f) The Company Schedules contain a list of all (i) severance and
employment agreements with officers and employees of the Company and each
ERISA Affiliate, (ii) severance plans, programs and policies of the Company
with or relating to its employees and (iii) plans, programs, agreements and
other arrangements of the Company with or relating to its employees which
contain change of control or similar provisions. The Company has provided
to Parent a true and complete copy of each of the foregoing.
2.19 Relationships with Related Persons. Except as disclosed in the Company
SEC Reports filed prior to the date hereof and except as set forth on the
Company Schedules, there are no, and since January 1, 1997 have not been any,
undischarged contracts or agreements or other material transactions between
the Company or any of its subsidiaries, on the one hand, and any director or
executive officer of the Company or any of their respective Related Persons
(as defined below), on the other hand, and no director or executive officer of
the Company or any of their respective Related Persons have any interest in
any of the assets of the Company or any of its subsidiaries. For purposes
hereof, the term "Related Persons" shall mean: (a) each other member of such
individual's Family and (b) any person or entity that is directly or
indirectly controlled by any one or more members of such individual's Family.
For purposes of this definition, the "Family" of an individual includes (i)
such individual, (ii) the individual's spouse, siblings, or ancestors (iii)
any lineal descendant of such individual, or their siblings, or ancestors or
(iv) a trust for the benefit of the foregoing.
2.20 State "Anti-Takeover" Statutes. The Board of Directors of the Company
has taken all necessary action so that neither Section 203 of Delaware law nor
any other "fair price" or "control share acquisition" statute or other similar
statute or regulation will apply to the Merger or this Agreement or the
transactions contemplated hereby.
2.21 Pooling of Interests. To the knowledge of the Company, based on
consultation with its independent accountants, neither the Company nor its
directors, officers or stockholders has taken any action which would preclude
(i) Parent's ability to account for the Merger as a pooling of interests or
(ii) Parent's, Surviving Corporation's or the Company's ability to continue to
account for as a pooling of interests any past acquisition by the Company
currently accounted for as a pooling of interests.
2.22 Change of Control Payments. Except as set forth on the Company
Schedules, except for the acceleration of vesting of outstanding stock options
in accordance with the terms of the Company Stock Option Plans, except for
employment agreements with directors and officers entered into before the date
of this Agreement and filed with the SEC and except as contemplated by this
Agreement, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director or employee
of the Company or any of its subsidiaries from the Company or any of its
subsidiaries, under any Company Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Company Plan, (iii) result in the
acceleration of the time of payment or vesting of any such benefits or (iv)
create a right to receive payments upon a subsequent termination of
employment.
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2.23 Registration Statements; Proxy Statements/Prospectus. The information
supplied by the Company for inclusion in the Registration Statement (as
defined in Section 3.7) shall not at the time the Registration Statement is
filed with the SEC and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. The information supplied by or concerning
the Company for inclusion in the proxy statement/prospectus to be sent to the
stockholders of the Company in connection with the meeting of the Company's
stockholders to consider the Merger (the "Company Stockholders' Meeting")
(such proxy statement/prospectus as amended or supplemented is referred to
herein as the "Proxy Statement") shall not, on the date the Proxy Statement is
first mailed to the Company's stockholders, at the time of the Company
Stockholders' Meeting or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false or misleading. The Proxy
Statement will comply (with respect to the Company) as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time any event relating to
the Company or any of its affiliates, officers or directors should be
discovered by the Company which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, the Company
shall promptly inform Parent. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to any information supplied by or
concerning Parent or Merger Sub which is contained in any of the foregoing
documents.
2.24 Board Approval. The Board of Directors of the Company, has, on or prior
to the date hereof, approved this Agreement and the Merger.
2.25 Fairness Opinion. The Board of Directors of the Company has received a
written opinion from Broadview Associates LLC, dated no later than the date
hereof, that the Exchange Ratio contemplated by this Agreement is fair to the
Companys shareholders from a financial point of view and has delivered to
Parent a copy of such opinion.
2.26 Brokers' and Finders' Fees. Neither the Company nor any of its
subsidiaries has incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby, except for a fee due to Broadview Associates LLC at the Effective Time
pursuant to an agreement, a copy of which has been provided to Parent (the
"Broadview Engagement Letter").
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, subject to the
exceptions specifically disclosed in the disclosure letter supplied by Parent
to the Company (the "Parent Schedules") and dated as of the date hereof as
follows:
3.1 Organization of Parent. Each of Parent and its material subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power to own,
lease and operate its property and to carry on its business as now being
conducted, and is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which such qualification is
required by virtue of the nature of activities conducted by it, except to the
extent that the failure to be so qualified and in good standing could not
reasonably be expected to have, individual or in the aggregate, a Material
Adverse Effect on Parent. In this Agreement, the term "Material Adverse
Effect" used in reference to the Parent and its subsidiaries means any event,
change or effect materially adverse to the Parent and its subsidiaries, taken
as a whole. Parent has delivered or made available a true and correct copy of
the Certificate of Incorporation and Bylaws or other charter documents of
Parent, each as amended to date, to counsel for the Company.
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3.2 Absence of Certain Changes of Events. Except as described in the Parent
SEC Reports (as hereinafter defined) filed prior to the date hereof, and
except with respect to the actions contemplated by this Agreement, since the
date of the Parent Balance Sheet (as hereinafter defined) the Parent has
conducted its business only in the ordinary course and in a manner consistent
with past practice and, since such date, there has not been (i) any Material
Adverse Effect on the Parent or any development that could reasonably be
expected to have a Material Adverse Effect on the Parent; (ii) any damage,
destruction or loss (whether or not covered by insurance) on the Parent or any
of its material subsidiaries that has had or could reasonably be expected to
have a Material Adverse Effect on the Parent; (iii) any material change by the
Parent or any of its material subsidiaries in its accounting methods,
principles or practices; (iv) any material revaluation by the Parent or any of
its material subsidiaries of any of its assets, including, without limitation,
writing down the value of capitalized software or inventory or deferred tax
assets or writing off notes or accounts receivable other than in the ordinary
course of business; (v) any labor dispute or charge of unfair labor practice
which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent, any activity or proceeding by
a labor union or representative thereof to organize any employee of the Parent
or any of its material subsidiaries or any campaign being conducted to solicit
authorization from employees to be represented by such labor union; or (vi)
any waiver by the Parent of any rights of material value.
3.3 Capital Structure.
(a) As of the date hereof of, the authorized capital stock of Parent
consists of 180,000,000 shares of Common Stock, $.001 par value, of which
64,764,051 shares were issued and outstanding as of March 11, 1998 (not
including any shares issued on or after such date upon exercise of options
outstanding on such date) and 10,000,000 shares of Class II Preferred
Stock, $.01 par value, 1,000,000 shares of which (subject to adjustment
upward or downward by the Parent's Board of Directors) have been designated
Series A Junior Participating Preferred Stock and 1,775,000 of which
(subject to adjustment upward or downward in accordance with the Parent's
Certificate of Incorporation, as amended) have been designated as Class II
Series B Preferred Stock. No shares of the Series A Junior Participating
Preferred Stock are issued or outstanding as of the date hereof. The shares
of Parent Common Stock to be issued pursuant to the Merger and upon the
exercise of Substitute Options will include a corresponding number of
rights (such rights being hereinafter referred to collectively as "Parent
Rights") to purchase shares of Series A Junior Participating Stock pursuant
to the Rights Agreement dated as of December 21, 1995 (the "Parent Rights
Agreement") between Parent and Harris Trust and Savings Bank, as Rights
Agent. The authorized capital stock of Merger Sub consists of 1,000 shares
of Common Stock, $.01 par value, 1,000 shares of which are issued and
outstanding and held by Parent. A total of 1,768,421 shares of Class II
Series B Preferred Stock are issued and outstanding as of the date hereof.
All of the foregoing shares have been duly authorized, and all such issued
and outstanding shares have been validly issued, are fully paid and
nonassessable and are free of any liens or encumbrances other than any
liens or encumbrances created by or imposed upon the holders thereof. The
registered holders of Parent Common Stock have Parent Rights, pursuant to
the Parent Rights Agreement. The description and terms of the Parent Rights
are set forth in the Parent Rights Agreement.
(b) As of the date hereof, Parent has also reserved (i) 862,850 shares of
Common Stock for issuance to the Parent's officers, directors, employees or
independent contractors or affiliates thereof under the Parent's 1989 Stock
Option Plan, (ii) 115,000 shares of Common Stock for issuance to the Chief
Executive Officer of the Parent under the Parent's Chief Executive Officer
Stock Option Plan, (iii) 2,416,506 shares of Common Stock for issuance to
the Parent's officers, directors, employees or independent contractors or
affiliates thereof under the Parent's 1991 Stock Option Plan, (iv) 498,000
shares of its Common Stock for issuance to non-employee directors of the
Parent under the Parent's Directors' Stock Option Plan, (v) 1,000,000
shares of its Common Stock for issuance to officers, directors, employees,
independent contractors or other service providers of the Parent under the
1994 Stock Incentive Plan, (vi) 8,268,203 shares of its Common Stock for
issuance to officers, directors, employees, independent contractors or
other service providers of the Parent under the Parent's 1995 Employee
Incentive Compensation Plan, (vii) 1,768,421 shares (subject to adjustment
upward or downward) of its Common Stock for issuance upon conversion of
outstanding shares of Class II Series B Preferred Stock, and (viii)
8,243,010 shares of
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Common Stock for issuance upon the election by the holders of 6 3/4%
Convertible Subordinated Notes to convert such notes into shares of Common
Stock as provided therein and (ix) 4,160,600 shares of Common Stock for
issuance upon the election by the holders of 6.25% Convertible Subordinated
Notes to convert such notes into shares of Common Stock as provided
therein. As of February 28, 1998, of the 13,238,068 shares of Parent Common
Stock reserved for issuance upon exercise of options therefor, 12,093,662
shares remained subject to outstanding options and 1,144,406 shares were
reserved for future grant. In addition, pursuant to Parent's Employee Stock
Purchase Plan, 350,000 shares of Parent's Common Stock are issuable to the
participants therein for the offering period ending May 30, 1998. In
addition as of the date hereof, there are outstanding (A) $114,990,000
(aggregate principal amount) of 6 3/4% Convertible Subordinated Notes Due
2001 (the "Notes"), which Notes are (i) convertible at the option of the
holder into shares of Parent Common Stock at any time prior to maturity at
a conversion price of $13.95 per share (equivalent to a conversion rate of
71.685 shares per $1,000 principal amount of Notes), (ii) redeemable at the
option of Parent at any time after November 15, 1999 and (iii) mature on
November 15, 2001, and (B) $150,000,000 (aggregate principal amount) of
6.25% Convertible Subordinated Notes Due 2002, which (i) are redeemable at
the option of the Purchaser at any time after December 15, 2000 and (ii)
mature on December 15, 2002. Except as set forth in the Parent Schedules
and for shares of Parent capital stock issuable in connection with business
combinations or acquisitions of technology pursuant to agreements which
have been publicly announced prior to the date hereof or are entered into
after the date hereof, there are no other material equity securities,
options, warrants, calls, rights, commitments or agreements of any
character to which Parent is a party or by which it is bound obligating
Parent to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Parent or obligating Parent to grant, extend or enter into any
such equity security, option, warrant, call, right, commitment or
agreement.
