<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1 AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(a)
(AMENDMENT NO. ___________)
PLATINUM SOFTWARE CORPORATION
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(NAME OF THE ISSUER)
COMMON STOCK
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(TITLE OF CLASS OF SECURITIES)
72764 R 10 5
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(CUSIP NUMBER)
STUART W. CLIFTON
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
DATAWORKS CORPORATION
5910 PACIFIC CENTER BLVD., SUITE 300
SAN DIEGO, CA 92121
(619) 546-9600
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
OCTOBER 13, 1998
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(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
(Page 1 of 30 pages)
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The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
<TABLE>
<S> <C>
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CUSIP NO. 72764 R 10 5 13D Page 2 of 30 Pages
- -------------------------------------------- ------------------------------------------
- --------- -------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
DATAWORKS CORPORATION
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) OR
2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER 7 SOLE VOTING POWER
OF -0-
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SHARES 8 SHARED VOTING POWER
BENEFICIALLY 5,558,116 (1)
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OWNED BY 9 SOLE DISPOSITIVE POWER
REPORTING -0-
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PERSON 10 SHARED DISPOSITIVE POWER
WITH -0-
- --------- -------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,558,116 (1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ]
- --------- -------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9% (1)
- --------- -------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
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</TABLE>
(1) Based solely on information provided by Platinum Software Corporation.
Includes shares of Platinum Series C Preferred Stock on an as-converted
basis. Includes 49,500 shares of Platinum Common Stock underlying stock
options exercisable within 60 days of October 13, 1998.
(Page 2 of 30 pages)
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Neither the filing of this Schedule 13D nor any of its contents shall be deemed
to constitute an admission by DataWorks Corporation that it is the beneficial
owner of any of the Platinum Common Stock referred to herein for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended, or for any
other purpose, and such beneficial ownership is expressly disclaimed.
ITEM 1. SECURITY AND ISSUER
(a) Title of Security:
Common Stock, $.001 par value per share (the "Common Stock").
(b) Name of the Issuer:
Platinum Software Corporation, a Delaware corporation
("Platinum").
(c) The Issuer's principal executive office:
195 Technology Drive
Irvine, CA 92618-2402
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is filed by DataWorks Corporation, a Delaware
corporation ("DataWorks" or the "Company"). DataWorks is principally in the
business of developing, marketing, implementing and supporting open systems,
client/server-based Enterprise Resource Planning software for mid-range discrete
manufacturing companies with annual revenues between $3 million and $1 billion.
(b) The address of the principal business offices of DataWorks is 5910
Pacific Center Blvd., Suite 300, San Diego, California 92121.
(c) Set forth in Schedule I to this Schedule 13D is the name and present
principal occupation or employment of each of DataWorks executive officers and
directors and the name, principal business and address of any corporation or
other organization in which employment is conducted.
(d) During the last five years, there have been no criminal proceedings
against DataWorks, or, to the best knowledge of DataWorks, any of the other
persons with respect to whom information is given in response to this Item 2.
(e) During the last five years, neither DataWorks nor, to the best
knowledge of DataWorks, any of the other persons with respect to whom
information is given in response to this Item 2, has been a party to any civil
proceeding of a judicial or administrative body of competent jurisdiction
resulting in a judgment, decree or final order enjoining future violations
(Page 3 of 30 pages)
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of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) To the best knowledge of DataWorks, all of the directors and
executive officers of DataWorks named in Schedule I to this Schedule 13D are
citizens of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to an Agreement and Plan of Reorganization dated October 13,
1998, (the "Reorganization Agreement"), among Platinum, Zoo Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Platinum ("Merger Sub"), and
DataWorks, and subject to the conditions set forth therein (including approval
by stockholders of Platinum and DataWorks), Merger Sub will merge with and into
DataWorks and DataWorks will become wholly-owned subsidiary of Platinum (such
events constituting the "Merger). Once the Merger is consummated, Merger Sub
will cease to exist as a corporation and all of the business, assets,
liabilities and obligations of Merger Sub will be merged into DataWorks with
DataWorks remaining as the surviving corporation ("Surviving Corporation"). As a
result of the Merger, each outstanding share of DataWorks Common Stock, other
than shares owned by Merger Sub, Platinum or any wholly-owned subsidiary of
Platinum, will be converted into the right to receive 0.794 of a share (the
"Exchange Ratio") of Platinum Common Stock, and each outstanding option to
purchase DataWorks Common Stock under DataWorks' stock option plans (each, a
"DataWorks Common Stock Option") will be assumed by Platinum (each, an "Assumed
Option") and certain outstanding warrants to purchase DataWorks Common Stock
(each, a "DataWorks Warrant") will be assumed by Platinum (each, an "Assumed
Warrant"). Each Assumed Option and each Assumed Warrant will become an option or
warrant, as the case may be, to purchase that number of shares of Platinum
Common Stock as is equal (subject to rounding) to the number of shares of
DataWorks Common Stock that was subject to such option or warrant, as the case
may be, immediately prior to the Merger, multiplied by the Exchange Ratio. The
exercise price of each Assumed Option and each Assumed Warrant will be equal to
the quotient determined by dividing the exercise price per share of DataWorks
Common Stock at which such DataWorks Common Stock Option and each DataWorks
Warrant was exercisable immediately prior to the effective time of the Merger by
the Exchange Ratio, rounded up to the nearest whole cent. The foregoing summary
of the Merger is qualified in its entirety by reference to the Reorganization
Agreement, which is included as Exhibit 2.1 to this Schedule 13D and
incorporated herein in its entirety by reference.
ITEM 4. PURPOSE OF THE TRANSACTION
(a)-(b) The following is a brief summary of the material provisions of
the Reorganization Agreement, which is filed as Exhibit 2.1 to this Schedule 13D
and is incorporated herein by reference. This summary is qualified in its
entirety by reference to the full and complete text of the Reorganization
Agreement.
(Page 4 of 30 pages)
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Effective Time
Subject to the provisions of the Reorganization Agreement, Platinum,
DataWorks and Merger Sub shall cause the Merger to be consummated by filing a
Certificate of Merger, with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware law as soon as practicable
on or after the Closing Date. The closing of the Merger (the "Closing") shall
take place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation 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 of the
conditions set forth in the Reorganization Agreement, or at such other time,
date and location as the parties to the Reorganization Agreement agree in
writing.
Manner and Basis of Converting Shares
At the Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub, DataWorks or the holders of any of the following
securities each share of DataWorks Common Stock (including, with respect to each
such share of DataWorks Common Stock and the associated Rights (as defined in
that certain Rights Agreement (the "DataWorks Rights Plan") dated as of on or
about October 13, 1998, between DataWorks and Chase Mellon Shareholder Services,
L.L.C., as Rights Agent)) issued and outstanding immediately prior to the
Effective Time, other than any shares of the DataWorks Common Stock held by
DataWorks or owned by Platinum, Merger Sub or any direct or indirect
wholly-owned subsidiary to be canceled, will be canceled and extinguished and
automatically converted into the right to receive 0.794 (the "EXCHANGE RATIO")
shares of Common Stock of Platinum upon surrender of the certificate
representing such share of the DataWorks Common Stock in the manner provided
below (or in the case of a lost, stolen or destroyed certificate, upon delivery
of an affidavit).
