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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934*
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CROSSWORLDS SOFTWARE, INC.
(Name of Issuer)
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Common Stock, Par Value $0.001 Per Share
(Title of Class of Securities)
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22769P 10 9
(CUSIP Number)
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David L. Johnson
International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
Telephone: (914) 499-4100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
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Copy to:
Scott A. Barshay, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
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October, 29, 2001
(Date of Event Which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box. [_]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. Seess. 240.13d-7(b) 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.
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)
CUSIP No. 22769P 10 9 13D
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
International Business Machines Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
I.R.S. I.D. # 13-0871985
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
OO
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
________________________________________________________________________________
7 SOLE VOTING POWER
None
NUMBER OF _________________________________________________________________
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 9,422,554
OWNED BY _________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON _________________________________________________________________
WITH 10 SHARED DISPOSITIVE POWER
9,422,554
_______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,422,554
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.19%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
Neither the filing of this Schedule 13D nor any of its contents
shall be deemed to constitute an admission by International Business Machines
Corporation that it is the beneficial owner of any of the common stock of
CrossWorlds Software, Inc. referred to herein for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or for
any other purpose, and such beneficial ownership is expressly disclaimed.
International Business Machines Corporation also disclaims any interest in any
shares of common stock of CrossWorlds Software, Inc. held by any of its
affiliated employee benefit plans, including pension funds and medical and
dental funds, and by certain affiliated entities which may hold such shares
for charitable purposes.
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D relates to the common stock, par
value $0.001 per share (the "Issuer Common Stock"), of CrossWorlds Software,
Inc., a Delaware corporation (the "Issuer"). The principal executive offices
of the Issuer are located at 577 Airport Boulevard, Suite 800, Burlingame, CA
94010.
ITEM 2. IDENTITY AND BACKGROUND
(a) The name of the person filing this statement is International
Business Machines Corporation, a New York corporation ("IBM").
(b) The address of the principal office and principal business of
IBM is New Orchard Road, Armonk, NY 10504.
(c) IBM uses advanced information technology to provide customer
solutions. The company operates primarily in a single industry using several
segments that create value by offering a variety of solutions that include,
either singularly or in some combination, technologies, systems, products,
services, software and financing. Set forth in Schedule A hereto, which is
incorporated herein by reference, is the name, business address, present
principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment is
conducted and citizenship, of each of IBM's directors and executive officers,
as of the date hereof. Other than such directors and executive officers, there
are no persons controlling IBM.
(d) During the past five years, neither IBM nor, to IBM's knowledge,
any person named in Schedule A hereto has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, neither IBM nor, to IBM's knowledge,
any person named in Schedule A hereto 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.
(f) Not applicable.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to the Stockholder Agreement, dated as of October 29, 2001
(the "Stockholder Agreement"), among IBM and certain stockholders of the
Issuer set forth on Schedule A thereto (collectively, the "Stockholders"), IBM
may be deemed to be the beneficial owner of 9,422,554 shares of Issuer Common
Stock (collectively, the "Subject Shares"). IBM and the Stockholders entered
into the Stockholder Agreement to induce IBM to enter into the Agreement and
Plan of Merger, dated as of October 29, 2001 (the "Merger Agreement"), among
IBM, Duke Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of IBM ("Merger Sub"), and the Issuer. Pursuant to the Merger
Agreement, Merger Sub will merge with and into the Issuer (the "Merger"), with
the Issuer continuing as the surviving corporation in the Merger (the
"Surviving Corporation"), as a wholly owned subsidiary of IBM. In the Merger,
each share of Issuer Common Stock will be converted into the right to receive
$4.65 in cash, without interest. The Merger is subject to certain conditions.
The descriptions of the Merger Agreement and the Stockholder Agreement
contained herein are qualified in their entirety by reference to such
agreements, which are attached hereto as Exhibits 1 and 2, respectively.
ITEM 4. PURPOSE OF TRANSACTION
(a)-(b) The Stockholder Agreement was entered into as a condition to
the willingness of IBM to enter into the Merger Agreement and to increase the
likelihood that the approval of the Issuer's stockholders required in
connection with the Merger will be obtained. See the response to Item 3 for a
more complete description of the Merger.
(c) Not applicable.