(c) The shares of Parent Common Stock to be issued pursuant to the Merger
and upon exercise of Substitute Options will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable.
3.4 Authority; No Conflict.
(a) Parent and Merger Sub have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and
Merger Sub. This Agreement has been duly executed and delivered by Parent
and Merger Sub and constitutes the valid and binding obligations of Parent
and Merger Sub, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and
general principles of equity.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a benefit under
(i) any provision of the Certificate of Incorporation or Bylaws of Parent
or Merger Sub or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent, any of its subsidiaries or their respective properties or assets
other than any such conflicts, violations, defaults, terminations,
cancellations or accelerations which could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent
or materially impair the ability of Parent to consummate the transactions
contemplated hereby.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Parent and Merger Sub and their respective subsidiaries in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub or the consummation by Parent and Merger Sub of the transactions
contemplated hereby, except for (i) the filing of a pre-merger notification
report under the HSR Act, (ii) the filing of the Form S-4 Registration
Statement with the SEC, (iii) the filing of the Certificate of Merger with
the Delaware Secretary of State,
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(iv) the filing of a Form 8-K with the SEC, (v) listing of the shares on
the Nasdaq National Market, and (vi) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent or materially impair the ability of
Parent to consummate the transactions contemplated hereby.
3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed with the SEC since January 1, 1996. All such required forms, reports
and documents are referred to herein as the "Parent SEC Reports." As of
their respective dates, the Parent SEC Reports (i) complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Parent SEC Reports and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
None of Parent's subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports (the
"Parent Financials"), including any Parent SEC Reports filed after the date
hereof until the Closing and the consolidated audited balance sheet of the
Parent and its subsidiaries as of December 31, 1997 and the consolidated
audited statement of operations and cash flow for the twelve month period
then ended, true and correct copies of which were delivered to the Company
(the "Parent December 31st Financials"), (i) complies, or complied, as the
case may be, as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, (ii) was prepared (or will
be prepared) in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto) and (iii) fairly presented (or will
fairly present) in all material respects the consolidated financial
position of Parent and its subsidiaries as at the respective dates thereof
and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements
do not include footnote disclosure of the type associated with audited
financial statements and were or are subject to normal and recurring year-
end adjustments and to any other adjustments described therein. The
consolidated audited balance sheet of Parent and its subsidiaries included
in the Parent December 31st Financials is hereinafter referred to as the
"Parent Balance Sheet."
(c) Except as disclosed in the Parent Schedules, as of the date hereof,
there are no material amendments or modifications to agreements, documents
or other instruments which previously had been filed by the Parent with the
SEC pursuant to the Securities Act or the Exchange Act or any other
agreements, documents or other instruments, which have not yet been filed
with the SEC but which are or will be required to be filed by the Parent.
3.6 Liabilities. Except (a) for liabilities incurred in the ordinary course
of business consistent with past practice, (b) for liabilities set forth on
the balance sheet included in the Parent December 31st Financials, (c) as set
forth in the Parent Schedules or (d) other liabilities that could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Parent, since December 31, 1997, none of the Parent,
Merger Sub or any of the Parent's subsidiaries has incurred any liabilities
that would be required to be reflected or reserved against in a consolidated
balance sheet of the Parent and its subsidiaries prepared in accordance with
generally accepted accounting principles as applied in preparing the
consolidated balance sheet of the Parent and its subsidiaries as of December
31, 1997 contained in the Parent December 31st Financials.
3.7 Intellectual Property. The Parent and its subsidiaries either own, are
licensed, or otherwise possess legally enforceable rights to all patents,
trademarks, trade names, service marks, trade secrets, copyrights and
applications therefor, schematics, technology, trade secrets, know-how,
computer software (in both source code and object code form), and other
tangible or intangible proprietary information, materials and rights
(collectively,
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"Parent Intellectual Property Rights") as are necessary in connection with the
business of the Parent and its subsidiaries, taken as a whole, except where
the failure to have such rights to Parent Intellectual Property Rights could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Parent. To the Parent's knowledge, neither the
Parent nor any of its subsidiaries has infringed any Third Party Intellectual
Property Rights, other than any infringements that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on the Parent.
3.8 Litigation. Except as disclosed in Parent Schedules or in Parent SEC
Reports filed prior to the date of this Agreement, there is no suit, action,
arbitration, demand, claim or proceeding pending or, to the knowledge of the
Parent, threatened against the Parent or any of its subsidiaries, except for
suits, actions, arbitrations, demands, claims and proceedings which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Parent; nor is there any material judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Parent or any of its subsidiaries, except for judgments, decrees,
injunctions, rules and orders which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Parent. No
investigation or review by any Governmental Entity with respect to the Parent
or any of its subsidiaries is pending or threatened, except investigations or
reviews that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Parent.
3.9 Employee Benefits.
(a) Except as could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Parent, (i) each Parent
Plan complies with ERISA, the Code and all other applicable statutes and
governmental rules and regulations and (ii) there has been no failure to
make any contribution or pay any amount due to any Parent Plan as required
by Section 412 of the Code or Section 302 of ERISA and no Parent Plan, nor
any trust created thereunder, has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived.
(b) To the knowledge of the Parent, there are no actions, suits or claims
pending or threatened (other than routine claims for benefits) with respect
to any Parent Plan which would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Parent. Neither the
Parent nor any of its ERISA Affiliates has incurred or would reasonably be
expected to incur any material liability under or pursuant to Title IV of
ERISA. No prohibited transactions described in Section 406 of ERISA or
Section 4975 of the Code have occurred which could reasonably be expected
to result in material liability to the Parent or its subsidiaries.
(c) As used herein, "Parent Plan" means a "pension plan" (as defined in
Section 3(2) of ERISA), a "welfare plan" (as defined in Section 3(1) of
ERISA), or any bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
vacation, severance, death benefit, insurance or other plan, arrangement or
understanding, in each case established, maintained or contributed to by
the Parent or any of its ERISA Affiliates or as to which the Parent or any
of its ERISA Affiliates or otherwise may have any material liability.
3.10 Pooling of Interests. To the Parent's knowledge, based on consultation
with its independent accountants, neither the Parent nor its directors,
officers or stockholders nor any of its subsidiaries has taken any action
which would preclude (i) the Parent's ability to account for the Merger as a
pooling of interests or (ii) the Parent's or the Surviving Corporation's
ability to continue to account for as a pooling of interests any past
acquisitions by Parent or the Company currently accounted for as a pooling of
interests.
3.11 Registration Statement; Proxy Statement/Prospectus. Other than with
respect to the information supplied by the Company, the registration statement
on Form S-4 (or such other or successor form as shall be appropriate)
(including any amendments or supplements thereto, the "Registration
Statement"), pursuant to which the shares of Parent Common Stock to be issued
in the Merger will be registered with the SEC shall not, at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective
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under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
included therein not misleading. The information supplied by Parent for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to stockholders, at the time of the Company Stockholders' Meeting
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not false or misleading. The Proxy Statement will comply
(with respect to information relating to Parent or Merger Sub) as to form in
all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. If at any time prior to the Effective Time any
event relating to Parent, Merger Sub or any of their respective affiliates,
officers or directors should be discovered by Parent or Merger Sub which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, Parent or Merger Sub will promptly inform
the Company. Notwithstanding the foregoing, Parent and Merger Sub make no
representation or warranty with respect to any information supplied by the
Company which is contained in any of the foregoing documents.
3.12 Board Approval. The Board of Directors of Parent has, as of the date
hereof, approved this Agreement and the Merger.
3.13 Fairness Opinion. Parent has received a written opinion from Deutsche
Morgan Grenfell Inc., dated no later than the date hereof, that the Exchange
Ratio is fair to Parent from a financial point of view, and has delivered to
the Company a copy of such opinion.
3.14 Brokers' And Finders' Fees. Parent has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement,
the Merger or any transaction contemplated hereby, except for a fee due to
Deutsche Morgan Grenfell Inc. at the Effective Time.
3.15 Operations of Merger Sub. Merger Sub is a direct, wholly-owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated hereby.
4. CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of the Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms and the Effective Time, the Company (which for
the purposes of this Article 4 shall include the Company and each of its
subsidiaries) agrees, except to the extent that Parent shall otherwise consent
in writing (which consent shall not be unreasonably withheld or delayed), to
carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to timely pay its debts
and Taxes, subject to good faith disputes over such debts or taxes, and on the
same payment terms such debts and taxes have historically been paid, to
collect its receivables in the same manner and on the same terms such
receivables have historically been collected, to timely pay or perform other
material obligations when due, and to use all commercially reasonable efforts
consistent with past practices and policies to preserve intact the Company's
present business organizations, keep available the services of its present
officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with the Company, to the end that the Company's goodwill and ongoing
businesses be unimpaired at the Effective Time. The Company shall promptly
notify Parent of any material event or occurrence not in the ordinary course
of business of the Company. Except as expressly provided for by this Agreement
or as set forth on the Company Schedules, the Company shall not, prior to the
Effective Time or earlier termination of this Agreement pursuant to its terms,
without the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed):
(a) Except as required by the Company's benefit plans and agreements,
accelerate, amend or change the period of exercisability of options or
restricted stock, or reprice options granted under the Company Stock Option
Plans or authorize cash payments in exchange for any options granted under
any of such plans;
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(b) Enter into any partnership agreements, joint development agreements
or strategic alliance agreements;
(c) Except as required by the Company Plans, grant any severance or
termination pay (i) to any executive officer or (ii) to any other employee
except payments made in connection with the termination of employees who
are not executive officers in amounts consistent with Company's policies
and past practices or pursuant to written agreements outstanding, or
policies existing, on the date hereof and as previously disclosed in
writing to Parent;
(d) Other than in the ordinary course of business consistent with past
practices, transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property Rights
(including rights to resell or relicense the Company Intellectual Property
Rights) or enter into grants to future patent rights, other than the
Company's standard forms of End-User Licenses entered into in the ordinary
course of business consistent with past practices;
(e) Commence any litigation other than (i) for the routine collection of
bills, (ii) for software piracy, or (iii) in such cases where the Company
in good faith determines that failure to commence suit would result in the
material impairment of a valuable aspect of the Company's business,
provided that the Company consults with the Parent prior to the filing of
such a suit (except that the Company shall not require the approval of, and
shall not be required to consult with, Parent with respect to any claim,
suit or proceeding by the Company against Parent or any of its affiliates);
(f) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of the Company;
(g) Repurchase or otherwise acquire, directly or indirectly, any shares
of its capital stock;
(h) Issue, deliver or sell or authorize or propose the issuance, delivery
or sale of, any shares of its capital stock of any class or securities
convertible into, or subscriptions, rights, warrants or options to acquire,
or enter into other agreements or commitments of any character obligating
it to issue any such shares or other convertible securities, other than (i)
the issuance of shares of Company Capital Stock pursuant to the exercise of
Company stock options outstanding as of the date of this Agreement; (ii)
the grant of stock options under the Company Stock Option Plan covering no
more than 100,000 shares of Company Common Stock in the aggregate in the
ordinary course of business, provided such options (if assumed by the
Parent) do not vest upon the consummation of the Merger or any of the
transactions contemplated hereby and have an exercise price equal to the
market value of the Company Common Stock on the date of grant; and (iii) up
to 60,000 shares of Company Capital Stock issuable to participants in the
Stock Purchase Plan consistent with the terms of that Plan;
(i) Cause, permit or propose any amendments to the Company's Certificate
of Incorporation or Bylaws, or amend any Material Contract;
(j) Sell, lease, license, encumber or otherwise dispose of any of the
Company's properties or assets which are material, individually or in the
aggregate, to the business of the Company, except in the ordinary course of
business consistent with past practice;
(k) Incur any indebtedness for borrowed money (other than ordinary course
trade payables or pursuant to existing credit facilities in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any
debt securities or warrants or rights to acquire debt securities of the
Company or guarantee any debt securities of others;
(l) Except as required by law, adopt or amend any Company Plan or
increase the salaries or wage rates of any of its employees (except for
wage increases in the ordinary course of business and consistent with past
practices), including but not limited to (but without limiting the
generality of the foregoing), the adoption or amendment of any stock
purchase or option plan, the entering into of any employment contract or
the payment of any special bonus or special remuneration to any director or
employee, other than bonuses reflected on the Company Balance Sheet;
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(m) Revalue any of the Company's assets, including without limitation
writing down the value of inventory, writing off notes or accounts
receivable other than in the ordinary course of business consistent with
past practice or waive any right of material value;
(n) Pay, discharge or satisfy in an amount in excess of $100,000 (in any
one case) or $250,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), including, without limitation, under any employment contract or
with respect to any bonus or special remuneration, other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
of the type reflected or reserved against in the Company December 31st
Financials (or the notes thereto);
(o) Except as required by applicable Tax law, make or change any material
election in respect of Taxes, adopt or change in any material respect any
accounting method in respect of Taxes, file any material Return or any
amendment to a material Return, enter into any closing agreement, settle
any claim or assessment in respect of Taxes (except settlements effected
solely through payment of immaterial sums of money), or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
(p) Intentionally take any action, including the acceleration of vesting
(except as contemplated under the Company Stock Option Plans) of any
options, warrants, restricted stock or other rights to acquire shares of
the Company's Capital Stock, which would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests;
(q) Enter into any Material Contract other than in the usual, regular and
ordinary course of business consistent with past practices and policies; or
(r) Take, or agree in writing or otherwise to take, any of the actions
described in clauses (a) through (q) above, or any action which would cause
or would be reasonably likely to cause any of the conditions to the Merger
set forth in Sections 6.1 or 6.3, not to be satisfied.
4.2 Conduct by Parent. Except as expressly provided for by this Agreement,
the Parent shall not, prior to the Effective Time or earlier termination of
this Agreement pursuant to its terms, without the prior written consent of the
Company (which consent shall not be unreasonably withheld or delayed), adopt
any amendments to its Certificate of Incorporation, or take any other action
requiring a vote of the holders of Parent Common Stock, which, in either case,
would materially adversely affect the terms and provisions of the Parent
Common Stock, or take, or agree in writing or otherwise to take, any of the
foregoing actions.
5. ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement. As promptly as
practicable after the execution of this Agreement, Parent and the Company
shall prepare, and file with the SEC, the Proxy Statement and Parent shall
prepare and file with the SEC the Registration Statement in which the Proxy
Statement will be included as a prospectus. Each of the Parent and Company
shall use its reasonable best efforts to have the Registration Statement
declared effective as soon thereafter as reasonably practicable; provided,
however, that Parent shall have no obligation to agree to account for the
Merger as a "purchase" in order to cause the Registration Statement to become
effective. The Proxy Statement shall include the fairness opinion of Broadview
Associates LLC referred to in Section 2.25. Parent and the Company agree that,
unless they mutually agree otherwise, this Agreement shall not be filed with
the SEC, other than on a confidential basis, until ten (10) days prior to the
expected effectiveness of the Registration Statement.
5.2 Meeting of Stockholders. Promptly after the date hereof and subject to
Section 5.4, the Company shall take all action necessary in accordance with
the Delaware Law and its Certificate of Incorporation and Bylaws to convene
the Company Stockholders' Meeting to be held as promptly as practicable for
the purpose of voting upon approval of this Agreement and the Merger. Subject
to Section 5.4, the Board of Directors of the Company shall recommend and
declare advisable such approval and the Company shall take all lawful action
to solicit, and use its best efforts to obtain, such approval.
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5.3 Access to Information; Confidentiality.
(a) Each party shall afford the other party and its accountants, counsel
and other representatives reasonable access during normal business hours
during the period prior to the Effective Time to all information concerning
the business, including the status of product development efforts,
properties and personnel of such party as the other party may reasonably
request. No information or knowledge obtained in any investigation pursuant
to this Section 5.3 shall affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of the
parties to consummate the Merger.
(b) The parties acknowledge that Parent and the Company have previously
executed Confidentiality Agreements (the "Confidentiality Agreements"),
which Confidentiality Agreements shall continue in full force and effect in
accordance with their respective terms and which Confidentiality Agreements
shall be applicable to any information obtained pursuant to Section 5.3(a).
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective Time or
the earlier termination of this Agreement in accordance with its terms, the
Company and its subsidiaries will not, and will not permit their respective
directors, officers, investment bankers to, and will use their best efforts
to cause their respective employees, representatives and other agents not
to, directly or indirectly, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to
lead to, any Acquisition Proposal (as defined below), (ii) engage in
negotiations or discussions concerning, or provide any non-public
information to any person or entity in connection with, any Acquisition
Proposal, or (iii) agree to, approve, recommend or otherwise endorse or
support any Acquisition Proposal. As used herein, the term "Acquisition
Proposal" shall mean any proposal relating to a possible (i) merger,
consolidation or similar transaction involving the Company or any
subsidiary of Company, (ii) sale, lease or other disposition, directly or
indirectly, by merger, consolidation, share exchange or otherwise, of any
assets of Company or any subsidiary of the Company representing, in the
aggregate, 50% or more of the assets of Company on a consolidated basis,
(iii) issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase or securities convertible into,
such securities) representing 20% or more of the votes attached to the
outstanding securities of Company, (iv) transaction in which any person
shall acquire beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act), or the right to acquire beneficial ownership, or
any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the outstanding shares of Company Capital
Stock, (v) liquidation, dissolution, or other similar type of transaction
with respect to Company or any subsidiary of Company, or (vi) transaction
which is similar in form, substance or purpose to any of the foregoing
transactions, provided, however, that the term "Acquisition Proposal" shall
not include the Merger and the transactions contemplated thereby. The
Company will immediately cease any and all existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
of the foregoing.
(b) Notwithstanding the provisions of paragraph (a) above, prior to the
approval of this Agreement and the Merger by the shareholders of the
Company at the Company Stockholder's meeting, nothing contained in this
Agreement shall prevent Company or its Board of Directors, directly or
through representatives or agents on behalf of the Board, from (i)
furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited
bona fide written Acquisition Proposal by such person or entity, if (A)
such Acquisition Proposal would, if consummated, result in a transaction
that would, in the reasonable good faith judgment of the Board of Directors
of Company, and based upon the advice of its financial advisors, result in
a transaction materially more favorable to Company's shareholders from a
financial point of view (including consideration of, among other matters,
the ability of the person or entity making such Proposal to obtain any
financing necessary for the Acquisition Proposal) than the Merger (any such
materially more favorable Acquisition Proposal being referred to in this
Agreement as a "Superior Proposal"), (B) the failure to take such action
would constitute a breach of
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the fiduciary duties of the Company's Board of Directors to the Company's
shareholders under Delaware Law in the reasonable good faith judgment of
the Board of Directors of Company based upon the advice of the Company's
outside corporate counsel, and (C) prior to furnishing such non-public
information to, or entering into discussions or negotiations with, such
person or entity, the Company's Board of Directors receives from such
person or entity an executed confidentiality agreement with standard and
customary confidentiality provisions not materially less favorable to such
party than those contained in the Confidentiality Agreement dated February
3, 1998 between Parent and the Company; or (ii) complying with Rule 14d-9
and Rule 14e-2 promulgated under the Exchange Act or other applicable law
with regard to an Acquisition Proposal. Notwithstanding the foregoing, the
Company will provide to Parent, within 24 hours of providing any non-public
information to any third party, such non-public information if the Company
has not previously provided such information to Parent.
(c) In the event the Company receives a Superior Proposal, prior to the
approval of this Agreement and the Merger by the shareholders of the
Company at the Company Stockholders' Meeting, nothing contained in this
Agreement shall prevent the Board of Directors of the Company from
accepting or approving such Superior Proposal or recommending such Superior
Proposal to the Company's shareholders, if the Board reasonably determines
in good faith, based upon the advice of the Company's outside corporate
counsel, that the failure to take such action would constitute a breach of
the fiduciary duties of the Company's Board of Directors to the Company's
shareholders under Delaware Law; in such case, the Board may amend,
withhold or withdraw its recommendation of the Merger. Subject to the right
of termination set forth in Section 7.1, except to the extent expressly set
forth in this Section 5.4, nothing shall relieve the Company from complying
with all other terms of this Agreement. Notwithstanding the foregoing, the
Company shall provide not less than three (3) days prior written notice to
Parent before accepting or approving a Superior Proposal.