If any shares of the DataWorks Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with DataWorks, then the shares of
Platinum Common Stock issued in exchange for such shares of DataWorks Common
Stock will also be unvested to the same extent and/or be subject to the same
repurchase option, risk of forfeiture or other condition, as applicable, and the
certificates representing such shares of Platinum Common Stock may accordingly
be marked with appropriate legends.
Each share of DataWorks Common Stock held by DataWorks or owned by
Merger Sub, Platinum or any direct or indirect wholly-owned subsidiary of
DataWorks or of Platinum immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
At the Effective Time, all options to purchase DataWorks Common Stock
then outstanding under DataWorks' 1995 Equity Incentive Plan, 1995 Non-Employee
Directors' Stock Option Plan, the Interactive 1997 Nonstatutory Stock Option
Plan and the Interactive 1995 Stock Option Plan (the "DataWorks Stock Option
Plans") shall be assumed by Platinum. At the
(Page 5 of 30 pages)
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Effective Time, rights outstanding under DataWorks' 1995 Employee Stock Purchase
Plan (the "DataWorks Purchase Plan") shall be treated as described below. At the
Effective Time, certain warrants issued by DataWorks (the "Warrants") shall be,
in connection with the Merger, assumed by Platinum as described below.
At the Effective Time, each outstanding DataWorks Option, whether or not
exercisable and regardless of the respective exercise prices thereof, will be
assumed by Platinum. Each DataWorks Option so assumed by Platinum under the
Reorganization Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable DataWorks Stock Option Plan
immediately prior to the Effective Time (including, without limitation, any
repurchase rights, vesting provisions and vested status of any such DataWorks
Option), except that (i) each DataWorks Option will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole shares
of Platinum Common Stock equal to the product of the number of shares of
DataWorks Common Stock that were issuable upon exercise of such DataWorks Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Platinum Common Stock and
(ii) the per share exercise price for the shares of Platinum Common Stock
issuable upon exercise of such assumed DataWorks Option will be equal to the
quotient determined by dividing the exercise price per share of DataWorks Common
Stock at which such DataWorks Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. It
is intended that DataWorks Options assumed by Platinum shall qualify following
the Effective Time as incentive stock options as defined in Section 422 of the
Code to the extent DataWorks Options qualified as incentive stock options
immediately prior to the Effective Time.
Rights outstanding under the DataWorks Purchase Plan shall be treated in
a manner reasonably acceptable to Platinum and DataWorks, provided that in no
event shall any such treatment interfere with Platinum's ability to account for
the Merger as a pooling of interests.
At the Effective Time, the Warrants will be assumed by Platinum. Each
Warrant so assumed by Platinum under the Reorganization Agreement will continue
to have, and be subject to, the same terms and conditions set forth in the
applicable warrant agreement immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions), except that
(i) each Warrant will be exercisable (or will become exercisable in accordance
with its terms) for that number of whole shares of Platinum Common Stock equal
to the product of the number of shares of DataWorks Common Stock that were
issuable upon exercise of such Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Platinum Stock and (ii) the per share exercise price for the shares of
Platinum Common Stock issuable upon exercise of such assumed Warrant will be
equal to the quotient determined by dividing the exercise price per share of
DataWorks Common Stock at which such Warrant was exercisable immediately prior
to the Effective Time by the Exchange Ratio, rounded up to the nearest whole
cent.
The Exchange Ratio shall be adjusted to reflect appropriately the effect
of any stock split, reverse stock split, stock dividend (including any dividend
or distribution of securities convertible into Platinum Common Stock or
DataWorks Common Stock), reorganization,
(Page 6 of 30 pages)
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recapitalization, reclassification or other like change with respect to Platinum
Common Stock or DataWorks Common Stock occurring on or after the date hereof and
prior to the Effective Time.
As soon as practicable after the Effective Time, Platinum shall cause
the Exchange Agent to mail to each DataWorks stockholder of record (as of the
Effective Time) a letter of transmittal with instructions to be used by such
stockholder in surrendering certificates which, prior to the Merger, represented
shares of DataWorks Common Stock and cash in lieu of any fractional shares.
Conduct Following the Merger
Once the Merger is consummated, Merger Sub will cease to exist as a
corporation, and all of the business, assets, liabilities and obligations of
Merger Sub will be merged into DataWorks with DataWorks remaining as the
Surviving Corporation.
Pursuant to the Reorganization Agreement, the Certificate of
Incorporation of Merger Sub in effect immediately prior to the Effective Time
will become the Certificate of Incorporation of the Surviving Corporation and
the Bylaws of Merger Sub will become the Bylaws of the Surviving Corporation.
The Board of Directors of the Surviving Corporation will consist of the
directors who are serving as directors of Merger Sub immediately prior to the
Effective Time. The officers of DataWorks immediately prior to the Effective
Time will remain as officers of the Surviving Corporation, until their
successors are duly elected or appointed or qualified.
Pursuant to the Reorganization Agreement, the Platinum Board will take
all actions necessary to cause Stuart Clifton to be elected to the Platinum
Board immediately after the Effective Time.
Conduct of Platinum's and DataWorks' Business Prior to the Merger
Pursuant to the Reorganization Agreement, until the earlier of the
termination of the Reorganization Agreement pursuant to its terms or the
Effective Time, DataWorks (and each of its subsidiaries) agrees, except (i) as
indicated in the DataWorks disclosure schedules or (ii) to the extent that
Platinum shall otherwise consent in writing, to carry on its business in all
material respects, in the usual, regular and ordinary course, in substantially
the same manner as heretofore conducted and in compliance with all applicable
laws and regulations, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others with which it has business dealing. In addition, DataWorks will
promptly notify the other of any material event involving its business or
operations. In addition, except as permitted by the terms of the Reorganization
Agreement or as provided in the DataWorks disclosure schedules, without the
prior written consent of Platinum,
(Page 7 of 30 pages)
<PAGE> 8
DataWorks shall not do any of the following, and shall not permit its
subsidiaries to do any of the following:
(A) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or
other stock plans or authorize cash payments in exchange for any options
granted under any of such plans;
(B) Grant any severance or termination pay to any officer or
employee except pursuant to agreements outstanding, or policies
existing, on the date hereof and as disclosed in the DataWorks
schedules, or adopt any new severance plan;
(C) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the
Platinum Intellectual Property, or enter into grants to future patent
rights, other than non-exclusive licenses in the ordinary course of
business and consistent with past practice;
(D) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock;
(E) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of DataWorks or it subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(F) Issue, deliver, sell, authorize, pledge or otherwise
encumber, any shares of DataWorks capital stock or any securities
convertible into shares of DataWorks capital stock, or subscriptions,
rights, warrants or options to acquire any shares of DataWorks capital
stock or any securities convertible into shares of DataWorks capital
stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other
than the issuance delivery and/or sale of (i) stock options in the
ordinary course of business and consistent with past practice up to
200,000 shares, (ii) shares of the DataWorks Common Stock pursuant to
the exercise of stock options therefor outstanding as of the date of the
Reorganization Agreement or granted pursuant to the foregoing clause
(i), (iii) shares of DataWorks Common Stock issuable to participants in
the DataWorks Employee Stock Purchase Plan consistent with the terms
thereof and (iv) shares of DataWorks capital stock pursuant to exercise
of the Warrants;
(G) Cause, permit or propose any amendments to the Certificate of
Incorporation and Bylaws of DataWorks or the similar governing
instruments of each of its subsidiaries;
(Page 8 of 30 pages)
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(H) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of DataWorks or enter
into any material joint ventures, strategic partnerships or alliances;
(I) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the
aggregate, to the business of DataWorks, except sales of inventory in
the ordinary course of business consistent with past practice;
(J) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities
or options, warrants, calls or other rights to acquire any debt
securities of DataWorks, enter into any "keep well" or other agreement
to maintain any financial statement condition or enter into any
arrangement having the economic effect of any of the foregoing other
than (i) in connection with the financing of ordinary course trade
payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business;
(K) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment
contract or collective bargaining agreement (other than offer letters
and letter agreements entered into in the ordinary course of business
consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits
(including rights to severance or indemnification) of its directors,
officers, employees or consultants other than pursuant to written
agreements with such persons disclosed in the DataWorks schedules or in
the ordinary course of business, consistent with past practice, or
change in any material respect any management policies or procedures;
(L) Make any payments outside of the ordinary course of business
in excess of $250,000 other than in connection with the Merger or
commitments preexisting the date of the Reorganization Agreement;
(M) Modify, amend or terminate any DataWorks Contract or other
material contract or agreement to which DataWorks or any subsidiary
thereof is a party or waive, release or assign any material rights or
claims thereunder;
(N) Enter into any contracts, agreements, or obligations relating
to the distribution, sale, license or marketing by third parties of
DataWorks' products or products licensed by DataWorks other than in the
ordinary course of business consistent with past practice but in no
event will any exclusive rights be granted or restrictions on DataWorks'
business activities be agreed to;
(Page 9 of 30 pages)
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(O) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(P) Take any action that would be reasonably likely to interfere
with Platinum's ability to account for the Merger as a pooling of
interests;
(Q) Agree in writing or otherwise to take any of the actions
described in (A) through (P) above.