3
(d) Upon consummation of the Merger, the directors of the Surviving
Corporation shall be the existing directors of Merger Sub, until their
resignation or removal or until their successor or successors are duly elected
and qualified. The existing directors of Merger Sub are David L. Johnson,
Gregory C. Bomberger and Jeffrey J. Doyle. The officers of the Surviving
Corporation shall be the officers of the Issuer immediately prior to the
consummation of the Merger, until their resignation or removal or until their
respective successors are duly elected and qualified.
(e) Other than as a result of the Merger described in Item 3 above,
not applicable.
(f) Not applicable.
(g) Upon consummation of the Merger, the Certificate of
Incorporation of the Issuer, as in effect immediately prior to the Merger,
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended. Upon consummation of the Merger, the By-laws of
Merger Sub, as in effect immediately prior to the Merger, shall be the By-laws
of the Surviving Corporation until thereafter changed or amended.
(h) - (i) Upon consummation of the Merger, the Issuer Common Stock
will be delisted from The Nasdaq Stock Market Inc. and will become eligible
for termination of registration pursuant to Section 12(g)(4) of the Exchange
Act.
(j) Other than as described above, IBM currently has no plan or
proposals that relate to, or may result in, any of the matters listed in Items
4(a) - (i) of Schedule 13D (although IBM reserves the right to develop such
plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b) As a result of the Stockholder Agreement, IBM may be deemed
to be the beneficial owner of the Subject Shares. The Subject Shares
constitute approximately 35.19% of the issued and outstanding shares of Issuer
Common Stock, based on the Issuer's representation in the Merger Agreement
that there were 26,775,214 shares of Issuer Common Stock issued and
outstanding at the close of business on October 29, 2001.
Pursuant to the Stockholder Agreement, the Stockholders have agreed,
among other things, (a) to vote the Subject Shares in favor of (i) the
adoption of the Merger Agreement, (ii) the approval of the terms of the Merger
Agreement and (iii) the approval of the Merger and each of the other
transactions contemplated by the Merger Agreement, (b) to vote the Subject
Shares against (i) any Takeover Proposal (as such term is defined in Section
4.02 of the Merger Agreement) and (ii) any amendment of the Issuer's Amended
and Restated Certificate of Incorporation or Amended and Restated By-laws or
other proposal, action or transaction involving the Issuer or any of its
subsidiaries or any of its stockholders, in each case that could reasonably be
expected to prevent or materially impede or delay the consummation of the
Merger or the other transactions contemplated by the Merger Agreement or the
consummation of the transactions contemplated by the Stockholder Agreement or
to dilute in any material respect the benefits to IBM of the Merger and the
other transactions contemplated by the Merger Agreement or the transactions
contemplated by the Stockholder Agreement, or change in any manner the voting
rights of the Issuer Common Stock, (c) prior to the Stockholders Meeting (as
defined in Section 5.01(b) of the Merger Agreement), not to sell, transfer,
pledge, assign, tender or otherwise dispose of any Subject Shares (or consent
to any such action) or enter into any contract, option or other arrangement
with respect to the sale, transfer, pledge, assignment or other disposition of
such Subject Shares unless, prior to any such action, the transferee enters
into a Stockholder Agreement with IBM that is substantially identical to the
Stockholder Agreement and (d) not to enter into any voting agreement or
arrangement in connection with any Takeover Proposal or Frustrating
Transaction (as such term is defined in Section 3(b) of the Stockholder
Agreement) with respect to any Subject Shares, other than pursuant to the
Stockholder Agreement.
By their execution of the Stockholder Agreement, each Stockholder
has irrevocably appointed IBM and David S. Hershberg, Vice President -
Assistant General Counsel of IBM, Andrew Bonzani, Assistant Secretary and
Senior Counsel of IBM, and David L. Johnson, Vice President of Corporate
Development of IBM, in their respective capacities as designees of IBM, and
any individual who shall thereafter succeed to any such office of IBM, and
each of them individually, as his or her proxy and attorney-in-fact (the
"Attorney"). The name of each Stockholder and the number of Subject Shares
owned of record or beneficially by each Stockholder are set forth in Schedule
A to the Stockholder Agreement, which is attached as Exhibit 2 hereto. In
exercising its right to vote the Subject Shares as proxy and attorney-in-fact
of the Stockholders, the Attorney's rights are limited to voting the Subject
Shares, or granting a consent or approval with respect to the Subject Shares,
(a) in favor of the adoption of the Merger Agreement and approval of the terms
thereof and of the Merger and each of the other transactions contemplated by
the Merger Agreement, (b) against any Takeover Proposal or any Frustrating
Transaction and (c) otherwise in accordance with the covenants of each
Stockholder in Section 3 of the Stockholder Agreement. The proxy granted in
the Stockholder Agreement terminates upon termination of the Stockholder
Agreement.