(d) The Company will notify Parent within 24 hours (i) if a bona fide
written Acquisition Proposal is made or is modified in any material respect
(including the principal terms and conditions of any such Acquisition
Proposal or modification and the identity of the offeror) or (ii) the
Company furnishes non-public information to, or enter into discussions or
negotiations with respect to an Acquisition Proposal with, any person or
entity.
5.5 Expenses.
(a) Except as set forth in Section 5.5 and Section 5.6, all fees and
expenses incurred in connection with the Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated.
(b) In connection with any claim, dispute, disagreement or other conflict
involving the enforcement of this Article V, the parties agree that the
prevailing party shall be reimbursed by the other party for all reasonable
attorneys' fees and costs and expenses associated with such conflict.
5.6 Break-Up Fee.
(a) If this Agreement is terminated pursuant to Section 7.1(d)(iii) and a
Company Negative Event has not occurred on or prior to such termination,
then, provided that Parent is not then in material breach of this
Agreement, the Company shall pay to Parent, within ten (10) days following
Parent's written request therefor, an amount equal to the Expenses, by wire
transfer of immediately available funds to an account designated by Parent.
In addition, if prior to such termination, an Acquisition Proposal had been
received by the Company or publicly announced and, within twelve months
after such termination, the Company or any of its subsidiaries consummates
a transaction arising out of or resulting from such Acquisition Proposal,
then the Company shall pay to Parent, on or prior to the consummation of
such transaction, in addition to the Expenses, $6,000,000 by wire transfer
of immediately available funds to an account designated by Parent.
"Expenses" shall mean all of the reasonable out-of-pocket expenses of
Parent, including but not limited to attorneys' fees, accounting fees,
financial printer fees, filing fees and fees and expenses of financial
advisors, in each case incurred in connection with this Agreement and the
Merger, provided,
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however, that Parent shall have provided reasonable supporting
documentation (such as invoices and receipts) to the Company for such
Expenses; and provided further, that in no event shall the aggregate amount
of Expenses payable by the Company pursuant to this Section 5.6 exceed
$1,500,000. Notwithstanding the foregoing, no fee or Expenses shall be
payable under this Section 5.6(a) if either (i) the Share Value has been
less than $22.00 at any time between the date hereof and the date of the
Company Stockholders' Meeting or (ii) the closing (last) price for a share
of Parent Common Stock, as reported on the Nasdaq National Market (as
reported in The Wall Street Journal, Midwest Edition) determined on the
date immediately prior to the Company Stockholders' Meeting, is less than
$22.00.
(b) If (1) this Agreement is terminated pursuant to Section 7.1(b)(ii),
(b)(iii), (b)(iv), (b)(v), or (d)(iv), or (2) if the Agreement is
terminated pursuant to Section 7.1(d)(iii) and a Company Negative Event has
occurred on or prior to such termination, then, provided that Parent is not
then in material breach of this Agreement, the Company shall pay to Parent,
within ten (10) days following Parent's written request therefor, the
aggregate sum equal to $6,000,000 plus the Expenses by wire transfer of
immediately available funds to an account designated by Parent.
(c) For purposes of this Agreement, a "Company Negative Event" means any
event described in clause (ii), (iv) or (v) of paragraph (b) of Section
7.1.
5.7 Public Disclosure. Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by law or any listing agreement with a national securities
exchange or the Nasdaq National Market.
5.8 Pooling Accounting. Parent and the Company shall each use its reasonable
commercial efforts to cause the business combination to be effected by the
Merger to be accounted for as a pooling of interests. Each of Parent and the
Company shall use its reasonable commercial efforts to cause its Affiliates
(as defined in Section 5.10) not to take any action that would adversely
affect the ability of Parent to account for the business combination to be
effected by the Merger as a pooling of interests.
5.9 Auditors' Letters. The Company shall use its reasonable commercial
efforts to cause to be delivered to the Company (with a copy to Parent) a
letter of Ernst & Young LLP, independent auditors to the Company, dated a date
within two business days before the date on which the Registration Statement
becomes effective, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement. The Parent shall use its reasonable commercial efforts
to cause to be delivered to Parent (with a copy to the Company) a letter of
KPMG Peat Marwick LLP, independent auditors to the Parent, dated a date within
two business days before the date on which the Registration Statement becomes
effective, in form and substance reasonably satisfactory to the Company and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
5.10 Affiliate Agreements. Set forth respectively in Parent's Schedules and
the Company's Schedules is a list of those persons who are, in Parent's or the
Company's reasonable judgment, as the case may be, "Affiliates" of Parent or
the Company, as the case may be, within the meaning of Rule 145 (each such
person who is an "affiliate" of Parent or the Company within the meaning of
Rule 145 is referred to as an "Affiliate") promulgated under the Securities
Act ("Rule 145"). Each of Parent and the Company shall provide the other such
information and documents as the other shall reasonably request for purposes
of reviewing such list. The Company shall use its reasonable commercial
efforts to deliver or cause to be delivered to Parent, within thirty (30) days
after the date hereof, from each of the Affiliates of the Company, an executed
Affiliate Agreement in the form attached hereto as Exhibit A (each, a "Company
Affiliate Agreement" and, collectively, the "Company Affiliate Agreements").
Parent shall use its reasonable best efforts to deliver or cause to be
delivered to the Company, within thirty (30) days after the date hereof, an
Affiliate Agreement, executed by each of the Affiliates of Parent, in the form
attached hereto as Exhibit B (the "Parent Affiliate Agreement"). Parent shall
be entitled to place appropriate legends on the certificates evidencing any
Parent Common Stock to be received
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by such Affiliates of the Company pursuant to the terms of this Agreement, and
to issue appropriate stop transfer instructions to the transfer agent for
Parent Common Stock, consistent with the terms of the Company Affiliate
Agreements.
5.11 Legal Requirements. Each of Parent, Merger Sub and the Company will
take all reasonable actions necessary or desirable to comply promptly with all
legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement (including
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any Governmental Entity, and prompt resolution of
any litigation prompted hereby) and will promptly cooperate with and furnish
information to any party hereto necessary in connection with any such
requirements imposed upon any of them or their respective subsidiaries in
connection with the consummation of the transactions contemplated by this
Agreement, and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with,
any Governmental Entity or other public or private third party required to be
obtained or made in connection with the Merger or taking of any action
contemplated by this Agreement. The obligations of Acquiror under this Section
5.11 with respect to the HSR Act shall not require Acquiror to obtain or
attempt to obtain any such waiver, permit, consent, approval or authorization
if obtaining such waiver, permit, consent, approval or authorization would
require disposition of any assets of Acquiror.
5.12 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Parent Common Stock pursuant hereto. The Company
shall use its reasonable commercial efforts to assist Parent as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Parent Common Stock
pursuant hereto.
5.13 Reasonable Commercial Efforts and Further Assurances.
Each of the parties to this Agreement shall each use its reasonable
commercial efforts to effectuate the transactions contemplated hereby as
expeditiously as reasonably practicable and to fulfill and cause to be
fulfilled the conditions to closing under this Agreement (including
resolution of any litigation prompted hereby). Each party hereto, at the
reasonable request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
5.14 Certain Benefit Plans.
(a) Parent agrees that it will cause the Surviving Corporation from and
after the Effective Time to honor all Company Plans and all employment
agreements entered into by the Company prior to the date hereof; provided,
however, that nothing in this Agreement shall be interpreted as limiting
the power of Parent or the Surviving Corporation to amend or terminate any
Company Plan or any other individual employee benefit plan, program,
agreement or policy or as requiring Parent or the Surviving Corporation to
offer to continue (other than as required by its terms) any written
employment contract. As soon as administratively practicable following the
Effective Time, Parent shall cause all employees of the Company and its
subsidiaries then actually at work ("Company Employees") to be covered
under employee benefit and fringe benefit plans, programs, policies and
arrangements that are substantially the same as the employee benefit plans,
programs, policies and arrangements that Parent maintains for similarly
situated employees of Parent ("Parent-Provided Plans"). Nothing in this
Section 5.14 shall be deemed to affect the Parent's obligations under
Section 5.19.
(b) All service of a Company Employee taken into account prior to the
Effective Time under any Company Plan shall, on and after the Effective
Time, be taken into account as service with the Parent or any of its
subsidiaries (as applicable) for purposes of eligibility to participate and
vesting and accrual of benefits under any similar Parent-Provided Plan;
provided, however, that a Company Employee's service prior to the Effective
Time shall not be taken into account as service for purposes of the accrual
of benefits
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under any defined benefit pension plan maintained by Parent or any of its
subsidiaries on or after the Effective Time. Parent shall cause all Parent-
Provided Plans to (i) waive any pre-existing condition limitations
otherwise applicable on and after the Effective Time to the extent that
such conditions are covered under Company Plans immediately prior to the
Effective Time and (ii) provide that any expenses incurred by Company
Employees (and their dependents) during the plan year within which the
Effective Time occurs shall be taken into account for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions (and like adjustments or limitations on coverage) under the
Parent-Provided Plans. Any salary reduction elections of Company Employees
under a flexible spending plan maintained by the Company pursuant to
section 125 of the Code prior to the Effective Time shall continue in
effect under any similar Parent-Provided Plan on and after the Effective
Time, and any amounts credited and debited to accounts of such employees
under such Company Plan as of the Effective Time shall be credited and
debited to such employees' accounts under such Parent-Provided Plan.
5.15 Tax-Free Reorganization. Parent and the Company shall each use
reasonable commercial efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368 of the Code.
5.16 Nasdaq Listing. Parent agrees to authorize for listing on the Nasdaq
National Market the shares of Parent Common Stock issuable, and those required
to be reserved for issuance, in connection with the Merger, upon official
notice of issuance.
5.17 Indemnification. From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
(and advance expenses to) all past and present officers, directors and
employees of the Company and of its subsidiaries to the same extent such
persons are indemnified as of the date of this Agreement by the Company
pursuant to any agreements between the Company and any such person and the
Company's Restated Certificate of Incorporation and By-Laws, for acts or
omissions occurring at or prior to the Effective Time, and shall obtain, or
continue the existing, Director and Officer Insurance for a period of three
years after the Effective Date with substantially the same coverage as
provided on the Effective Time. In the event of any dispute regarding whether
a director, officer or employee has met the standards of conduct set forth
therein, such question shall be conclusively determined by the written opinion
of reputable disinterested legal counsel selected by the Company's Board of
Directors. Any heirs or legal representatives entitled to the benefits of such
indemnification shall be deemed express third party beneficiaries of this
Section 5.17.
