SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
(Amendment No. 6)
SEER TECHNOLOGIES, INC.
--------------------------------------------------
(Name of Issuer)
LEVEL 8 SYSTEMS, INC.
LIRAZ SYSTEMS LTD.
WELSH, CARSON, ANDERSON & STOWE VI, L.P.
WCAS INFORMATION PARTNERS, L.P.
WCAS CAPITAL PARTNERS II
----------------------------------------------
(Name of Person(s) Filing Statement)
Common Shares, par value $0.01 per share
(Title of Class of Securities)
815780 10 1
----------------------------------------------
(CUSIP Number of Class of Securities)
Arie Killman
Level 8 Systems, Inc.
1250 Broadway, 35th Floor
New York, NY 10001
(212) 244-1234
----------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
Copy to:
Edward W. Kerson, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
- --------------------------------------------------------------------------------
This statement is filed in connection with (check the appropriate box):
a. |_| The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
<PAGE>
b. |_| The filing of a registration statement under the Securities Act of
1933.
c. |X| A tender offer.
d. |_| None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: |_|
Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction valuation Amount of filing fee
- --------------------------------------------------------------------------------
$1,697,409 (1) $339.48 (2)
- --------------------------------------------------------------------------------
(1) Calculated by multiplying $0.35, the per share tender offer price, by
4,849,739, the number of shares of common stock being sought in the tender
offer.
(2) Calculated as 1/50 of 1% of the transaction value.
|X| Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $339.48
Form or Registration No.: 14D-1
Filing Party: Level 8 Systems, Inc.
Date Filed: February 1, 1999
2
<PAGE>
Amendment No. 6
---------------
This Statement amends and supplements the Rule 13e-3 Transaction Statement
on Schedule 13E-3 filed with the Securities and Exchange Commission on February
1, 1999 (the "Schedule 13E-3"), by Level 8 Systems, Inc., a New York corporation
("Level 8" or the "Purchaser"), and Liraz Systems Ltd., an Israeli company
("Liraz"), in connection with the tender offer by Level 8 to purchase for $0.35
per share, net to the seller in cash, all the issued and outstanding common
shares, par value $0.01 per share, (the "Shares") of Seer Technologies, Inc., a
Delaware corporation ("Seer" or the "Company"), not already owned by Level 8 and
Liraz, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated February 1, 1999, as supplemented by a Supplement dated April 8,
1999 (as so supplemented, the "Offer to Purchase") and in the related Letter of
Transmittal (which together with the Offer to Purchase constitute the "Offer"),
copies of which are filed as Exhibits (d)(1), (d)(2) and (d)(12) hereto,
respectively.
The undersigned hereby amend Items 2, 10, and 17 of their Schedule 13E-3 as
hereinafter set forth.
Item 2. Identity and Background.
Item 2 is hereby amended as follows to add Welsh, Carson, Anderson & Stowe
VI, L.P. ("WCAS VI"), WCAS Information Partners, L.P. ("Information Partners")
and WCAS Capital Partners II ("Capital Partners" and collectively with WCAS VI
and Information Partners, the "WCAS Partnerships") as filing persons. While the
WCAS Partnerships have agreed to their inclusion as filing parties in this
Schedule 13E-3, the WCAS Partnerships do not believe that they are affiliates of
the Purchaser or Liraz, nor do they believe that any of them are engaged in or
is a participant in a "Rule 13e-3 transaction," as such term is defined in Rule
13e-3 under the Exchange Act. Other than the Agreement, the WCAS Partnerships
have no agreements or understandings with Level 8 or Liraz with respect to the
management of Seer, Level 8 or Liraz.
(a)-(d) and (g) The information concerning the name, business address,
principal business and the state or other place or organization of the WCAS
Partnerships is set forth in "Schedule 3" of the Offer to Purchase and is
incorporated herein by reference.
(e) and (f) During the last five years, the WCAS Partnerships, and to
the best knowledge of each of the WCAS Partnerships, the persons listed in
Schedule 3 of the Offer to Purchase have not been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation such laws.
Item 10. Interest in Securities of the Issuer.
Item 10 is hereby amended to read in its entirety as follows.
(a)-(b) The information set forth in the "Introduction"; "Special Factors -
The Acquisition Agreement"; "The Tender Offer - Certain Information Concerning
the Purchaser"; "Schedule 1"; "Schedule 2" and "Schedule 3" of the Offer to
Purchase is incorporated herein by reference.
Item 17. Material to be Filed as Exhibits
Item 17 is hereby amended to add the following exhibits:
3
<PAGE>
(c)(2) Amendment No. 1 to Agreement dated November 23, 1998 among Level 8
Systems, Inc., Welsh Carson Anderson & Stowe VI, L.P. ("WCAS") and
certain parties affiliated or associated with WCAS dated April 7, 1999.