4
In addition to the voting agreements and arrangements described
above, each Stockholder has granted IBM an option to purchase any and all of
the Subject Shares of such Stockholder, within three business days following
the later of (a) a request by IBM to purchase such Subject Shares and (b) the
last to occur of (i) expiration or termination of any waiting period (and any
extension thereof) applicable to such sale and purchase under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any other
applicable competition, merger control, antitrust or similar law or regulation
and (ii) the receipt of any other regulatory approvals applicable to such sale
and purchase, for a purchase price equal to $4.65 per share in cash.
Further, the Stockholder Agreement contains provisions (the "profit
provisions") pursuant to which if (a) the Termination Fee (as such term is
defined in the Stockholder Agreement) becomes payable pursuant to the Merger
Agreement and a Takeover Proposal is consummated or (b) a Takeover Proposal
made by IBM (including any amendment of the Merger Agreement) which provides
for Transaction Consideration (as such term is defined in the Stockholder
Agreement) in excess of $4.65, is consummated, then each Stockholder is
required to pay to IBM the amount in cash equal to such Stockholder's Profit
(as such term is defined in the Stockholder Agreement), provided, however,
that if all or any part of the Transaction Consideration which such
Stockholder is entitled to receive is not cash, then such Stockholder's Profit
shall be paid to IBM in each type of consideration paid to such Stockholder
and in the same proportions as the types of consideration comprising the
Transaction Consideration which such Stockholder is entitled to receive, in
each case determined at the close of business on the date of the consummation
of the Takeover Proposal referred to in clause (a) or (b) of this paragraph in
the manner set forth in the Stockholder Agreement.
The Stockholder Agreement terminates upon the earlier of (i) such
date and time as the Merger shall become effective in accordance with the
terms of the Merger Agreement and (ii) the date of termination of the Merger
Agreement if the Merger Agreement is terminated according to its terms,
provided, however, that if the Merger Agreement is terminated following one
the following events: (a) (i) a Takeover Proposal has been made to the Issuer
or its stockholders or any person has announced an intention to make a
Takeover Proposal or a Takeover Proposal otherwise becomes known to the
stockholders of the Issuer or any person or group acquires ownership of 10% or
more of the Issuer Common Stock; (ii) thereafter the Merger Agreement is
terminated due to the lack of consummation of the Merger by March 31, 2002, or
the failure to obtain the approval of the Issuer's stockholders to the Merger;
and (iii) within 12 months after such termination the Issuer or any of its
subsidiaries enters into any Acquisition Agreement (as such term is defined in
Section 4.02(b) of the Merger Agreement) with respect to, or consummates, any
Takeover Proposal (for this purpose, as such term is defined in Section
5.06(b) of the Merger Agreement); or (b) the Merger Agreement is terminated by
IBM in the event that (i) the Board of Directors of the Issuer or any
committee thereof shall withdraw or adversely modify, or propose publicly or
agree to withdraw or adversely modify, the recommendation or declaration of
advisability by such Board of Directors or any such committee of the Merger
Agreement or the Merger, or shall resolve or agree to take any such action, or
(ii) the Board of Directors of the Issuer or any committee thereof shall have
failed to confirm its recommendation and declaration of advisability of the
Merger Agreement and the Merger within ten business days after a written
request by IBM that it do so, then (A) the profit provisions and any other
related provisions of the Stockholder Agreement shall continue in full force
and effect during the 12 month period described in clause (a) of this
paragraph and (B) the option granted under the Stockholder Agreement and any
other related provisions of the Stockholder Agreement shall continue in full
force and effect for six months following the termination of the Merger
Agreement.