5.18 Notification. Between the date of this Agreement and the Effective
Time, each party will promptly notify the other party in writing if such party
becomes aware of any development, fact or condition that causes or constitutes
a breach of any agreement or covenant under this Agreement applicable to such
party or of such party's representations and warranties as of the date of this
Agreement, or if such party becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition.
5.19 Company Stock Options; Employee Stock Purchase Plan.
(a) At the Effective Time, the Company's 1995 Stock Option/Stock Issuance
Plan (the "Company Stock Option Plan") and each option to purchase Company
Capital Stock ("Company Stock Option") which is outstanding immediately
prior to the Effective Time pursuant to the Company Stock Option Plan shall
be assumed by the Parent and each such assumed option shall be converted
into and represent an option to purchase the number of shares of Parent
Common Stock (a "Substitute Option") (rounded down to the nearest full
share) determined by multiplying (i) the number of shares of Company
Capital Stock subject to such Company Stock Option immediately prior to the
Effective Time by (ii) the Exchange Ratio, at an exercise price per share
of Parent Common Stock (rounded up to the nearest tenth of a cent) equal to
the exercise price per share of Company Capital Stock immediately prior to
the Effective Time divided by the Exchange Ratio. Parent shall pay cash to
holders of Company Stock Options in lieu of issuing fractional
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shares of Parent Common Stock upon the exercise of Substitute Options for
shares of Parent Common Stock, unless in the judgment of Parent such
payment would adversely affect the ability to account for the Merger under
the pooling of interests method. After the Effective Time, except as
provided above in this Section 5.19, each Substitute Option shall be
subject to the same terms and conditions as were applicable under the
related Company Stock Option immediately prior to the Effective Time. The
Company agrees that it will not grant any stock appreciation rights or
limited stock appreciation rights and will not permit cash payments to
holders of Company Stock Options in lieu of the substitution therefor of
Substitute Options, as described in this Section 5.19.
(b) The Company shall not commence any "offering periods" under its
Amended and Restated Employee Stock Purchase Plan (the "Stock Purchase
Plan") after April 30, 1998, shall apply all amounts deducted and withheld
thereunder to purchase shares of the Company Capital Stock in accordance
with the provisions thereof, and shall terminate the Stock Purchase Plan as
of the Effective Time. Parent shall have no obligation or duty in respect
of the Stock Purchase Plan or the rights granted thereunder.
(c) It is the intention of the parties that the options assumed by Parent
qualify, to the maximum extent permissible, following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent
such options qualified as incentive stock options prior to the Effective
Time. As soon as practicable but not later than 45 days after the Effective
Time, Parent will issue to each person who, immediately prior to the
Effective Time, was a holder of an outstanding option under the Company
Stock Option Plan, a document in form and substance reasonably satisfactory
to the Company evidencing the foregoing assumption of such option by Parent
under Paragraph 5.19(a).
(d) Parent agrees to file, no later than 21 days after the Effective
Time, a registration statement on Form S-8 covering the shares of Parent
Common Stock issuable pursuant to outstanding options under the Company
Stock Option Plan assumed by Parent.
6. CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote under applicable law of the
stockholders of the Company.
(b) Registration Statement Effective. The SEC shall have declared the
Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding
in respect of the Proxy Statement, shall have been initiated or threatened
in writing by the SEC; and all requests for additional information on the
part of the SEC shall have been complied with to the reasonable
satisfaction of the parties hereto.
(c) No Injunctions. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall be in effect.
(d) HSR Act. Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(e) Opinion of Accountants. (i) Ernst & Young LLP shall have delivered a
letter to the Company, in form and substance reasonably satisfactory to the
Company and Parent, that the Company is an entity that can participate in a
merger that qualifies for pooling of interest accounting treatment under
Accounting Principles Board Opinion No. 16, and (ii) KPMG Peat Marwick LLP
shall have delivered a letter to Parent, in form and substance reasonably
satisfactory to Parent, that the Merger will qualify for pooling of
interests accounting treatment under Accounting Principles Board Opinion
No. 16 if consummated in accordance with this Agreement.
(f) Nasdaq Listing. The shares of Parent Common Stock issuable to
stockholders of the Company pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with
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the Merger (including the Substitute Options) shall have been authorized
for listing on the Nasdaq National Market upon official notice of issuance.
(g) Governmental Consents. All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
Governmental Entity required by or with respect to the Company, Parent or
any of their respective subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby shall have been obtained or made, except for such
consents, approvals, orders, authorizations, registrations, declarations or
filings the failure to obtain or make could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company or Material Adverse Effect on the Parent or materially impair the
Company's, Parent's or Merger Sub's ability to consummate the Merger.
6.2 Additional Conditions to Obligations of the Company. The obligations of
the Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be
waived, in writing, exclusively by the Company:
(a) Representations and Warranties.
(i) The representations and warranties of Parent set forth in this
Agreement that are qualified by materiality shall have been true and
correct in all respects as of the date of this Agreement and shall be
true and correct as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties
expressly speak as of an earlier date), except for changes contemplated
or permitted by this Agreement and the representations and warranties
of the Parent that are not so qualified shall have been true and
correct in all material respects as of the date of this Agreement and
shall be true and correct in all material respects as of the Closing
Date as though made on and as of the Closing Date (except to the extent
such representations and warranties expressly speak as of an earlier
date), except for changes contemplated or permitted by this Agreement;
and
(ii) The Company shall have received a certificate to the foregoing
effect signed on behalf of Parent by the President or Chief Financial
Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have performed
or complied in all materials respect with all agreements and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time, and the Company shall have received a
certificate to the foregoing effect signed by the President or Chief
Financial Officer of Parent.
(c) Tax Opinion. The Company shall have received a tax opinion from
Brobeck, Phleger & Harrison LLP, legal counsel to the Company, in form and
substance reasonably satisfactory to the Company, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion that are consistent with the
state of facts existing as of the Effective Time, for federal income tax
purposes, the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Company, Merger Sub and Parent will
each be a party to such reorganization within the meaning of Section 368(b)
of the Code. In rendering such opinion, Brobeck, Phleger & Harrison LLP may
receive and rely upon representations contained in appropriate certificates
of the Company, Parent and others.
(d) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect on Parent.
(e) Affiliate Agreements. Each of the parties identified by Parent
pursuant to Section 5.10 hereof as being an Affiliate of Parent shall have
executed, and Parent shall have delivered to the Company, the Parent
Affiliate Agreement which shall be in full force and effect.
6.3 Additional Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject
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to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent:
(a) Representations and Warranties.
(i) The representations and warranties of the Company set forth in
this Agreement that are qualified by materiality shall have been true
and correct as of the date of this Agreement, and the representations
and warranties of the Company contained in this Agreement that are not
so qualified shall have been true and correct in all material respects
as of the date of this Agreement.
(ii) Except for changes contemplated or permitted by this Agreement,
(1) the representations and warranties made by the Company in Sections
2.2, 2.3, 2.4, 2.5, 2.9, 2.20, 2.24, and 2.26 shall be true and correct
as of the Effective Time as if made on and as of the Effective Time
except for those representations and warranties which address matters
only as of a particular date (which shall remain true and correct as of
such date) and (2) the other representations and warranties of the
Company contained in this Agreement shall be true and correct in all
respects (without taking into account any qualifications or exceptions
for materiality or Material Adverse Effect on the Company) as if made
on and as of the Effective Time, except for (A) those representations
and warranties which address matters only as of a particular date
(which shall remain true and correct as of such date) and (B) such
inaccuracies or breaches that in the aggregate could not reasonably be
expected to have a Material Adverse Effect on the Company or materially
impair Company's ability to consummate the Merger; and
(iii) Parent and Merger Sub shall have received a certificate to the
foregoing effect signed on behalf of the Company by the President and
Chief Financial Officer of the Company.
(b) Agreement and Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Parent and Merger Sub shall have received a
certificate to the foregoing effect signed by the President and Chief
Financial Officer of the Company.
(c) Third Party Consents. Parent shall have received all written
consents, assignments, waivers, authorizations or other certificates
necessary to provide for the continuation in full force and effect of any
and all Material Contracts of the Company and for the Company to consummate
the transactions contemplated hereby, except where the failure to receive
such consents, assignments, waivers, authorizations or certificates could
not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(d) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect on the Company or any
development that could reasonably be expected to have a Material Adverse
Effect on the Company; provided, however, that no event, change or effect
that results primarily from the announcement or pending status of the
Merger (including without limitation any reduction or termination of orders
received by the Company's employees, distributors or resellers or the
cessation of employment by Company employees resulting therefrom) shall be
deemed to cause or constitute, either individually or in the aggregate, a
Material Adverse Effect on the Company or a development that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(e) Affiliate Agreements. Each of the parties identified by the Company
pursuant to Section 5.10 hereof as being an Affiliate of the Company shall
have delivered to Parent an executed Company Affiliate Agreement which
shall be in full force and effect.
(f) Tax Opinion. Parent shall have received a tax opinion from Katten
Muchin & Zavis, legal counsel to Parent, in form and substance reasonably
satisfactory to Parent, dated the Effective Time, substantially to the
effect that, on the basis of facts, representations and assumptions set
forth in such opinion that are consistent with the state of facts existing
as of the Effective Time, for federal income tax purposes, the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of the
Code, and the
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Company, Merger Sub and Parent will each be a party to such reorganization
within the meaning of Section 368(b) of the Code. In rendering such
opinion, Katten Muchin & Zavis may receive and rely upon representations
contained in appropriate certificates of the Company, Parent and others.
7. TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by Parent if:
(i) there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the
Company and such breach has not been cured within twenty (20) days
after written notice to the Company (provided, that Parent is not in
material breach of the terms of this Agreement; and provided further,
that no cure period shall be required for a breach which by its nature
cannot be cured) such that the conditions set forth in Section 6.3(a)
or Section 6.3(b), as the case may be, will not be satisfied;
(ii) the Board of Directors of the Company (A) adversely amends,
withholds or withdraws its recommendation of the Merger or (B) shall
have resolved or publicly announced its intention to recommend or enter
into an agreement with respect to an Acquisition Proposal;
(iii) the Company breaches its obligations under Section 5.2 of this
Agreement and such breach has not been cured within twenty (20) days
after written notice to the Company (provided that Parent is not in
material breach of the terms of this Agreement and this Agreement has
not otherwise been terminated pursuant to this Section 7.1);
(iv) a tender offer or exchange offer for twenty percent (20%) or
more of the outstanding shares of Company Capital Stock shall have been
commenced or a registration statement with respect thereto shall have
been filed (other than by Parent of an affiliate thereof) and the Board
of Directors of Company shall, notwithstanding its obligations
hereunder, have (x) recommended that the stockholders of Company tender
their shares in such tender or exchange offer of (y) publicly announced
its intention to take no position with respect to such tender offer; or
(v) the Company breaches any of the provisions of Section 5.4;
(c) by the Company if:
(i) there has been a material breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the
Parent or Merger Sub and such breach has not been cured within twenty
(20) days after written notice to the Parent (provided, that the
Company is not in material breach of the terms of this Agreement; and
provided further, that no cure period shall be required for a breach
which by its nature cannot be cured) such that the conditions set forth
in Section 6.2(a) or Section 6.2(b), as the case may be, will not be
satisfied; or
(ii) the Share Value is below $22.00 at any time after the date
hereof and prior to the date of the Company Stockholders' Meeting;
provided, however, that the Company's right to terminate this Agreement
pursuant to this subparagraph (ii) may not be exercised after the
Company's shareholders have voted to approve the Merger;
(d) by any party hereto if:
(i) there shall be a final, non-appealable order of a Federal or
state court in effect preventing consummation of the Merger;
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(ii) there shall be any final action taken, or any statute, rule,
regulation or order enacted, promulgated or issued and deemed
applicable to the Merger by any Governmental Entity which would make
consummation of the Merger illegal or which would prohibit Parent's
ownership or operation of all or a material portion of the business of
the Company, or compel Parent to dispose of or hold separate all or a
material portion of the business or assets of the Company or Parent as
a result of the Merger;
(iii) the Company's stockholders do not approve the Merger at the
Company Stockholders' Meeting; or
(iv) if the Board of Directors of the Company accepts or approves a
Superior Proposal, or recommends a Superior Proposal to the
shareholders of the Company; provided that the Company may terminate
this Agreement pursuant to this paragraph (iv) only if the Company is
not in breach of Section 5.4.
(e) by any party hereto if the Merger shall not have been consummated by
July 31, 1998; provided, however, that the right to terminate this
Agreement under this Section 7.1(e) shall not be available (i) to any party
whose willful failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date or (ii) to the Company
during a cure period provided to it under Section 7.1(b)(iii).
7.2 Effect of Termination.
In the event of termination of this Agreement as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Merger Sub, the Company or their respective
officers, directors, stockholders or affiliates, except to the extent that
such termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, and, provided that the provisions of Sections 5.3(b), 5.5, and 5.6
and Article VIII of this Agreement shall remain in full force and effect and
survive any termination of this Agreement. The exercise by either party of a
termination right pursuant to Section 7.1 shall not be deemed a breach of any
provision of this Agreement.
7.3 Notice of Termination. Any termination of this Agreement under Section
7.1 above will be effective immediately upon the delivery of written notice of
the terminating party to the other parties hereto upon satisfaction of the
requirements set forth in Section 7.1.
7.4 Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto
and (iii) waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
8. GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive beyond the Effective Time.
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8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Andrew J. Filipowski
Larry Freedman
Telecopy No.: (630) 691-0710
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois
Attention: Matthew S. Brown, Esq.
Telecopy No.: (312) 902-1061
(b) if to the Company, to:
Logic Works, Inc.
University Square at Princeton
111 Campus Drive
Princeton, New Jersey 08540
Attention: Gregory A. Peters
Telecopy No.: (609) 514-0323
with a copy to:
Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Ellen B. Corenswet
Telecopy No.: (212) 586-7878
8.3 Interpretation. When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "include", "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When reference is made herein to "the
business of" an entity, such reference shall be deemed to include the business
of all direct and indirect subsidiaries of such entity. Reference to the
subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity. References in this Agreement to "knowledge" shall
mean the knowledge of the officers and directors of the Company or Parent, as
the case may be.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement. This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, including the Company Schedules and the Parent
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Schedules (a) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive
any termination of this Agreement; and (b) are not intended to confer upon any
other person any rights or remedies hereunder, except with respect to Article
1 and Sections 5.14, 5.17 and 5.19.
8.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or
equity upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law
thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court within the State of Delaware, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in
any manner authorized by the laws of the State of Delaware for such persons
and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the parties.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by themselves or their duly authorized respective
officers, all as of the date first written above.
PLATINUM technology, inc. LOGIC WORKS, INC.
/s/ Larry S. Freedman /s/ Gregory Peters
By: _________________________________ By: _________________________________
Larry S. Freedman Gregory Peters
Name: _______________________________ Name: _______________________________
Senior Vice President and General President and Chief Executive
Counsel Officer
Title: ______________________________ Title: ______________________________
PT ACQUISITION CORPORATION II
/s/ Larry S. Freedman
By: _________________________________
Larry S. Freedman
Name: _______________________________
Senior Vice President and General
Counsel
Title: ______________________________
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APPENDIX B
March 14, 1998
CONFIDENTIAL
Board of Directors
Logic Works, Inc.
University Square at Princeton
111 Campus Drive
Princeton, NJ 08540
Dear Members of the Board:
We understand that Logic Works, Inc. ("Logic Works"), PLATINUM technology,
inc. ("PLATINUM"), and PT Acquisition Corporation II, a wholly-owned
subsidiary of PLATINUM (the "Merger Sub"), propose to enter into an Agreement
and Plan of Merger (the "Agreement") pursuant to which, through the merger of
the Merger Sub with and into Logic Works (the "Merger") each share of Logic
Works common stock, $0.01 par value per share ("Logic Works Common Stock"),
shall be converted into 0.5769 shares (the "Exchange Ratio") of PLATINUM
common stock, $0.001 par value per share ("PLATINUM Common Stock"). The Merger
is intended to be a tax-free reorganization within the meaning of Section 368
of the United States Internal Revenue Code of 1986, as amended, and to be
accounted for as a pooling of interests pursuant to Opinion No. 16 of the
Accounting Principles Board. The terms and conditions of the above described
Merger are more fully detailed in the Agreement.
You have requested our opinion as to whether the Exchange Ratio is fair,
from a financial point of view, to Logic Works shareholders.
Broadview Associates focuses on providing merger and acquisition advisory
services to information technology ("IT") companies. In this capacity, we are
continually engaged in valuing such businesses, and we maintain an extensive
database of IT mergers and acquisitions for comparative purposes. We are
currently acting as financial advisor to the Logic Works Board of Directors
and will receive a fee from Logic Works upon the successful conclusion of the
Merger. Broadview Associates also has an immaterial equity interest in Logic
Works as a result of the fact that a former Managing Director of Broadview
Associates serves on Logic Works' Board of Directors.
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the Agreement and the associated schedules
thereto in the form of the draft dated March 13, 1998 furnished to us
by Katten Muchen & Zavis on March 13, 1998 (which, for the purposes of
this opinion, we have assumed, with your permission, to be identical in
all material respects to the agreement to be executed);
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2.) reviewed Logic Works' Form 10-K for its fiscal year ended December 31,
1996, including the audited financial statements included therein,
Logic Works' Form 10-Q for the nine months ended September 30, 1997,
including the unaudited financial statements included therein, Logic
Works' unaudited financial information for its fiscal year ended
December 31, 1997 included in a Logic Works press release dated
February 10, 1998, and Logic Works' draft annual report dated March 10,
1998 for its fiscal year ended December 31, 1997, including the draft
audited financial statements included therein;
3.) reviewed financial projections for Logic Works for its fiscal year
ending December 31, 1998 prepared and provided to us by Logic Works
management;
4.) participated in discussions with Logic Works management concerning the
operations, business strategy, financial performance and prospects for
Logic Works;
5.) discussed with Logic Works management its view of the strategic
rationale for the Merger;
6.) reviewed the reported closing prices and trading activity for Logic
Works Common Stock;
7.) compared certain aspects of the financial performance of Logic Works
with public companies we deemed comparable;
8.) analyzed available information, both public and private, concerning
other mergers and acquisitions we believe to be comparable in whole or
in part to the Merger;
9.) reviewed PLATINUM's annual report and Form 10-K for its fiscal year
ended December 31, 1996, including the audited financial statements
included therein, PLATINUM's Form 10-Q for the nine months ended
September 30, 1997, including the unaudited financial statements
included therein, PLATINUM's unaudited financial information for its
fiscal year ended December 31, 1997 reported in a PLATINUM press
release dated February 10, 1998, and PLATINUM's draft Form 10-K dated
March 6, 1998 for its fiscal year ended December 31, 1997, including
the draft audited financial statements included therein;
10.) participated in discussions with PLATINUM management concerning the
operations, business strategy, financial performance and prospects for
PLATINUM;
11.) discussed with PLATINUM management its view of the strategic rationale
for the Merger;
12.) reviewed the reported closing prices and trading activity for PLATINUM
Common Stock;
13.) compared certain aspects of the financial performance of PLATINUM with
public companies we deemed comparable;
14.) considered the total number of shares of PLATINUM Common Stock
outstanding and the average weekly trading volume of PLATINUM Common
Stock;
15.) reviewed recent equity analyst reports covering Logic Works and
PLATINUM;
16.) analyzed the anticipated effect of the Merger on the future financial
performance of the consolidated entity;
17.) participated in negotiations and discussions related to the Merger
among Logic Works, PLATINUM and their financial and legal advisors;
and
18.) conducted other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Logic Works
or PLATINUM. With respect to the financial projections examined by us, we have
assumed that they were reasonably prepared and reflected the best available
estimates and good faith judgments of the management of Logic Works as to the
future performance of Logic Works. We have neither made nor obtained an
independent appraisal or valuation of any of Logic Works' assets. We have not
reviewed any internal financial projections prepared by PLATINUM management as
such projections have not been made available to us.
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Based upon and subject to the foregoing, we are of the opinion that the
Exchange Ratio is fair, from a financial point of view, to Logic Works
shareholders.
For purposes of this opinion, we have assumed that neither Logic Works nor
PLATINUM is currently involved in any material transaction other than the
Merger, other transactions of which we are aware and those activities
undertaken in the ordinary course of conducting their respective businesses.
Our opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this opinion,
and any change in such conditions may impact this opinion. We express no
opinion as to the price at which PLATINUM Common Stock will trade at any time.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Logic Works in
connection with its consideration of the Merger and does not constitute a
recommendation to any Logic Works shareholder as to how such shareholder
should vote on the Merger. This opinion may not be published or referred to,
in whole or part, without our prior written permission, which shall not be
unreasonably withheld. Broadview Associates hereby consents to references to
and the inclusion of this opinion in its entirety in the Proxy
Statement/Prospectus to be distributed to Logic Works shareholders in
connection with the Merger.