(d)(12) Supplement to the Offer to Purchase dated April 8, 1999
4
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: April 8, 1999 LEVEL 8 SYSTEMS, INC.
By: /s/ Arie Kilman
-----------------------------------------------
Name: Arie Kilman
Title: Chairman of the Board and Chief
Executive Officer
LIRAZ SYSTEMS LTD.
By: /s/ Arie Kilman
-----------------------------------------------
Name: Arie Kilman
Title: Chairman of the Board and President
WELSH, CARSON, ANDERSON & STOWE VI, L.P.
By: WCAS VI Partners, L.P., General Partner
By: /s/ Laura Van Buren
-----------------------------------------------
General Partner
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners, L.P.
By: /s/ Laura Van Buren
-----------------------------------------------
Attorney-in-Fact
WCAS CAPITAL PARTNERS II
By: /s/ Laura Van Buren
-----------------------------------------------
General Partner
5
<PAGE>
13E-3 EXHIBIT INDEX
Exhibit Description
- ------- -----------
(a) None
(b)(1) Preliminary Due Diligence Report dated August 13, 1998 prepared by
Burton Grad Associates, Inc.*+
(c)(1) Agreement dated as of November 23, 1998 among Level 8 Systems, Inc.,
Welsh Carson Anderson & Stowe VI, L.P. ("WCAS") and certain parties
affiliated or associated with WCAS is incorporated by reference to
Exhibit 2.1 of Level 8 Systems, Inc.'s Report on Form 8-K filed with
the Securities and Exchange Commission on January 15, 1999.
(c)(2) Amendment No. 1 to Agreement dated November 23, 1998 among Level 8
Systems, Inc., Welsh Carson Anderson & Stowe VI, L.P. ("WCAS") and
certain parties affiliated or associated with WCAS dated April 7,
1999.
(d)(1) Offer to Purchase dated February 1, 1999*
(d)(2) Letter of Transmittal*
(d)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees*
(d)(4) Letter To Our Clients*
(d)(5) Notice of Guaranteed Delivery*
(d)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9*
(d)(7) Press Release dated February 1, 1999*
(d)(8) Supplement to the Offer to Purchase dated February 24, 1999*
(d)(9) Press Release dated March 2, 1999*
(d)(10) Press Release dated March 16, 1999*
(d)(11) Press Release dated March 26, 1999*
(d)(12) Supplement to the Offer to Purchase dated April 8, 1999
(e) None
(f) None
- -------------------------------
* Previously filed.
+ Confidential treatment has been requested for certain provisions of this
Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. The omitted portions have been separately filed with the Commission.
6
Amendment No. 1
to
Agreement
dated November 23, 1998
This Amendment No. 1 (the "Amendment"), dated as of April 7, 1999, among
Level 8 Systems, Inc., a New York corporation ("Level 8"), Liraz Systems Ltd.,
an Israeli company ("Liraz") and the WCAS Parties amends the agreement, dated
November 23, 1998 (the "Agreement"), between Level 8 and the WCAS Parties.
Capitalized terms used herein and not otherwise defined will have the meanings
ascribed to them in the Agreement.
In response to comments received from the Staff of the Commission, the WCAS
Parties, Level 8 and Liraz propose to amend the Schedule 13E-3 and, among other
things, add Welsh, Carson, Anderson & Stowe VI, L.P., WCAS Information Partners,
L.P. and WCAS Capital Partners II (collectively, the "WCAS Partnerships") as
filing persons. For purposes of this Amendment, the Schedule 13E-3, as hereafter
amended from time to time, is referred to as the "Amended Schedule 13E-3".
The parties agree as follows:
1. The following paragraphs are hereby added as Sections 10.1.3. and
10.1.4. to the Agreement:
"10.1.3. Subject to the provisions of this section 10, Level 8 and Liraz
shall indemnify and hold harmless each WCAS Party against any loss, claim,
damage or liability, or any action in respect thereof (including reasonable
fees and expenses of counsel) to which each WCAS Party may become subject,
insofar as such loss, claim, damage, liability or action arises out of or
is based upon any untrue statement of a material fact included in the
Amended Schedule 13E-3 or the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that any such loss, claim, damage,
liability or action is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission, not made in reliance upon and
in conformity with information furnished in writing by the WCAS Parties
relating to themselves, their affiliates or their associates for inclusion
in the Amended Schedule 13E-3 (the "WCAS Information").