Pursuant to the Reorganization Agreement, until the earlier of the
termination of the Reorganization Agreement pursuant to its terms or the
Effective Time, Platinum (and each of its subsidiaries) agrees, except (i) as
indicated in the Platinum disclosure schedules or (ii) to the extent that
DataWorks shall otherwise consent in writing, carry on its business, in all
material respects, in the usual, regular and ordinary course, in substantially
the same manner as heretofore conducted and in compliance with all applicable
laws and regulations, pay its debts and taxes when due, subject to good faith
disputes over such debts or taxes, pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others with which it has business dealings. In addition, except as permitted
by the terms of the Reorganization Agreement or as provided in the Platinum
disclosure schedules, without the prior written consent of DataWorks, Platinum
shall not do any of the following and shall not permit its subsidiaries to do
any of the following:
(A) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or
other stock plans or authorize cash payments in exchange for any options
granted under any of such plans;
(B) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the
Platinum Intellectual Property, or enter into grants to future patent
rights, other than in the ordinary course of business and consistent
with past practice;
(C) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock;
(D) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Platinum or its subsidiaries,
except repurchases of unvested shares at cost in connection with the
termination of the employment relationship with any employee pursuant to
stock option or repurchase agreements in effect on the date hereof;
(Page 10 of 30 pages)
<PAGE> 11
(E) Issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into shares of
capital stock, or subscriptions, rights, warrants or options to acquire
any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible
securities, other than the issuance, delivery and/or sale of (i) stock
options in the ordinary course of business and consistent with past
practice, (ii) shares of Platinum Common Stock pursuant to the exercise
of stock options therefor outstanding as of the date of the
Reorganization Agreement or granted pursuant to the foregoing clause
(i), and (iii) shares of Platinum Common Stock issuable to participants
in the Platinum Employee Stock Purchase Plan consistent with the terms
thereof.
(F) Cause, permit or propose any amendments to the Certificate of
Incorporation and Bylaws of Platinum or the similar governing
instruments of each of its subsidiaries;
(G) Acquire or agree to acquire by (i) merging or consolidating
with, or (ii) purchasing any equity in or a portion of the assets of, or
(iii) any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, for
consideration in excess of $50 million in any individual acquisition or
$100 million in the aggregate for all such acquisitions;
(H) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities
or options, warrants, calls or other rights to acquire any debt
securities of Platinum, enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement
having the economic effect of any of the foregoing other than (i) in
connection with the financing of ordinary course trade payables
consistent with past practice or (ii) pursuant to existing credit
facilities in the ordinary course of business.
(I) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the
aggregate, to the business of Platinum, except sales of inventory in the
ordinary course of business consistent with past practice;
(J) Materially revalue any of its assets or, except as required
by GAAP, make any change in accounting methods, principles or practices;
(K) Take any action that would be reasonably likely to interfere
with Platinum's ability to account for the Merger as a pooling of
interests; and
(L) Agree in writing or otherwise to take any of the actions
described in Section (A) through (K) above.
(Page 11 of 30 pages)
<PAGE> 12
No Solicitation
Under the terms of the Reorganization Agreement, until the earlier of
the Effective Time or termination of the Reorganization Agreement pursuant to
its terms, DataWorks and its subsidiaries will not, nor will they authorize or
permit any of their respective officers, directors, affiliates or employees or
any investment banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal (as
defined below), (ii) participate in any discussions or negotiations regarding,
or furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in discussions with any person with respect to any Acquisition
Proposal, except as to the existence of the provisions regarding
non-solicitation contained in the Reorganization Agreement, (iv) subject to the
following paragraph, approve, endorse or recommend any Acquisition Proposal or
(v) enter into any letter of intent or similar document or any contract
agreement or commitment contemplating or otherwise relating to any Acquisition
Transaction (as defined below); provided, however, that prior to the approval of
the Reorganization Agreement by the required DataWorks stockholder vote, the
non-solicitation provisions contained in the Reorganization Agreement shall not
prohibit DataWorks from furnishing nonpublic information regarding DataWorks and
its subsidiaries to, entering into a confidentiality agreement with or entering
into discussions with, any person or group in response to a Superior Offer (as
hereinafter defined) submitted by such person or group (and not withdrawn) if
(1) neither DataWorks nor any representative of DataWorks and its subsidiaries
shall have violated any of the restrictions regarding non-solicitation set forth
in the Reorganization Agreement, (2) the DataWorks Board concludes in good
faith, after consultation with its outside legal counsel, that such action is
required in order for the DataWorks Board to comply with its fiduciary
obligations to the DataWorks' stockholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions with,
such person or group, DataWorks gives Platinum written notice of the identity of
such person or group and of DataWorks' intention to furnish nonpublic
information to, or enter into discussions with, such person or group and
DataWorks receives from such person or group an executed confidentiality
agreement containing customary limitations on the use and disclosure of all
nonpublic written and oral information furnished to such person or group by or
on behalf of DataWorks, and (4) contemporaneously with furnishing any such
nonpublic information to such person or group, DataWorks furnishes such
nonpublic information to Platinum (to the extent such nonpublic information has
not been previously furnished by Platinum to DataWorks). DataWorks and its
subsidiaries will immediately cease any and all existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by any
officer, director or employee of DataWorks or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of DataWorks or
any of its subsidiaries shall be deemed to be a breach of the non-solicitation
provisions contained in the Reorganization Agreement by DataWorks. In addition
to the foregoing, DataWorks shall provide Platinum with at least 24 hours prior
notice (or such lesser prior notice as provided to the members of the DataWorks
Board but in no event less than eight hours) of any
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<PAGE> 13
meeting of the DataWorks Board at which the DataWorks Board is reasonably
expected to consider a Superior Offer, together with such notice a copy of the
definitive documentation relating to such Superior Offer.