Sincerely,
/s/ Broadview Associates LLC
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ten of PLATINUM's Restated Certificate of Incorporation provides
that PLATINUM 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 PLATINUM 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 PLATINUM
without the prior written consent of PLATINUM. With the approval of its
stockholders, PLATINUM has entered into indemnity agreements with each of its
directors and certain of its officers. These agreements may require PLATINUM,
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 PLATINUM's Restated Certificate of
Incorporation provides that a director of PLATINUM shall not be personally
liable to PLATINUM 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 PLATINUM 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.
PLATINUM 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.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed with this Registration Statement:
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EXHIBITS
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2.1 Agreement and Plan of Merger among the Registrant, PT Acquisition
Corporation II and Logic Works Inc. ("Logic Works"), dated as of
March 14, 1998 (the "Merger Agreement") (incorporated by reference to
Appendix A to the Proxy Statement/Prospectus contained in this
Registration Statement). The exhibits to the Merger Agreement are
omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant
agrees to furnish supplementally to the Commission, upon request, a
copy of any omitted exhibits.
3.1 Restated Certificate of Incorporation of the Registrant, incorporated
by reference to Exhibit 3.1 to PLATINUM's Registration Statement on
Form S-1, Registration Statement No. 33-39233 (the "IPO S-1
Registration Statement").
3.2 Bylaws of the Registrant, incorporated by reference to Exhibit 3.2 to
the IPO S-1 Registration Statement.
4.1 Specimen stock certificate representing Common Stock, incorporated by
reference to Exhibit 4.1 to the IPO S-1 Registration Statement.
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4.2 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 (the "1995 8-A").
4.3 Certificate of Designations of the Class II Series A Junior
Participating Preferred Stock, incorporated by reference to Exhibit
4.3 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "1995 10-K").
4.4 Indenture between the Company and American National Bank and Trust
Company, as Trustee, dated as of November 18, 1996, incorporated by
reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997 ("1997 10-K").
4.5 Form of Note for the Company's convertible subordinated notes due
2001, incorporated by reference to Exhibit 4.5 to the 1997 10-K.
4.6 Indenture between the Company and American National Bank and Trust
Company, as Trustee, dated as of December 15, 1997, incorporated by
reference to Exhibit 4.6 to the 1997 10-K.
4.7 Form of Note for the Company's convertible subordinated notes due
2002, incorporated by reference to Exhibit 4.7 to the 1997 10-K.
5.1 Opinion of Katten Muchin & Zavis as to the legality of the securities
being issued.*
8.1 Opinion of Katten Muchin & Zavis as to tax matters.*
8.2 Opinion of Brobeck, Phleger & Harrison LLP as to tax matters.*
10.1 1989 Stock Option Plan, incorporated by reference to Exhibit 10.1 to
the IPO S-1 Registration Statement.
10.2 Forms of Stock Option Agreements, incorporated by reference to
Exhibit 10.2 to the IPO S-1 Registration Statement.
10.3 Chief Executive Stock Option Plan, incorporated by reference to
Exhibit 10.3 to the IPO S-1 Registration Statement.
10.4 Chief Executive Stock Option Agreement, incorporated by reference to
Exhibit 10.4 to the IPO S-1 Registration Statement.
10.5 1991 Stock Option Plan, incorporated by reference to Exhibit 10.5 to
the IPO S-1 Registration Statement.
10.6 Amended and Restated Employment Agreement between Andrew J.
Filipowski and the Company, dated as of January 1, 1996, incorporated
by reference to Exhibit 10.6 to the 1997 10-K.
10.7 Amended and Restated Employment Agreement between Michael P.
Cullinane and the Company, dated as of January 1, 1996, incorporated
by reference to Exhibit 10.7 to the 1997 10-K.
10.8 Amended and Restated Employment Agreement between Paul L. Humenansky
and the Company, dated as of October 28, 1997, incorporated by
reference to Exhibit 10.8 to the 1997 10-K.
10.9 Form of Indemnification Agreement between the Company and each of
Andrew J. Filipowski, Michael P. Cullinane, Paul L. Humenansky, Casey
G. Cowell, James E. Cowie, Steven D. Devick and Gian Fulgoni,
incorporated by reference to Exhibit 10.10 to the IPO S-1
Registration Statement.
10.10 Forms of Affiliate Agreements, incorporated by reference to Exhibit
10.11 to the IPO S-1 Registration Statement.
10.11 Form of Master Product License Agreement, incorporated by reference
to Exhibit 10.11 to the 1995 10-K.
10.12 Office Lease, dated May 6, 1992, between the Company and LaSalle
National Trust N.A. as Trustee (the "Oakbrook Terrace Lease"),
incorporated by reference to Exhibit 10.20 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.
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10.13 PLATINUM technology, inc. 1993 Directors' Stock Option Plan,
incorporated by reference to Exhibit 10.18 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1994 (the "June
1994 10-Q").
10.14 PLATINUM technology, inc. 1994 Stock Incentive Plan, incorporated by
reference to Exhibit 10.19 to the June 1994 10-Q.
10.15 Amendments to the PLATINUM technology, inc. 1994 Stock Incentive
Plan, incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-8, Registration No. 33-85798 (the
"1994 S-8").
10.16 Form of Option Agreement under the PLATINUM technology, inc. 1993
Director's Stock Option Plan, incorporated by reference to Exhibit
4.4 to the 1994 S-8.
10.17 Form of Option Agreement under the PLATINUM technology, inc. 1994
Stock Incentive Plan, incorporated by reference to Exhibit 4.5 to the
1994 S-8.
10.18 Amendment Number One, dated as of May 3, 1993, to the Oakbrook
Terrace Lease, incorporated by reference to Exhibit 10.19 to the 1994
10-K.
10.19 Amendment Number Two, dated as of October 26, 1993, to the Oakbrook
Terrace Lease, incorporated by reference to Exhibit 10.20 to the 1994
10-K.
10.20 Amendment Number Three, dated as of December 22, 1994, to the
Oakbrook Terrace Lease, incorporated by reference to Exhibit 10.21 to
the 1994 10-K.
10.21 Office Lease, dated August 8, 1994, between the Company and L.J.
Sheridan & Co. as court appointed receiver, incorporated by reference
to Exhibit 10.22 to the 1994 10-K.
10.22 PLATINUM technology, inc. Employee Incentive Compensation Plan,
incorporated by reference to Exhibit 10.23 to the Company's
Registration Statement on Form S-4, Registration No. 33-94410 (the
"1995 S-4").
10.23 Lease Agreement, dated as of March 30, 1995, between the Company and
Lisle Property Venture, Inc. (the "March 1995 Lisle Lease"),
incorporated by reference to Exhibit 10.24 to the 1995 S-4.
10.24 First Amendment, dated as of September 15, 1995, to the March 1995
Lisle Lease, incorporated by reference to Exhibit 10.25 to the 1995
10-K.
10.25 Second Amendment, dated as of September 15, 1995, to the March 1995
Lisle Lease, incorporated by reference to Exhibit 10.26 to the 1995
10-K.
10.26 Third Amendment, dated as of January 3, 1996, to the March 1995 Lisle
Lease, incorporated by reference to Exhibit 10.27 to the 1995 10-K.
10.27 Lease Agreement, dated as of October 31, 1995, between Lisle Property
Venture, Inc. and the Company (the "October 1995 Lisle Lease"),
incorporated by reference to Exhibit 10.28 to the 1995 10-K.
10.28 Amendment Number Four, dated as of March 9, 1995, to the Oakbrook
Terrace Lease, incorporated by reference to Exhibit 10.29 to the 1995
10-K.
10.29 Loan Agreement, dated as of December 31, 1995, between the Company
and American National Bank and Trust Company of Chicago (the "Loan
Agreement"), incorporated by reference to Exhibit 10.30 to the 1995
10-K.
10.30 First Amendment, dated as of December 31, 1996, to the Loan
Agreement, incorporated by reference to Exhibit 10.30 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1996 (the "1996 10-K").
10.31 First Amendment, dated as of May 23, 1996, to the October 31, 1995
Lisle Lease, incorporated by reference to Exhibit 10.31 to the 1996
10-K.
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EXHIBITS
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10.32 Second Amendment, dated as of May 24, 1996, to the October 31, 1995
Lisle Lease, incorporated by reference to Exhibit 10.32 to the 1996
10-K.
10.33 Lease Agreement, dated as of July 17, 1996, between the Company and
Oakbrook Tower Limited Partnership, incorporated by reference to
Exhibit 10.33 to the 1996 10-K.
10.34 PLATINUM technology, inc. 1996 Stock Purchase Plan, incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-8, Registration No. 333-03284 (the "April 1996
S-8").
10.35 PLATINUM technology, inc. Amended and Restated 1993 Directors' Stock
Option Plan, incorporated by reference to Exhibit 4.2 to the April
1996 S-8.
10.36 Amendment to the PLATINUM technology, inc. 1994 Stock Incentive Plan,
incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996 (the "June 1996 10-Q").
10.37 First Amendment to the PLATINUM technology, inc. Employee Incentive
Compensation Plan, incorporated by reference to the June 1996 10-Q.
10.38 Second Amendment to the PLATINUM technology, inc. Employee Incentive
Compensation Plan, incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997 (the "June 1997 10-Q").
10.39 Amendment Number Five, dated as of December 1, 1996, to the Oakbrook
Terrace Lease, incorporated by reference to Exhibit 10.2 to the June
1997 10-Q.
10.40 Amendment Number Six, dated as of April 30, 1997, to the Oakbrook
Terrace Lease, incorporated by reference to Exhibit 10.3 to the June
1997 10-Q.
10.41 Amendment Number Seven, dated as of September 16, 1997, to the
Oakbrook Terrace Lease, incorporated by reference to Exhibit 10.42 to
the Company's Registration Statement on Form S-1, Registration No.
333-40075.
10.42 Credit Agreement, dated as of December 22, 1997, between the Company
and American National Bank and Trust Company of Chicago, as Agent,
incorporated by reference to Exhibit 10.42 to the 1997 10-K.
12 Computation of Ratios of Earnings to Fixed Charges, incorporated by
reference to Exhibit 12 to the 1997 10-K.
21 Subsidiaries of the Company, incorporated by reference to Exhibit 21
to the 1997 10-K.
23.1 Consent of Katten Muchin & Zavis (included in their opinions filed as
Exhibits 5.1 and 8.1 herewith).*
23.2 Consent of KPMG Peat Marwick LLP.*
23.3 Consent of Ernst & Young LLP.*
23.4 Consent of Broadview Associates LLC (incorporated by reference to
Appendix B to the Proxy Statement/Prospectus contained in this
Registration Statement).