10.1.4. Subject to the provisions of this section 10, the WCAS Parties
shall indemnify and hold harmless Level 8 and Liraz against any loss,
claim, damage or liability, or any action in respect thereof (including
reasonable fees and expenses of counsel) to which Level 8 and Liraz may
become subject, insofar as such loss, claim, damage, liability or action
arises out of or is based upon any untrue statement of a material fact in
the WCAS Information or the omission to state in the WCAS Information a
material fact required to be stated therein or necessary to make the
statements therein not misleading."
<PAGE>
2. All references in the Agreement to "the agreement" or "this agreement"
shall hereinafter be deemed to refer to the Agreement as amended by this
Agreement. Except as expressly amended hereby, the Agreement shall remain in
full force and effect as originally executed by the parties.
3. This Amendment may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute the same
instrument.
LEVEL 8 SYSTEMS, INC.
By: /s/ Steven Dmiszewicki
----------------------------
Name: Steven Dmiszewicki
Title: Chief Operating Officer
LIRAZ SYSTEMS LTD.
By: /s/ Arie Kilman
----------------------------
Arie Kilman
Chairman of the Board and President
WCAS PARTIES:
WELSH, CARSON, ANDERSON
& STOWE VI, L.P.
By: WCAS VI Partners, L.P., General Partner
By: /s/ Laura Van Buren
----------------------------
General Partner
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners, L.P.
By: /s/ Laura Van Buren
----------------------------
Attorney-in-Fact
<PAGE>
WCAS CAPITAL PARTNERS II
By: /s/ Laura Van Buren
----------------------------
General Partner
/s/ Laura Van Buren*
----------------------------
Patrick J. Welsh
/s/ Laura Van Buren*
----------------------------
Russell L. Carson
/s/ Laura Van Buren*
----------------------------
Bruce K. Anderson
/s/ Laura Van Buren*
----------------------------
Richard H. Stowe
/s/ Laura Van Buren*
----------------------------
Andrew M. Paul
/s/ Laura Van Buren*
----------------------------
Thomas E. McInerney
/s/ Laura Van Buren
----------------------------
Laura Van Buren
/s/ Laura Van Buren*
----------------------------
James B. Hoover
_________________________
* As Attorney-in-Fact
<PAGE>
Richard H. Stowe , as
----------------------------------
Trustee for the Benefit of the IRA of
Richard H. Stowe
By: /s/ Richard H. Stowe
----------------------------
/s/ Laura Van Buren*
----------------------------------
Anthony J. de Nicola
DELAWARE CHARTER TRUST CO., as
Trustee for the Benefit of the
IRA Rollover of James B. Hoover
By: /s/ James B. Hoover
----------------------------
/s/ Laura Van Buren*
----------------------------------
Robert A. Minicucci
TRUST U/A DATED 11/26/84 for the
Benefit of Eric Welsh (Carol
Ann Welsh, Trustee)
By: /s/ Carol Welsh
----------------------------
TRUST U/A DATED 11/26/84 for the
Benefit of Randall Welsh (Carol
Ann Welsh, Trustee)
By: /s/ Carol Welsh
----------------------------
TRUST U/A DATED 11/26/84 for the
Benefit of Jennifer Welsh (Carol
Ann Welsh, Trustee)
By: /s/ Carol Welsh
----------------------------
_________________________
* As Attorney-in-Fact
<PAGE>
/s/ David F. Bellet
----------------------------------
David F. Bellet
REBOUL, MACMURRAY, HEWITT,
MAYNARD & KRISTOL
By: /s/ Robert A. Schwed
----------------------------
Partner
SUPPLEMENT
to the
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Seer Technologies, Inc.
at
$0.35 Net Per Share
by
Level 8 Systems, Inc.
-----------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, APRIL 15, 1999, UNLESS EXTENDED.
-----------------------------------------------------------------
Level 8 Systems, Inc. (the "Purchaser"), a New York corporation, hereby
supplements and amends its offer to purchase all outstanding shares of common
stock, $.01 par value ("Shares"), of Seer Technologies, Inc. (the "Company"), a
Delaware corporation, at $0.35 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase dated February 1, 1999, as supplemented and amended by this Supplement
(as it may be further supplemented or amended from time to time, the "Offer to
Purchase") and in the related Letter of Transmittal (which together constitute
the "Offer"). Capitalized terms used but not otherwise defined in this
Supplement shall have the meanings set forth in the Offer to Purchase.