Notwithstanding the terms discussed in this section, nothing in the
Reorganization Agreement prevents the DataWorks Board from withholding,
withdrawing, amending or modifying its unanimous recommendation in favor of the
Merger if (i) a Superior Offer is made to DataWorks and is not withdrawn, (ii)
neither DataWorks nor any of its representatives shall have violated any of the
restrictions regarding confidentiality contained in the Reorganization
Agreement, and (iii) the DataWorks Board or any committee thereof concludes in
good faith, after consultation with its outside counsel, that, in light of such
Superior Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the DataWorks Board to comply with its
fiduciary obligations to the DataWorks' stockholders under applicable law.
Subject to applicable laws, no provision of the Reorganization Agreement
summarized in this paragraph shall limit DataWorks' obligation to hold and
convene the DataWorks Stockholders' Meeting (regardless of whether the unanimous
recommendation of the DataWorks Board shall have been withdrawn, amended or
modified).
In addition to the obligations of DataWorks described in this section,
DataWorks as promptly as practicable shall advise Platinum orally and in writing
of any request for non-public information which DataWorks reasonably believes
would lead to an Acquisition Proposal or of any Acquisition Proposal, or any
inquiry with respect to or which DataWorks reasonably should believe would lead
to any Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person or group making
any such request, Acquisition Proposal or inquiry. DataWorks will keep Platinum
informed in all material respects of the status and details (including material
amendments or proposed material amendments) of any such request, Acquisition
Proposal or inquiry.
"ACQUISITION PROPOSAL" means any offer or proposal (other than an offer
or proposal by Platinum) relating to any Acquisition Transaction. "ACQUISITION
TRANSACTION" means any transaction or series of related transactions other than
the transactions contemplated by the Reorganization Agreement involving: (A) any
acquisition or purchase from DataWorks by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of DataWorks or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of DataWorks or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving DataWorks pursuant to
which the stockholders of DataWorks immediately preceding such transaction hold
less than 95% of the equity interests in the surviving or resulting entity of
such transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 10% of the assets of
DataWorks; or (C) any liquidation or dissolution of DataWorks. "SUPERIOR OFFER"
means an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger, consolidation,
(Page 13 of 30 pages)
<PAGE> 14
business combination, recapitalization, liquidation, dissolution or similar
transaction involving DataWorks pursuant to which the stockholders of DataWorks
immediately preceding such transaction hold less than 50% of the equity interest
in the surviving or resulting entity of such transaction; (ii) a sale or other
disposition by DataWorks of assets (excluding inventory and used equipment sold
in the ordinary course of business) representing in excess of 50% of the fair
market value of DataWorks business immediately prior to such sale, or (iii) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by DataWorks), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing in
excess of 50% of the voting power of the then outstanding shares of capital
stock of DataWorks in each case, on terms that the DataWorks Board of Directors
determines, in its reasonable judgment, after consultation with its financial
advisor, to be more favorable to the DataWorks' stockholders than the terms of
the Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the judgment of
the DataWorks' Board to be obtained by such third party on a timely basis.
Break Up Fees
Platinum and DataWorks have agreed that if the Reorganization Agreement
is terminated by either Platinum or DataWorks, as applicable, due to (i) the
failure of the Merger to be consummated by February 28, 1999 for any reason;
provided, however, the right to terminate the Reorganization Agreement as a
result of such failure is not available to any party to the Reorganization
agreement whose action or failure to act has been a principal cause or resulted
in the failure of the Merger to occur on or before such date and such action or
failure constitutes a material breach of the Reorganization Agreement; (ii) the
failure of DataWorks to obtain the required approval of the stockholders of
DataWorks contemplated by the Reorganization Agreement by reason of the failure
to obtain the required vote at a meeting of the DataWorks stockholders duly
convened therefore or at any adjournment thereof; provided, however, that the
right to terminate the Reorganization Agreement as a result of such failure
shall not be available to DataWorks where the failure to obtain the DataWorks
stockholder approval shall have been caused by the action or failure to act of
DataWorks and such action or failure to act constitutes a material breach by
DataWorks of the Reorganization Agreement or (iii) a DataWorks Triggering Event
(as defined below), then DataWorks shall promptly, but in no event later than
two days after the date of such termination, pay Platinum a fee equal to $3.25
million in immediately available funds; provided, that in the case of
termination as a result of the failure of the Merger to be consummated by
February 28, 1999, such payment shall be made only if following October 13, 1998
and prior to the termination of the Reorganization Agreement, a third party has
publicly announced an Acquisition Proposal for an Acquisition Transaction and
within 12 months following the termination of the Reorganization Agreement
Platinum enters into or announces an intention to enter into a Company
Acquisition (as defined below).
Platinum and DataWorks have further agreed that if the Reorganization
Agreement is terminated by either Platinum or DataWorks, as applicable, due to
(i) the failure of Platinum to obtain the required approval of the stockholders
of Platinum contemplated by the Reorganization
(Page 14 of 30 pages)
<PAGE> 15
Agreement by reason of the failure to obtain the required vote at a meeting of
the Platinum stockholders duly convened therefore or at any adjournment thereof;
provided, however, that the right to terminate the Reorganization Agreement as a
result of such failure shall not be available to Platinum where the failure to
obtain the Platinum stockholder approval shall have been caused by the action or
failure to act of Platinum and such action or failure to act constitutes a
material breach by Platinum of the Reorganization Agreement or (ii) a Platinum
Triggering Event, then Platinum shall promptly, but in no event later than two
(2) days after the date of such termination, pay to DataWorks a fee equal to
$3.25 million in immediately available funds.
Platinum and DataWorks have agreed that the fees described above shall
not be in lieu of damages incurred in the event of breach of the Reorganization
Agreement.
Except as set forth above, Platinum and DataWorks have agreed that all
fees and expenses incurred in connection with the Reorganization Agreement and
the transactions contemplated thereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided, however, that
Platinum and DataWorks shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred in relation to the
printing and filing (with the SEC) of this Joint Proxy Statement/Prospectus.
"COMPANY ACQUISITION" shall mean any of the following transactions
(other than the transactions contemplated by the reorganization Agreement); (i)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving DataWorks pursuant to which the
stockholders of DataWorks immediately preceding such transaction hold less than
50% of the aggregate equity interests in the surviving or resulting entity of
such transaction or (ii) a sale or other disposition by DataWorks of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 50% of the aggregate fair market value of DataWorks'
business immediately prior to such sale. "DATAWORKS TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the DataWorks Board or any committee thereof
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Platinum its unanimous recommendation in favor of, the
adoption and approval of the Reorganization Agreement or the approval of the
Merger; (ii) Platinum shall have failed to include in this Joint Proxy
Statement/Prospectus the unanimous recommendation of the DataWorks Board in
favor of the adoption and approval of the Reorganization Agreement and the
approval of the Merger; (iii) the DataWorks Board fails to reaffirm its
unanimous recommendation in favor of the adoption and approval of the
Reorganization Agreement and the approval of the Merger within ten (10) business
days after Platinum requests in writing that such recommendation be reaffirmed;
(iv) the DataWorks Board or any committee thereof shall have approved or
publicly recommended any Acquisition Proposal; or (v) a tender or exchange offer
relating to securities of DataWorks shall have been commenced by a Person
unaffiliated with Platinum and DataWorks shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that DataWorks recommends
rejection of such tender or exchange offer.