23.5 Consent of Brobeck, Phleger & Harrison LLP (included in their opinion
filed as Exhibit 8.2 herewith).*
24.1 Power of Attorney (included on the signature page).*
99.1 Form of proxy card to be used in soliciting Logic Work's stockholders
for its annual meeting.*
</TABLE>
- --------
*Filed herewith
(b) See Schedule II--Valuation and Qualifying Accounts, incorporated by
reference to the 1997 10-K contained in this Registration Statement.
II-4
<PAGE>
(c) The opinion of Piper Jaffray Inc. is included as Appendix B to the
Supplement to the Proxy Statement/Prospectus contained in this Registration
Statement.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) 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 of 1933, each such post-effective amendment 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) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 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 registrant 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
registrant 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 Act and will be governed by the final
adjudication of such issue.
II- 5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, the registrant,
PLATINUM technology, inc., a Delaware corporation, has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Chicago, State of Illinois on the 21st day of
April, 1998.
PLATINUM technology, inc.
/s/ Andrew J. Filipowski
By: __________________________________
Andrew J. Filipowski
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Andrew J. Filipowski, Michael P. Cullinane and Matthew S. Brown, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution, to sign on his behalf, individually and in each capacity stated
below, all amendments and post-effective amendments to this Registration
Statement on Form S-4 and to file the same, with all exhibits thereto and any
other documents in connection therewith, with the Securities and Exchange
Commission under the Securities Act of 1933, granting into said attorneys-in-
fact and agents full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully and to all intents and purposes as each might or could do in person,
hereby ratifying and confirming each act that said attorneys-in-fact and agents
may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED:
SIGNATURE TITLE DATE
/s/ Andrew J. Filipowski President, Chief April 21, 1998
- ------------------------------------- Executive Officer
Andrew J. Filipowski (Principal
Executive Officer)
and a Director
/s/ Paul L. Humenansky Executive Vice April 21, 1998
- ------------------------------------- President--Product
Paul L. Humenansky Development, Chief
Operations Officer
and a Director
/s/ Michael P. Cullinane Executive Vice April 21, 1998
- ------------------------------------- President, Chief
Michael P. Cullinane Financial Officer,
Treasurer
(Principal
Financial and
Accounting
Officer) and a
Director
/s/ James E. Cowie Director April 21, 1998
- -------------------------------------
James E. Cowie
Director
- -------------------------------------
Steven D. Devick
/s/ Arthur P. Frigo Director April 21, 1998
- -------------------------------------
Arthur P. Frigo
Director
- -------------------------------------
Gian M. Fulgoni
II-6
<PAGE>
EXHIBIT 5.1
-----------
Katten Muchin & Zavis
525 W. Monroe, Suite 1600
Chicago, Illinois 60661
April 21, 1998
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for PLATINUM technology, inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
registration statement on Form S-4 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The Registration Statement relates to the issuance of up to 8,677,295 shares
(the "Shares") of the Company's common stock, $.001 par value per share (the
"Common Stock") pursuant to and in connection with the Company's acquisition of
Logic Works, Inc. ("Logic Works"), a Delaware corporation. Capitalized terms
used but not defined herein shall have the meanings set forth in the
Registration Statement.
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon certificates of public officials and others and upon
affidavits, certificates and written statements of directors, officers and
employees of, and the accountants for, the Company. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such instruments, documents and records as we have deemed relevant and necessary
to examine for the purpose of this opinion, including (a) the Registration
Statement, (b) the Agreement and Plan of Reorganization dated as of March 14,
1998 ("Merger Agreement") among the Company, PT Acquisition Corporation II, a
wholly-owned subsidiary of the Company, and Logic Works, (c) the Restated
Certificate of Incorporation of the Company, (d) the By-laws of the Company, and
(e) minutes of meetings of the Board of Directors of the Company.
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the genuineness
of all signatures, the due authority of the parties signing such documents, the
authenticity of the documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as certified,
conformed or reproduced copies.
Based upon and subject to the foregoing, it is our opinion that the Shares,
when issued and exchanged by the Company for shares of capital stock of
Logic Works in accordance with the Merger Agreement, will be legally issued,
fully paid and non-assessable shares of Common Stock.
<PAGE>
PLATINUM technology, inc.
April 21, 1998
Page 2
Our opinion expressed above is limited to the Delaware General Corporation
Law, and we do not express any opinion concerning any other laws. This opinion
is given as of the date hereof, and we assume no obligation to advise you of
changes that may hereafter be brought to our attention.
We hereby consent to the reference to our name in the Registration
Statement under the caption "Legal Matters" and further consent to the filing of
this opinion as Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ KATTEN MUCHIN & ZAVIS
<PAGE>
EXHIBIT 8.1
-----------
Katten Muchin & Zavis
525 W. Monroe, Suite 1600
Chicago, Illinois 60661
April 21, 1998
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for PLATINUM technology, inc., a Delaware
corporation ("PLATINUM"), in connection with the preparation and filing of a
registration statement on Form S-4 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The Registration Statement relates to the issuance of up to 8,677,295 shares
(the "Shares") of the Company's common stock, $.001 par value per share (the
"Common Stock") pursuant to and in connection with the Company's acquisition of
Logic Works Inc. ("Logic Works"), a Delaware corporation. You have requested
that we confirm the accuracy of the statements contained in the Registration
Statement regarding certain federal tax consequences under the section "The
Merger - Certain U.S. Federal Income Tax Consequences" in the Registration
Statement.
We have examined the (a) Registration Statement, (b) the Agreement and Plan
of Merger dated as of March 14, 1998 ("Merger Agreement") among PLATINUM, PT
Acquisition Corporation II, a wholly-owned subsidiary of PLATINUM, and Logic
Works and such other documents as we have deemed necessary to render our
opinions expressed below and within the Registration Statement.
Based upon and subject to the foregoing, we are of the opinion that the
statements set forth under the caption "The Merger-Certain U.S. Federal Income
Tax Consequences" in the Registration Statement are accurate in all material
respects.
Our opinion expressed above is limited to the federal tax laws of the
United States of America, and we do not express any opinion concerning any other
laws. This opinion is given as of the date hereof, and we assume no obligation
to advise you of changes that may hereafter be brought to our attention.
We hereby consent to the reference to our name in the Registration
Statement under the caption "Legal Matters" and further consent to the filing of
this opinion as Exhibit 8.1 to the Registration Statement.
Very truly yours,
/s/ KATTEN MUCHIN & ZAVIS
<PAGE>
EXHIBIT 8.2
-----------
BROBECK, PHLEGER & HARRISON LLP
1633 Broadway
47th Floor
New York, NY 10019
April 21, 1998
Logic Works, Inc.
University Square at Princeton
111 Campus Drive
Princeton, New Jersey 08540
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Logic Works, Inc. ("Logic Works"), a Delaware
corporation, in connection with the preparation and filing by PLATINUM
technology, inc. ("PLATINUM"), a Delaware corporation, of a registration
statement on Form S-4 (the "Registration Statement") with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement relates to the issuance of up to 8,677,295 shares (the
"Shares") of PLATINUM's common stock, $.001 par value per share (the "Common
Stock") pursuant to and in connection with PLATINUM's acquisition of Logic
Works. You have requested that we confirm the accuracy of the statements
contained in the Registration Statement regarding certain federal tax
consequences under the section "The Merger - Certain U.S. Federal Income Tax
Consequences" in the Registration Statement.
We have examined the Registration Statement, the Agreement and Plan
of Merger dated as of March 14, 1998 ("Merger Agreement") among PLATINUM,
PT Acquisition Corporation II, a wholly-owned subsidiary of PLATINUM, and
Logic Works and such other documents as we have deemed necessary to render our
opinions expressed below and within the Registration Statement.
Based upon and subject to the foregoing, we are of the opinion that the
statements set forth under the caption "The Merger-Certain U.S. Federal Income
Tax Consequences" in the Registration Statement are accurate in all material
respects.
Our opinion expressed above is limited to the federal tax laws of the
United States of America, and we do not express any opinion concerning any other
laws. This opinion is given as of the date hereof and we assume no obligation to
advise you of changes that may hereafter be brought to our attention.
We hereby consent to the reference to our name in the Registration
Statement under the caption "Legal Matters" and further consent to the filing of
this opinion as Exhibit 8.2 to the Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
PLATINUM technology, inc.:
We consent to the use of our reports incorporated herein by reference and
to the reference to our firm under the heading "EXPERTS" in this Proxy
Statement/Prospectus.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
April 21, 1998
<PAGE>
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts"
and to the incorporation by reference therein of our report dated February 10,
1998, except for Note 14 as to which the date is March 14, 1998, with respect to
the consolidated financial statements and schedule of Logic Works, Inc. included
in its Annual Report (Form 10-K) for the year ended December 31, 1997, filed
with the Securities and Exchange Commission in the Proxy Statement of Logic
Works, Inc. that is made part of the Registration Statement (Form S-4) and
related Prospectus of PLATINUM technology, inc. for the registration of
8,677,295 shares of its common stock.
/s/ Ernst & Young LLP
Princeton, New Jersey
April 17, 1998
<PAGE>
LOGIC WORKS, INC. EXHIBIT 99.1
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Gregory A. Peters and Daniel M. Shiffman, jointly and
individually, as proxies, each with full power of substitution, and hereby
authorizes them to represent and to vote, as directed below, all shares of
Common Stock, par value $.01 per share, of Logic Works, Inc., a Delaware
corporation ("Logic Works"), that the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of Logic Works to be
held on May 28, 1998, or any adjournment thereof.
UNLESS OTHERWISE SPECIFIED ON THIS PROXY, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR THE APPROVAL OF THE MERGER AGREEMENT, FOR THE NOMINEE TO BE A
CLASS III DIRECTOR AND FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
LLP AS INDEPENDENT AUDITORS. If any other business is presented at said meeting,
this Proxy shall be voted in the discretion of the proxies named on the reverse
side.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(To be signed and dated on the reverse side)
1. Approval of the Merger Agreement and the Merger (as defined in the
accompanying Proxy Statement/Prospectus).
______ FOR ______ AGAINST ______ ABSTAIN
2. ELECTION OF DIRECTOR
Nominee: Richard A. Hosley, II
______ FOR ______ AUTHORITY WITHHELD
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS LOGIC WORKS'
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1998
______ FOR ______ AGAINST ______ ABSTAIN
Dated: _____________________, 1998 ____________________________________
(Signature)
(Please sign exactly as name appears on stock certificate. Where stock is
registered jointly, all owners must sign. Corporate owners should sign full
corporate name by an authorized person. Executors, administrators, trustees or
guardians should indicate their status when signing.) PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