1. The first sentence of the second paragraph on page 1 in the
"Introduction" of the Offer to Purchase is hereby amended and supplemented to
read in its entirety as follows:
The Offer is being made pursuant to an agreement dated November 23,
1998, as amended (the "Acquisition Agreement"), between the Purchaser, on
the one hand, and Welsh Carson Anderson & Stowe VI, L.P. ("WCAS VI"), WCAS
Information Partners, L.P. ("Information Partners"), WCAS Capital Partners
II ("Capital Partners" and collectively with WCAS VI and Information
Partners, the "WCAS Partnerships") and certain other parties affiliated or
associated with WCAS VI (collectively, the "WCAS Parties").
2. The second sentence of the last paragraph on page 1 in the
"Introduction" of the Offer to Purchase is hereby amended and supplemented to
read in its entirety as follows:
To the best of the knowledge of the Purchaser and Liraz, however, each of
the Company's executive officers, directors and affiliates (other than the
Purchaser) intends to tender the Shares he or she owns.
3. The second paragraph on page 2 in the "Introduction" of the Offer to
Purchase is hereby amended and supplemented to read in its entirety as follows:
The Company has furnished the Purchaser and Liraz with the information
in this Offer to Purchase concerning the deliberations of the Company's
Board of Directors in connection with
<PAGE>
the Offer and the Merger. The Purchaser and Liraz take no responsibility
for the accuracy or completeness of that information.
4. The fourth paragraph under "Special Factors - Background of the
Transaction" on page 2 of the Offer to Purchase is hereby amended and
supplemented to read in its entirety as follows:
In early May 1998, senior management of the Purchaser and Liraz first
learned about the Company, and the possibility of acquiring the Company,
through discussions with an employee of the Purchaser who formerly had been
an employee of the Company. Thereafter, Arie Kilman, the chief executive
officer and chairman of the board of the Purchaser and the chairman of the
board and president of Liraz, met with Steven Dmiszewicki, the Company's
co-president and chief financial officer. At the meeting, Mr. Kilman
received basic information about the Company.
5. The first sentence of the first paragraph on page 3 of the Offer to
Purchase is hereby amended and supplemented to read in its entirety as follows:
On July 13, 1998, representatives of the Purchaser, Liraz and WCAS VI,
which at the time owned a majority of the outstanding and issuable Shares,
met to discuss the Purchaser's possible acquisition of the Company.
6. The fourth sentence of the first paragraph on page 3 of the Offer to
Purchase is hereby amended and supplemented to read in its entirety as follows:
Later in the day, Mr. Kilman and Lenny Recanati, a director of the
Purchaser and Liraz, met with Mr. Dmiszewicki to discuss the possible
acquisition and the due diligence process.
7. The Offer to Purchase is hereby amended and supplemented by adding the
following three paragraphs after the first paragraph on page 3:
The outside technology consultant to Liraz conducted a preliminary due
diligence study of the Company in the areas of operations, technologies,
customer attitudes and business/strategic plans. In conducting the due
diligence study, the consultant requested certain information from the
Company for each of the areas to be examined, which included financial
statements, corporate and technical strategy overviews, product research
notes, annual reports, a prospectus and marketing materials of the Company.
The consultant also conducted on-site and phone interviews with identified
key executives of the Company and performed a limited survey of
representative Company customers to determine their satisfaction with the
Company products, services and business operations.
The consultant's preliminary due diligence report on August 1998
reported that, although the Company's technology products and services were
sound and competitive, the Company faced extensive business problems and
risks. Those problems and risks included (a) low employee/management morale
and lost loyalty from extensive layoffs; (b) perceived financial weakness
and performance concerns by customers; (c) very low revenue from new sales
with flat maintenance and lower services revenue; (d) lack of market
opportunities; (e) strong competition; (f) loss of key personnel; (g) loss
of business momentum; (h) dependence on IBM's marketing alliance for sales
in Europe; and (i) poor U.S. sales performance. The consultant's
preliminary due diligence report on August 1998 concluded that the
acquisition of the Company would be a highly risky undertaking,
particularly considering the magnitude of the financial
2
<PAGE>
investment required to cover the Company's existing debt and to reestablish
the Company as a growing, profitable company, and recommended that Liraz
not proceed with a transaction that would involve any investment, unless
the bank debt could be eliminated (or sharply reduced). The transaction
proposed in August 1998 was abandoned and no final report was prepared by
the consultant.
Prior to the preliminary due diligence study, the Purchaser and Liraz
gave limited consideration to paying $30 million in exchange for a
controlling interest in the Company. After the preliminary due diligence
study, however, the Purchaser and Liraz determined that a transaction on
such terms would not be in the best interests of the Purchaser and Liraz.