(Page 15 of 30 pages)
<PAGE> 16
"PLATINUM TRIGGERING EVENT" shall be deemed to have occurred if: (i) the
Platinum Board for any committee thereof shall for any reason have withdrawn or
shall have amended or modified in a manner adverse to DataWorks its unanimous
recommendation in favor of, the issuance of shares of Platinum Common Stock
pursuant to the Merger; (ii) Platinum shall have failed to include in the
Prospectus/Proxy Statement the unanimous recommendation of the Platinum Board in
favor of the issuance of shares of Platinum Common Stock pursuant to the Merger;
or (iii) the Platinum Board of fails to reaffirm its unanimous recommendation in
favor of the issuance of the shares of Platinum Common Stock pursuant to the
Merger within ten (10) business days after DataWorks requests in writing that
such recommendation be reaffirmed.
Conditions to the Merger
The respective obligations of each party to the Reorganization Agreement
to effect the Merger are subject to the satisfaction at or prior to the Closing
Date of the following conditions: (i) the Reorganization Agreement shall have
been approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of DataWorks; (ii) the
issuance of the shares of Platinum Common Stock pursuant to the Merger shall
have been duly approved by the requisite vote under applicable Nasdaq rules by
the stockholders of Platinum; (iii) the SEC shall have declared the Registration
Statement effective and 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 this Joint
Proxy Statement/ Prospectus, shall have been initiated or threatened in writing
by the SEC; (iv) no Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger and all waiting periods, if any, under
the HSR Act relating to the transactions contemplated hereby shall have expired
or terminated early and all material foreign antitrust approvals required to be
obtained prior to the Merger in connection with the transactions contemplated
hereby shall have been obtained; (v) Platinum and DataWorks shall each have
received written opinions from their respective tax counsel (Wilson Sonsini
Goodrich & Rosati, Professional Corporation, and Cooley Godward LLP,
respectively), in form and substance reasonably satisfactory to them, to the
effect that the Merger will constitute a tax-free reorganization within the
meaning of Section 368(a) of the Code and such opinions shall not have been
withdrawn; provided, however, that if the counsel to either Platinum or
DataWorks does not render such opinion, this condition shall nonetheless be
deemed to be satisfied with respect to such party if counsel to the other party
renders such opinion to such party. The parties to the Reorganization Agreement
have agreed to make representations as requested by such counsel for the purpose
of rendering the Tax Opinions and have further agreed to confirm the accuracy
and completeness of such representations as of the Effective Time as requested
by such counsel for the purpose of rendering those opinions discussed in this
paragraph.
In addition, the obligation of DataWorks to consummate and effect the
Merger is subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
DataWorks: (i) each representation and
(Page 16 of 30 pages)
<PAGE> 17
warranty of Platinum and Merger Sub contained in the Reorganization Agreement
shall have been true and correct as of October 13, 1998 and as of the Closing
date (subject to certain materiality qualifications) and DataWorks shall have
received a certificate with respect to the foregoing signed on behalf of
Platinum by an authorized officer of Platinum; (ii) Platinum and Merger Sub
shall have performed or complied in all material respects with all agreements
and covenants required by the Reorganization Agreement to be performed or
complied with by them on or prior to the Closing Date, and DataWorks shall have
received a certificate to such effect signed on behalf of Platinum by an
authorized officer of Platinum; (iii) no material adverse effect with respect to
Platinum shall have occurred since the date of the Reorganization Agreement;
(iv) each of the Platinum Affiliates shall have entered into an affiliate
agreement and each of such agreements will be in full force and effect as of the
Effective Time; (v) DataWorks shall have received letters from Ernst & Young
LLP, dated within two (2) business days prior to the Effective Time, regarding
that firm's concurrence with Platinum management's and the DataWorks
management's conclusions as to the appropriateness of pooling of interest
accounting for the Merger and (vi) the shares of Platinum Common Stock to be
issued in the Merger shall have been authorized for listing on the Nasdaq
National Market, subject to notice of issuance.
Further, the obligations of Platinum and Merger Sub to consummate and
effect the Merger are 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 Platinum: (i) each representation and warranty of
DataWorks contained in the Reorganization Agreement shall be true and correct as
of October 13, 1998 and as of the Closing Date (subject to certain materiality
qualifications) and Platinum shall have received a certificate with respect to
the foregoing signed on behalf of DataWorks by an authorized officer of
DataWorks; (ii) DataWorks shall have performed or complied in all material
respects with all agreements and covenants required by the Reorganization
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Platinum shall have received a certificate to such effect signed on
behalf of DataWorks by the Chief Executive Officer and Chief Financial Officer
of DataWorks; (iii) no material adverse effect with respect to DataWorks and its
subsidiaries shall have occurred since the date of the Reorganization Agreement;
(iv) each of the DataWorks Affiliates shall have entered into affiliate
agreements and each of such agreements will be in full force and effect as of
the Effective Time; (v) Platinum shall have received letters from Ernst & Young
LLP, dated within two (2) business days prior to the Effective Time, regarding
that firm's concurrence with Platinum management's and DataWorks' management's
conclusions as to the appropriateness of pooling of interest accounting for the
Merger; (vi) all necessary actions shall have been taken to extinguish and
cancel all outstanding Rights under the DataWorks Rights Plan or render such
Rights inapplicable to the Merger and the other transactions contemplated by the
Reorganization Agreement.