8. The second sentence of the third paragraph on page 3 of the Offer to
Purchase is hereby amended and supplemented to read in its entirety as follows:
After two introductory meetings, neither Mr. Kilman nor any other
representative of the Purchaser or Liraz participated in discussions among
that unaffiliated party, the Company and WCAS VI.
9. The first and second paragraphs and Item (a) under "Special Factors -
Fairness of the Offer and the Merger" on page 4 of the Offer to Purchase are
hereby amended and supplemented to read in their entirety as follows:
The Purchaser and Liraz regard the acquisition of the Company as an
attractive investment opportunity because they believe the Company's future
business prospects may be favorable, and the anticipated combination will
afford each of the parties additional technological resources and products,
will afford the Purchaser additional sales and marketing and administrative
resources and will afford the Company additional financial resources.
Based on the following factors, the Purchaser, Liraz and the WCAS
Partnerships concluded that the consideration to be paid to the Company's
unaffiliated stockholders in the Offer and the Merger is fair to the
Company's unaffiliated stockholders. The Purchaser, Liraz and the WCAS
Partnerships did not find it practicable to quantify or otherwise attach
relative weights to the specific factors nor did they attach any weight to
the current or historical market price of the Shares (see (c) below), the
Company's net book value (which was negative) or (because the Purchaser and
Liraz had no intention of liquidating the Company) the Company's
liquidation value (see (c) below).
The Purchaser, Liraz and the WCAS Partnerships believe that the $0.35
per Share being offered in the Offer exceeds the value per Share that
should properly be allocated to the WCAS Parties' Shares, and, because such
value reflects the result of arms-length bargaining, no procedural
safeguards (such as a requirement that at least a majority of the Shares
owned by the unaffiliated shareholders approve the Offer and the Merger or
that the board of directors, or a committee of the board of directors, of
the Company retain an unaffiliated representative to act on behalf of the
unaffiliated shareholders for the purpose of negotiating the terms of the
Offer and the Merger and/or preparing a report concerning the fairness of
the Offer and the Merger) are necessary or appropriate to assure that the
Offer and the Merger is fair to the Company's unaffiliated stockholders.
(a) As set forth under (c) below, the Purchaser, Liraz and the WCAS
Partnerships believe the value of the Shares immediately before the
Acquisition Agreement was entered into
3
<PAGE>
was, at most, nominal, and, therefore, the fact that the Shares traded at
various times at prices above $0.35 (the $0.35 per Share Offer represented
approximately 117% of the average of the closing bid prices of the Shares
quoted on the over-the-counter bulletin board (the "OTC Bulletin Board")
during the five trading-day period ended on November 23, 1998, the day
before the public announcement of the transaction) is of little or no
significance.
10. The last sentence beginning on page 4 of the Offer to Purchase is
hereby amended and supplemented to read in its entirety as follows:
The Purchaser, Liraz and the WCAS Partnerships believe the value of the
securities issued to the WCAS Parties that should properly be allocated to
the WCAS Parties' Shares equals (i) the sum of the value of the Purchaser
Shares plus the Purchaser Warrants (which the Purchaser and Liraz believe
aggregated less than $7.0 million on the last trading day before the
Acquisition Agreement was entered into, and less than $10.5 million on
December 31, 1998, the date of the Closing under the Acquisition
Agreement), reduced by (ii) $34.4 million (i.e., the amount of the claims
of the WCAS Parties that would be senior to the claims of the holders of
Shares by virtue of the liquidation preference of their preferred stock
(i.e., $17.5 million) and the claims that would have arisen from the $16.9
million payment in lieu of payment in respect of the guarantee of Seer
debt). Because that amount is negative, the Purchaser, Liraz and the WCAS
Partnerships believe the value of the securities issued to the WCAS Parties
that should properly be allocated to the WCAS Parties' Shares is, at most,
nominal and, in any event, less than the $0.35 per Share being offered in
the Offer. While the WCAS Parties received securities of the Purchaser
rather than cash consideration, the WCAS Partnerships do not believe that
this constitutes a benefit. Such securities are subject to a two-year
prohibition on transfer, so that the value of such securities cannot be
realized for at least two years. Moreover, the market value of such
securities may decline over that period. In addition, pursuant to the
Acquisition Agreement, each WCAS Party will grant a proxy to individuals
named by the Purchaser to vote all the Purchaser shares held by that WCAS
Party at any shareholders meeting of the Purchaser prior to January 1, 2001
and, therefore, the WCAS Parties will have no voting rights to protect
their investment. The Purchaser, Liraz and the WCAS Partnerships believe
the WCAS Parties did not receive any significant benefit under the
Acquisition Agreement, except to the extent the securities issued to them
under the Acquisition Agreement may be deemed to constitute a benefit.
11. The second sentence of the first paragraph under "Special Factors -
Purpose and Structure of the Transaction; Plans for the Company" on page 5 of
the Offer to Purchase is hereby amended and supplemented to read in its entirety
as follows:
As a consequence of the Offer and the Merger, the Purchaser's and Liraz's
beneficial ownership of the Shares will increase from 69% to 100%.
12. After the first paragraph under "Special Factors - Purpose and
Structure of the Transaction; Plans for the Company" on page 5 of the Offer to
Purchase, the following paragraph is hereby added:
For the WCAS Partnerships, the purpose of the transactions, including
the sale of their shares of the Company and the subsequent Offer and
Merger, is to provide an eventual exit for the WCAS Partnerships from their
ownership position in the Company and to allow the unaffiliated
stockholders to receive cash for their Shares. The sale pursuant to the
Acquisition Agreement was undertaken at this time because the Company
required additional capital to
4
<PAGE>
continue its current operations and the WCAS Partnerships were unwilling to
provide additional financing.
13. The second sentence of the second paragraph under "Special Factors -
Purpose and Structure of the Transaction; Plans for the Company" on page 5 of
the Offer to Purchase is hereby amended and supplemented to read in its entirety
as follows:
In accordance with the Acquisition Agreement, the acquisition of all the
capital stock of the Company has been structured as a cash tender offer at
this time, to be followed by a cash merger, in order to provide a prompt
and orderly transfer of ownership of the Company from the public
stockholders to the Purchaser and to provide stockholders with cash for all
their Shares on a prompt basis; the parties to the Acquisition Agreement
chose this time for the Offer to assure the payment to the public of the
agreed consideration as quickly as possible following the acquisition of
control of the Company.
14. The fifth sentence of the first full paragraph on page 18 of the Offer
to Purchase is hereby amended and supplemented to read in its entirety as
follows:
Accordingly, the inclusion of the projections in this Offer to Purchase
should not be regarded as any indication that the Purchaser, Liraz, the
Company, the WCAS Partnerships or their respective officers, directors and
partners believe the results in the projections will be realized.
15. The section under "The Tender Offer - Certain Information Concerning
the Purchaser" beginning on page 19 of the Offer to Purchase is hereby amended
and supplemented to read in its entirety as follows:
Certain Information Concerning the Purchaser and Liraz
The Purchaser and Liraz. The Purchaser is a New York corporation with
its principal executive offices at 1250 Broadway, 35th Floor, New York, New
York 10001. Liraz is an Israeli corporation with its principal executive
offices at 5 Hazoref Street, Holon, 58856 Israel.
The Purchaser began operations in 1988 as a wholly-owned subsidiary of
Liraz. The Purchaser believes it has established itself as a technology
leader in the middleware marketplace. The Purchaser had its initial public
offering in August 1995. Liraz, which is a publicly traded company in
Israel, is in the business of systems integration.
During the last five years, neither the Purchaser nor Liraz, nor, to
the best knowledge of the Purchaser and Liraz, any of the persons listed in
schedule 2, (a) has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or (b) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violations of
such laws. The name, business address, present principal occupation or
employment, five-year employment history and citizenship of each director
and executive officer of the Purchaser and Liraz are set forth in schedule
2.
Except as described in this Offer to Purchase, (a) neither the
Purchaser nor Liraz, nor, to the best knowledge of the Purchaser and Liraz,
any of the persons listed in schedule 2 or any
5
<PAGE>
associate or majority-owned subsidiary of any such person, beneficially
owns or has a right to acquire any equity security of the Company and (b)
neither the Purchaser nor Liraz, nor, to the best knowledge of the
Purchaser and Liraz, any of the other persons referred to above, or any of
the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the
Company during the past 60 days.
Except as described in this Offer to Purchase, (a) neither the
Purchaser nor Liraz, nor, to the best knowledge of the Purchaser and Liraz,
any of the persons listed in schedule 2 has any contract, arrangement,
understanding or relationship (whether or not legally enforceable) with any
other person with respect to any securities of the Company, including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer of the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guarantees of the
loans, guarantees against loss or the giving or withholding of proxies, and
(b) there have been no contacts, negotiations or transactions between the
Purchaser or Liraz or any of their subsidiaries or, to the best knowledge
of the Purchaser or Liraz, any of the persons listed in schedule 2, on the
one hand, and the Company or any of its directors, officers or affiliates,
on the other hand, that are required to be disclosed pursuant to the rules
and regulations of the Commission.