Termination of the Reorganization Agreement
The Reorganization Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the requisite
approvals of the stockholders of Platinum or DataWorks: (i) by mutual written
consent duly authorized by the Platinum and DataWorks Boards; (ii) by either
DataWorks or Platinum if the Merger shall not have been consummated by
(Page 17 of 30 pages)
<PAGE> 18
February 28, 1999 for any reason; provided, however, that the right to terminate
the Reorganization Agreement pursuant to this right of termination shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a material breach of the
Reorganization Agreement; (iii) by either DataWorks or Parent if a Governmental
Entity shall have issued an order, decree or ruling or taken any other action,
in any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable; (iv) by DataWorks or Platinum if the required approval of the
stockholders of Platinum contemplated by the Reorganization Agreement shall not
have been obtained by reason of the failure to obtain the required vote at a
meeting of Platinum stockholders duly convened therefor or at any adjournment
thereof; provided, however, that the right to terminate the Reorganization
Agreement pursuant to this right of termination shall not be available to
Platinum where the failure to obtain Platinum stockholder approval shall have
been caused by the action or failure to act of Platinum and such action or
failure to act constitutes a material breach by Platinum of the Reorganization
Agreement; (v) by DataWorks or Platinum if the required approval of the
stockholders of DataWorks contemplated by the Reorganization Agreement shall not
have been obtained by reason of the failure to obtain the required vote at a
meeting of DataWorks stockholders duly convened therefore or at any adjournment
thereof; provided, however, that the right to terminate the Reorganization
Agreement pursuant to this right of termination shall not be available to
DataWorks where the failure to obtain the DataWorks stockholder approval shall
have been caused by the action or failure to act of DataWorks and such action or
failure to act constitutes a material breach by DataWorks of the Reorganization
Agreement; (vi) by Platinum (at any time prior to the adoption and approval of
the Reorganization Agreement and the Merger by the required vote of the
stockholders of DataWorks) if a DataWorks Triggering Event shall have occurred;
(vii) by DataWorks (at any time prior to the adoption and approval of the
Reorganization Agreement and the Merger by the required vote of the stockholders
of Platinum) if a Platinum Triggering Event shall have occurred; (viii) by
DataWorks, upon a breach of any representation, warranty, covenant or agreement
on the part of Platinum set forth in the Reorganization Agreement, or if any
representation or warranty of Platinum shall have become untrue (provided that
if such inaccuracy in Platinum's representations and warranties or breach by
Platinum is curable by Platinum through the exercise of commercially reasonable
efforts, then DataWorks may not terminate the Reorganization Agreement provided
Platinum continues to exercise such commercially reasonably efforts to cure such
breach); (ix) by Platinum, upon a breach of any representation, warranty,
covenant or agreement on the part of DataWorks set forth in the Reorganization
Agreement, or if any representation or warranty of DataWorks shall have become
untrue (provided that if such inaccuracy in DataWorks' representations and
warranties or breach by DataWorks is curable by DataWorks through the exercise
of commercially reasonable efforts, then Platinum may not terminate the
Reorganization Agreement provided DataWorks continues to exercise such
commercially reasonably efforts to cure such breach).
(Page 18 of 30 pages)
<PAGE> 19
Indemnification
From and after the Effective Time, Platinum will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of DataWorks
pursuant to any indemnification agreements between DataWorks and its directors
and officers as of the Effective Time (the "INDEMNIFIED PARTIES") and any
indemnification provisions under DataWorks Certificate of Incorporation or
Bylaws as in effect on the date hereof. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Certificate of Incorporation and
Bylaws of DataWorks as in effect on the date hereof, which provisions will not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who, immediately prior to the Effective Time, were directors,
officers, employees or agents of DataWorks, unless such modification is required
by law.
For a period of six years after the Effective Time, Platinum will cause
the Surviving Corporation to use its commercially reasonable efforts to maintain
in effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by DataWorks' directors' and officers'
liability insurance policy on terms comparable to those applicable to the
current directors and officers of DataWorks; provided, however, that in no event
will Platinum or the Surviving Corporation be required to expend in excess of
150% of the annual premium currently paid by DataWorks for such coverage (or
such coverage as is available for such 150% of such annual premium).
VOTING AGREEMENTS
DataWorks Voting Agreements. Pursuant to certain agreements (each a
"DataWorks Voting Agreement" and, collectively, the "DataWorks Voting
Agreements") certain stockholders of DataWorks (each a "DataWorks Voting
Agreement Stockholder"), who beneficially own an aggregate of 1,876,583
outstanding shares of DataWorks Common Stock (representing approximately 12.8%
of shares of DataWorks Common Stock as of October 13, 1998) have agreed that,
prior to the termination of the DataWorks Voting Agreement pursuant to its
terms, they will vote their shares of DataWorks Common Stock in favor of the
approval of the Reorganization Agreement and the Merger. The DataWorks Voting
Agreement Stockholders have also delivered to Platinum irrevocable proxies with
respect to the matters covered by the DataWorks Voting Agreements. In addition,
the DataWorks Voting Agreement Stockholders have agreed not to transfer any
securities of DataWorks owned by them, unless such transfer is in accordance
with the DataWorks Affiliate Agreement between the DataWorks Voting Agreement
Stockholder and Platinum, and provided that the proposed transferee of such
DataWorks securities shall have (i) executed a counterpart of the DataWorks
Voting Agreement and an irrevocable proxy and (ii) agreed to hold such DataWorks
securities subject to all of the terms and provisions of the DataWorks Voting
Agreement.
Platinum Voting Agreements. Pursuant to certain agreements (each a
"Platinum Voting Agreement" and, collectively, the "Platinum Voting Agreements")
certain stockholders of
(Page 19 of 30 pages)
<PAGE> 20
Platinum (each a "Platinum Voting Agreement Stockholder"), who beneficially own
an aggregate of 5,558,116 outstanding shares of Platinum Common Stock and
Platinum Series C Preferred Stock on an as-converted basis (representing
approximately 18.9% of the shares of Platinum Common Stock as of October 13,
1998) have agreed that, prior to the termination of the Platinum Voting
Agreement pursuant to its terms, they will vote their shares of Platinum Common
Stock and Platinum Series C Preferred Stock on an as-converted basis in favor of
the issuance of the shares of Platinum Common Stock to the stockholders of
DataWorks pursuant to the Reorganization Agreement. The Platinum Voting
Agreement Stockholders have also delivered to DataWorks irrevocable proxies with
respect to the matters covered by the Platinum Voting Agreements. In addition,
the Platinum Voting Agreement Stockholders have also agreed not to transfer any
securities of Platinum owned by them, unless such transfer is in accordance with
the Platinum Affiliate Agreement between the Platinum Voting Agreement
Stockholder and Platinum, and provided that the proposed transferee of such
Platinum securities shall have (i) executed a counterpart of the Platinum Voting
Agreement and an irrevocable proxy and (ii) agreed to hold such Platinum
securities subject to all of the terms and provisions of the Platinum Voting
Agreement.
AFFILIATE AGREEMENTS
DataWorks Affiliate Agreements. Pursuant to certain agreements (each
"DataWorks Affiliate Agreement"), certain individuals and entities that may be
deemed affiliates of DataWorks (each, a "DataWorks Affiliate") have agreed not
to effect any sale, transfer or other disposition of the Platinum Common Stock
received by such DataWorks Affiliate in the Merger unless: (i) such sale,
transfer or other disposition is made in conformity with the volume and other
requirements of Rule 145 under the Securities Act of 1933, as amended, as
evidenced by a broker's letter and a representation letter executed by the
DataWorks Affiliate (reasonably satisfactory in form and content to Platinum),
each stating that such requirements have been met; (ii) legal counsel reasonably
satisfactory to Platinum shall have advised Platinum in a written opinion letter
(reasonably satisfactory in form and content to Platinum), upon which Platinum
may rely, that such sale, transfer or other disposition will be exempt from
registration under the Securities Act; (iii) such sale, transfer or other
disposition is effected pursuant to an effective registration statement under
the Securities Act; or (iv) an authorized representative of the SEC shall
rendered written advice to such DataWorks Affiliate to the effect that the SEC
would take no action, or that the staff of the SEC would not recommend that the
SEC take action, with respect to such proposed sale, transfer or other
disposition, and a copy of such written advice and all other related
communications with the SEC shall have been delivered to Platinum.