16. The first paragraph under "The Tender Offer - Conditions to the Offer"
on page 20 of the Offer to Purchase is hereby amended and supplemented to read
in its entirety as follows:
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) the Purchaser's right to amend the Offer at any
time in its sole discretion, but subject to the provisions of the
Acquisition Agreement, the Purchaser shall not be required to accept for
payment, or pay for, and may delay the acceptance for payment, or the
payment, of, any tendered Shares, if, at or before the expiration of the
Offer (whether or not any such Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), there shall have been any
action or position taken or threatened, or any statute, rule, regulation,
judgment, order or injunction promulgated, enacted, entered or enforced, by
any state, federal or foreign government or governmental authority or by
any court, domestic or foreign, that may reasonably be expected to:
17. After the first sentence of the third paragraph under "Miscellaneous"
on page 23 of the Offer to Purchase, the following sentence is hereby added:
The WCAS Partnerships are filing parties to the Schedule 13E-3 filed by the
Purchaser and Liraz, although the WCAS Partnerships do not believe that
they are affiliates of the Purchaser or Liraz, nor do they believe they are
engaged in or participants in a Rule 13E-3 transaction.
18. The paragraph describing Anthony J. de Nicola's present principal
occupation or employment and material positions held during the past five years
on page 2 of Schedule 1 of the Offer to Purchase is hereby amended and
supplemented by adding the following sentence after the first sentence:
He has been a general partner of WCAS VI since 1994.
19. The paragraph describing Frank Klein's present principal occupation or
employment and material positions held during the past five years on page 2 of
Schedule 2 of the Offer to Purchase is hereby amended and supplemented to read
in its entirety as follows:
Mr. Klein has served as a director of Level 8 since December 1994. Since
January 1, 1995, Mr.
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Klein has been the president of PEC Israel Economic Corporation ("PEC"), a
corporation that holds equity interests in companies located in Israel or
are Israel related. Prior to Mr. Klein's appointment as president of PEC,
he served as executive vice president of Israel Discount Bank of New York
from 1985. Mr. Klein served as executive vice president of PEC from
November 1977 to November 1991 and as treasurer of PEC from May 1980 to
November 1991. He is a director of PEC, as well as a number of companies
affiliated with PEC, including Elron Electronics Industries Ltd. and Scitex
Corporation Ltd. He also is a director of Super-Sol Ltd. and Tefron Ltd.
The address in which Mr. Klein conducts his principal occupation or
employment is PEC Israel Economic Corporation, 511 Fifth Avenue, New York,
New York 10017.
20. The paragraph describing Lenny Recanati's present principal occupation
or employment and material positions held during the past five years on pages 2
and 4 of Schedule 2 of the Offer to Purchase is hereby amended and supplemented
to delete the reference that Mr. Recanati is a member of the board of directors
of Caniel-Israel Can Company Ltd.
21. The paragraph describing Gideon Erhard's present principal occupation
or employment and material positions held during the past five years on page 4
of Schedule 2 of the Offer to Purchase is hereby amended and supplemented to
read in its entirety as follows:
Mr. Erhard has served as a director of Liraz since 1994. He also has served
as senior executive and board member of Discount Investment Corporation,
Ltd. ("DIC") and other affiliates of DIC. Mr. Erhard is a citizen of
Israel.
22. The Offer to Purchase is hereby amended and supplemented by adding the
following Schedule 3 after Schedule 2:
SCHEDULE 3
CERTAIN INFORMATION
REGARDING THE WCAS PARTNERSHIPS
Set forth below are the name, present occupation or employment and
five-year employment history of the general partners of each of the WCAS
Partnerships. Each person below is a citizen of the United States, unless
otherwise stated. As a result of the transactions contemplated by the
Acquisition Agreement and unless otherwise stated, none of the persons listed
below beneficially owns any Shares or is an executive officer or director of or
holds any position with the Company. Unless otherwise stated, the address of
each of the WCAS Partnerships in which each person listed below conducts his
principal occupation or employment is 320 Park Avenue, Suite 2500, New York, New
York 10022.
The general partners of WCAS VI are Patrick Welsh, Russell Carson, Bruce
Anderson, Richard Stowe, Andrew Paul, Thomas McInerney, Laura VanBuren, James
Hoover, Robert Minicucci, Anthony de Nicola and Paul Queally. The general
partners of WCAS Information Partners, L.P. are Messrs. Anderson and McInerney.
The general partners of WCAS Capital Partners II are Messrs. Welsh, Carson,
Anderson, Stowe, Paul, McInerney, Hoover, Minicucci, de Nicola, Ms. Van Buren
and Charles G. Moore.