In addition, so as to help ensure that the Merger may qualify as a
pooling of interests for accounting and financial reporting purposes, the
DataWorks Affiliate Agreements provide that during the period contemplated by
the SEC's Staff Accounting Bulletin Number 65 until the earlier of (i)
Platinum's public announcement of financial results covering at least 30 days of
combined operations of Platinum and DataWorks or (ii) the Reorganization
Agreement is terminated in accordance with its terms, no DataWorks Affiliate
will sell, exchange, transfer, pledge, distribute or otherwise dispose of or
grant any option, establish any "short" or put-equivalent position with respect
to or enter into any similar transaction (through derivatives or
(Page 20 of 30 pages)
<PAGE> 21
otherwise) intended or having the effect, directly or indirectly, to reduce such
DataWorks Affiliate's risk relative to: (i) any DataWorks Common Stock (except
pursuant to and upon consummation of the Merger); or (ii) any Platinum Common
Stock received by such DataWorks Affiliate in the Merger or upon exercise of
options assumed by Platinum in the Merger. Provided certain conditions are met,
the DataWorks Affiliate Agreements provide for certain exceptions to the
foregoing restrictions on transfer relating to: (i) certain de minimis
transfers; (ii) transfers in payment of the exercise price of options to
purchase Platinum Common Stock; (iii) charitable donations; and (iv) transfers
to trusts established for the benefit of members of such DataWorks Affiliate's
family or gifts to members of such DataWorks Affiliate's family.
Platinum Affiliate Agreements. Pursuant to certain agreements (each an
"Platinum Affiliate Agreement" and, collectively, the "Platinum Affiliate
Agreements"), certain individuals and entities that may be deemed affiliates of
Platinum (each, "Platinum Affiliate") have agreed that, during the period
contemplated by the SEC's Staff Accounting Bulletin Number 65 until the earlier
of (i) Platinum's public announcement of financial results covering at least 30
days of combined operations of Platinum and DataWorks or (ii) the Reorganization
Agreement is terminated in accordance with its terms, such Platinum Affiliate
shall not, subject to certain exceptions, sell, exchange, transfer, pledge,
distribute or otherwise dispose of or grant any option, establish any "short" or
put-equivalent position with respect to or enter into any similar transaction
(through derivative's or otherwise) intended or having the effect, directly or
indirectly, to reduce such Platinum Affiliate's risk relative to any Platinum
Common Stock or Platinum Series C Preferred Stock. Provided certain conditions
are met, the Platinum Affiliate Agreements provide for certain exceptions to the
foregoing restrictions on transfer relating to: (i) certain de minimis
transfers; (ii) transfers in payment of the exercise price of options to
purchase Platinum Common Stock; (iii) charitable donations; and (iv) transfers
to trusts established for the benefit of members of such Platinum Affiliate's
family or gifts to members of such Platinum Affiliate's family.
(c) Not applicable.
(d) Upon consummation of the Merger, Stuart W. Clifton, the Company's
current Chairman of the Board, President and Chief Executive Officer, will
become a member of Platinum's Board of Directors.
(e) None, other than a change in the number of outstanding shares of
Platinum Common Stock as contemplated by the Reorganization Agreement.
(f) Upon consummation of the Merger, DataWorks will become a
wholly-owned subsidiary of Platinum.
(g) Not applicable.
(h) Upon consummation of the Merger, DataWorks Common Stock will cease
to be quoted on any quotation system or exchange.
(Page 21 of 30 pages)
<PAGE> 22
(i) Not applicable.
(j) Not applicable.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b)As a result of the Voting Agreements, DataWorks may be deemed to
be the beneficial ownership of an aggregate of 5,558,116 shares of Platinum
Common Stock. Such shares constitute approximately 18.9% of the issued and
outstanding shares of Platinum Common Stock as of October 13, 1998. DataWorks
has shared power to vote all of such shares for the limited purposes described
above. DataWorks does not have the sole power to vote or to direct the vote or
to dispose or to direct the disposition of any shares of Platinum Common Stock.
To the Company's knowledge, no shares of Platinum Common Stock are beneficially
owned by any of the persons named in Schedule I, except for such beneficial
ownership, if any, arising solely from the Voting Agreements.
Set forth in Schedule III to this Schedule 13D is the name and
present principal occupation or employment of each person with
whom DataWorks shares the power to vote or to direct the vote of
Platinum Common Stock.
During the past five years, to DataWorks' knowledge, no person named in
Schedule III to this Schedule 13D has been convicted in a criminal proceeding.
During the past five years, to DataWorks' knowledge, no person named in
Schedule III to this Schedule 13D was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
such person was or is subject to a judgment, decree or final order enjoining
future violations of or prohibiting or mandating activity subject to federal or
state securities laws or finding any violation with respect to such laws.
To DataWorks' knowledge, all persons named in Schedule III to this
Schedule 13D are citizens of the United States.
(c) Neither DataWorks, nor to DataWorks' knowledge, any person named in
Schedule I, has effected any transaction in Platinum Common Stock during the
past 60 days, except as disclosed herein.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
In connection with the Merger, Stuart W. Clifton has entered into an
Executive Employment Agreement and a Noncompetition Agreement with Platinum. The
(Page 22 of 30 pages)
<PAGE> 23
employment agreement provides that Mr. Clifton will serve as an employee of
Platinum as of the Closing Date and for one year thereafter, or such shorter or
longer time as agreed by the parties. The employment agreement provides that Mr.
Clifton's base annual salary rate will be $450,000 and that he will be entitled
to a yearly bonus based on his achievement of milestones relating to Platinum's
net revenue and net income projections. In addition, effective as of the Closing
Date, Platinum will grant to Mr. Clifton an option to purchase 375,000 shares of
Common Stock of Platinum.
Under the terms of his employment agreement, if Mr. Clifton's employment
is terminated by Platinum for cause, all of his executive compensation will
cease immediately and no severance benefits will be provided. If Mr. Clifton's
employment is terminated by Platinum without cause or by Mr. Clifton for any
reason or for no reason, Mr. Clifton will serve as a consultant to Platinum. The
consulting period will last two years, or, if longer, until three years after
the Closing Date in the event he is terminated by Platinum without cause (or he
resigns following a change of control of Platinum). In the event that Mr.
Clifton dies or becomes permanently disabled while he is an employee of
Platinum, Mr. Clifton or his estate, as appropriate, will be entitled to all of
the consulting fees (as described below) and to continuation of vesting of his
options. During the time that Mr. Clifton is acting as a consultant to Platinum,
Platinum has agreed to pay Mr. Clifton $450,000 per year and to pay for Mr.
Clifton's medical insurance. Mr. Clifton will also be eligible to receive yearly
bonuses during his consulting term which are comparable to bonuses he received
during his employment term, with appropriate adjustments based on his
achievement of milestones.
Under the terms of Mr. Clifton's Noncompetition Agreement with Platinum,
from the Closing Date until three years after the Closing Date (or, if later,
when Mr. Clifton ceases to serve as an employee or consultant of Platinum), Mr.
Clifton has agreed not to compete with the business of Platinum or to solicit
employees of Platinum to leave their employment with Platinum. In consideration
of these obligations, Platinum has agreed to pay Mr.
Clifton $1,000,000 on the Closing Date.
Other than as described in the foregoing paragraphs and in Item 4 above,
to DataWorks' knowledge there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 and between
such persons and any person with respect to any securities of Platinum,
including but not limited to transfer or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
2.1 Agreement and Plan of Reorganization dated as of October
13, 1998, by and among Platinum, Merger Sub and
DataWorks.(1)
9.1 Form of Voting Agreement dated as of October 13, 1998, by
and between DataWorks and certain stockholders of
Platinum.(2)
----------------
(Page 23 of 30 pages)
<PAGE> 24
(1) Incorporated by reference to the Schedule 13D, dated as of
October 13, 1998, filed by Platinum Software Corporation with
respect to the Common Stock of DataWorks Corporation (the
"Platinum Schedule 13D").
(2) Incorporated by reference to the Platinum Schedule 13D - see
Exhibit A-2 to the Reorganization Agreement filed as an exhibit
to the Platinum Schedule 13D.
(Page 24 of 30 pages)
<PAGE> 25
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 23, 1998
-----------------------------------------------
(Date)
DATAWORKS CORPORATION,
a Delaware corporation
By: /s/ Stuart W. Clifton
-----------------------------------------------
Stuart W. Clifton
Chairman of the Board, President
and Chief Executive Officer
(Page 25 of 30 pages)
<PAGE> 26
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF DATAWORKS CORPORATION
<TABLE>
<CAPTION>
NAME: PRINCIPAL OCCUPATION OR EMPLOYMENT:
----------------- -----------------------------------
<S> <C>
Stuart W. Clifton Chairman of the Board, President and Chief
Executive Officer
Norman R. Farquhar Executive Vice President, Chief Financial
Officer and Director
Bradley J. Thies General Counsel and Secretary
Rick E. Russo Vice President, Finance
Nathan W. Bell Director
Tony Domit Director
William P. Foley, II Director
Ronald S. Parker Director
Roy Thiele-Sardina Director
</TABLE>
All individuals named in the above table are employed at, or retained as
directors by, DataWorks Corporation, 5910 Pacific Center Blvd., Suite 300, San
Diego, CA 92121.
(Page 26 of 30 pages)
<PAGE> 27
SCHEDULE II
PLATINUM SOFTWARE CORPORATION
VOTING AGREEMENT STOCKHOLDERS
<TABLE>
<CAPTION>
Voting Agreement Shares of Common Stock Shares of Series C Preferred
Stockholder Beneficially Owned Stock Beneficially Owned*
--------------- --------------------- -----------------------------
<S> <C> <C>
L. George Klaus 2,000,000
William R. Peiser 500,000
Ken Lally 485,000(1)
W. Douglas Hajjar 74,500(2)
Kleiner Perkins Caufield & Byers 1,168,502(3) 31,770(4)
VII
KPCB Information Sciences
Zaibatsu Fund
L. John Doerr (5)
New Enterprise Associates VI 362,002 38,120
Limited Partnership
Arthur J. Marks (6)
Trident Capital, Inc. 15,062(7) 25,415(8)
Trident Administrator N.V.
Trident Capital Partners Fund I,
L.P.
Trident Capital Partners Fund I,
C.V.
Donald R. Dixon (9)
</TABLE>
* Each share of Series C Preferred Stock is convertible upon certain events into
ten (10) shares of Common Stock, as adjusted for any stock dividends,
combinations or splits with respect to such shares. Each share of Series C
Preferred Stock will be entitled to vote with the holders of Common Stock on an
as-converted basis.
(Page 27 of 30 pages)
<PAGE> 28
(1) Consists of 460,000 shares owned directly and 25,000 issuable pursuant
to options exercisable within sixty (60) days of October 13, 1998.
(2) Consists of 50,000 shares owned directly and 24,500 shares issuable
pursuant to options exercisable within sixty (60) days of October 13,
1998.
(3) Consists of 1,168,502 shares held by Kleiner Perkins Caufield & Byers
VII.
(4) Consists of 30,181 shares held by Kleiner Perkins Caufield & Byers VII
and 1,589 shares held by KPCB Information Sciences Zaibatsu Fund II.
(5) Mr. Doerr is a general partner of KPCB VII Associates, which is a
general partner of each of Kleiner Perkins Caufield & Byers VII and KPCB
Information Sciences Zaibatsu Fund. Mr. Doerr disclaims beneficial
ownership of these shares, other than to the extent of his individual
partnership interest.
(6) Mr. Marks is a general partner of NEA Partners VI, which is the general
partner of New Enterprise Associates VI, Limited Partnership. Mr. Marks
disclaims beneficial ownership of these shares, other than to the extent
of his individual partnership interest.
(7) Consists of 14,247 shares held by Donald R. Dixon, 618 shares held by
Trident Capital, Inc. and 197 shares owned by Trident Administrator N.V.
(8) Consists of 21,218 shares held by Trident Capital Partners Fund I, L.P.
and 4,197 shares held by Trident Capital Partners Fund I, C.V.
(9) Mr. Dixon is president of Trident Capital Inc., which is the general
partner of Trident Capital, L.P. which is the general partner of Trident
Capital Partners Fund I, L.P. and Trident Capital Partners Fund I, C.V.
Mr. Dixon disclaims beneficial ownership of these shares, other than to
the extent of his stock ownership in Trident Capital, Inc.
(Page 28 of 30 pages)
<PAGE> 29
SCHEDULE III
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION INCLUDING
NAME AND TITLE: NAME OF EMPLOYER:
-------------------------- ---------------------------------------
<S> <C>
L. George Klaus Platinum Software Corporation
President, Chairman of the 195 Technology Drive
Board of Directors Irvine, CA 92718-2402
Donald R. Dixon President
Director Triden Capital Partners Fund I, LP
2480 Sand Hill Road
Suite 100
Menlo Park, CA 94025
L. John Doerr General Partner
Director Kleiner Perkins Caufield & Byers VII
2750 Sand Hill Road
Menlo Park, CA 94025
W. Douglas Hajjar Platinum Software Corporation
Director 195 Technology Drive
Irvine, CA 92718-2402
Arthur J. Marks General Partner
Director New Enterprise Associates VI
Arthur J. Marks
Limited Partnership
1119 St. Paul Street
Baltimore, MD 21202
William R. Pieser Platinum Software Corporation
Executive Vice President, 195 Technology Drive
Product Operations and Irvine, CA 92718-2402
Marketing
Ken Lally Platinum Software Corporation
Executive Vice President, 195 Technology Drive
Field and Customer Irvine, CA 92718-2402
Operations
</TABLE>
(Page 29 of 30 pages)
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF DOCUMENT
- ------ -----------------------
<S> <C>
2.1 Agreement and Plan of Reorganization dated as of October 13, 1998, by
and among Platinum, Merger Sub and DataWorks. (1)
9.1 Form of Voting Agreement dated as of October 13, 1998, by and between
DataWorks and certain stockholders of Platinum. (2)
</TABLE>
----------------
(1) Incorporated by reference to the Schedule 13D, dated as of
October 13, 1998, filed by Platinum Software Corporation with
respect to the Common Stock of DataWorks Corporation (the
"Platinum Schedule 13D").
(2) Incorporated by reference to the Platinum Schedule 13D - see
Exhibit A-2 to the Reorganization Agreement filed as an exhibit
to the Platinum Schedule 13D.
(Page 30 of 30 pages)