7
<PAGE>
Present principal occupation or employment and
Name material positions held during the past five years
- ---- --------------------------------------------------
Patrick J. Welsh Mr. Welsh has served as a general partner of Welsh,
Carson, Anderson & Stowe ("WCAS") since its formation in
1979. He previously spent eight years with Citicorp
Venture Capital and was president at the time of his
departure.
Russell L. Carson Mr. Carson has served as a general partner of WCAS since
its formation in 1979. From 1968 to 1978, Mr. Carson was
employed by Citicorp Venture Capital and was Chairman
and Chief Executive Officer at the time of his
departure. Bruce Anderson Mr. Anderson has served as a
general partner of WCAS since its formation in 1979.
Prior to 1979, Mr. Anderson served as executive vice
president and a director of Automatic Data Processing,
Inc. Mr. Anderson has served as a director of the
Company since July 1994.
Richard H. Stowe Mr. Stowe has served as a general partner of WCAS since
1979. He previously served for eight years as a vice
president with New Court Securities (now Rothschild
Inc.) in its venture capital and corporate finance
groups. From 1965 to 1967, Mr. Stowe was a systems
engineer for IBM.
Andrew M. Paul Mr. Paul has served as a general partner of WCAS since
1984. Previously, he was an associate in Hambrecht &
Quist's venture capital group for one year. From 1978 to
1981, Mr. Paul was a systems engineer and then a
marketing representative for IBM.
Thomas E. McInerney Mr. McInerney has served as a general partner of WCAS
since 1986. formerly, he co-founded and served as
president and CEO of Dama Telecommunications Corp., a
telecommunications services company. Earlier, he was
group vice president - financial services at ADP and
senior vice president - operations at the American Stock
Exchange. Mr. McInerney is a director of The BISYS
Group, The Cerplex Group, MedE America Corporation and
several private companies.
Laura M. VanBuren Ms. VanBuren has served as a general partner of WCAS
since 1989. Ms. VanBuren joined WCAS in 1988.
James Hoover Mr. Hoover has served as a general partner of WCAS VI
and Capital Partners since 1992. Since June 1998, Mr.
Hoover has served as the managing member of Dauphin
Capital Partners, a health care venture capital fund.
The address of his principal place of business is 108
Forest Avenue, Locust Valley, New York 11560.
Robert A. Minicucci Mr. Minicucci has served as a general partner of WCAS
since 1993. From 1992 to 1993, he served as senior vice
president and chief financial officer of First Data
Corporation and from 1991 to 1992 as senior vice
president and treasurer of the American Express Company.
8
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From 1988 to 1991, he served as a managing director of
Lehman Brothers, where he began his career in 1979. Mr.
Minicucci has served as the chairman of the board of
directors of the Company since July 1994. He is also a
member of the board of directors of Alliance Data
Systems, a private label credit card processor,
Attachmate Corporation, a company that produces software
for enterprise/connectivity and remote access, and
Global Knowledge Network, an information technology
education and training company.
Anthony J. de Nicola Mr. de Nicola has served as a general partner of WCAS
since 1994. From 1990 to 1994, he was employed by
William Blair & Company specializing in financing middle
market buyouts. From 1986 to 1977, Mr. de Nicola was
employed in the mergers and Acquisitions Department of
Goldman Sachs & Co. Mr. de Nicola has served as a
director of the Company since July 1994 and also serves
as a director of MedE America Corporation.
Paul B. Queally Mr. Queally has served as a general partner of WCAS
since 1996. Previously he was a general partner at The
Sprout Group, Donaldson, Lufkin & Jenrette's private
equity group. From 1986 to 1987, Mr. Quealy was an
investment banking analyst at Donaldson, Lufkin &
Jenrette.
Charles G. Moore Mr. Moore has served as a general partner of WCAS
Capital Partners II since 1982. Since 1993 he has been
acting as a private investor and is no longer active in
the management of the WCAS Funds. The address of his
principal place of business is The Woodman Building, 75
Pearl Street, Suite 202, Portland, Maine 04101.
* * * * * * *
Level 8 Systems, Inc.
April 8, 1999
9
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depository, at one of the addresses set forth below:
The Depository is:
American Stock Transfer and Trust Company
<TABLE>
<S> <S> <S>
By Mail: By Facsimile Transmission By Hand:
American Stock Transfer and (for Eligible Institutions Only): American Stock Transfer and
Trust Company (718) 236-2641 Trust Company
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
Confirm by Telephone:
(718) 921-8200
By Overnight Delivery:
American Stock Transfer and
Trust Company
40 Wall Street, 46th Floor
New York, NY 10005
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at the Purchaser's expense. You may also contact you
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning this Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
New York, NY 10004
(212) 843-8500 (Collect)
or
(800) 792-2829 (Toll Free)
<PAGE>