(c) Neither IBM nor, to the knowledge of IBM, any person named in
Schedule A, has effected any transaction in the Issuer Common Stock during the
past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Other than as described in Items 3, 4 and 5 and the agreements
incorporated herein by reference and set forth as exhibits hereto, to the
knowledge of IBM, 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 the
Issuer, including but not limited to transfer or voting of any of the
securities, finder's fees, joint
5
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. MATERIALS TO BE FILED AS EXHIBITS
The following documents are filed as exhibits:
EXHIBIT
NUMBER EXHIBIT NAME
------ ------------
1. Agreement and Plan of Merger dated as of October 29, 2001, among
International Business Machines Corporation, a New York
corporation, Duke Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of International Business Machines
Corporation, and CrossWorlds Software, Inc., a Delaware
corporation.
2. Stockholder Agreement dated as of October 29, 2001, among
International Business Machines Corporation, a New York
corporation, and certain stockholders of CrossWorlds Software,
Inc., a Delaware corporation.
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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.
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
by
/s/ David L. Johnson
-----------------------------
Name: David L. Johnson
Title: Vice President,
Corporate Development
Dated: November 8, 2001
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EXHIBIT INDEX
Exhibit
Number Exhibit Name
------ ------------
1. Agreement and Plan of Merger dated as of October 29, 2001, among
International Business Machines Corporation, a New York
corporation, Duke Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of International Business Machines
Corporation, and CrossWorlds Software, Inc., a Delaware
corporation.
2. Stockholder Agreement dated as of October 29, 2001, among
International Business Machines Corporation, a New York
corporation, and certain stockholders of CrossWorlds Software,
Inc., a Delaware corporation.
8
SCHEDULE A
The following is a list of the directors and executive officers of IBM,
setting forth the present principal occupation or employment and the name and
principal business of any corporation or other organization in which such
employment is conducted for each such person. Unless otherwise indicated, all
directors and officers listed below are citizens of the United States, and
their business address is: International Business Machines Corporation, New
Orchard Road, Armonk, NY 10504.
BOARD OF DIRECTORS OF IBM
NAME POSITION PRESENT PRINCIPAL OCCUPATION BUSINESS ADDRESS
---- -------- ---------------------------- ----------------
Cathleen Black Director President, Hearst Magazines Hearst Magazine
The Hearst Corporation
959 8th Avenue
New York, NY 10019
Kenneth I. Chenault Director Chairman and Chief Executive Officer, American Express
American Express Company Company
World Financial Center
200 Vesey Street
New York, NY 10285
Temporary offices since
September 11, 2001:
90 Hudson Street
Jersey City, NJ 07302
Juergen Dormann Director Chairman of the Board of Management, Aventis
Citizenship: Aventis S.A. Espace Europeen de
Germany l'Enterprise,
16 avenue de l'Europe
F-67300 Schiltigheim, France
Louis V. Gerstner, Jr. Chairman Chairman of the Board and Chief
of the Board Executive Officer, IBM
of Directors
and Chief
Executive
Officer
Nannerl O. Keohane Director President, Duke University Duke University
207 Allen Bldg,
Durham, NC 27708
Charles F. Knight Director Chairman of the Board, Emerson Emerson Electric Co.
Electric Co. 8000 W. Florissant Ave.
St. Louis, MO 63136
Minoru Makihara Director Chairman of the Board, Mitsubishi Mitsubishi Corporation
Citizenship: Corporation 6-3, Marunouchi 2-chome
Japan Chiyoda-ku
Tokyo 100-8086, Japan
Lucio A. Noto Director Retired Vice Chairman of the Board,
Exxon Mobil Corporation
Samuel J. Palmisano Director President and Chief Operating Officer,
IBM
9
10
NAME POSITION PRESENT PRINCIPAL OCCUPATION BUSINESS ADDRESS
---- -------- ---------------------------- ----------------
John B. Slaughter Director President and Chief Executive Officer, NACME, Inc.
National Action Council for Minorities in The Empire State Building
Engineering, Inc. 350 Fifth Ave., Suite 2212
New York, NY 10118
Sidney Taurel Director Chairman of the Board, President and Eli Lilly and Company
Chief Executive Officer, Eli Lilly and Lilly Corporate Center
Company Indianapolis, IN 46285
John M. Thompson Vice Vice Chairman of the Board, IBM
Citizenship: Chairman
Canada of the Board
of Directors
Alex Trotman Director Retired Chairman of the Board and Chief Ford Motor Company
Executive Officer, Ford Motor Company One Parklane Boulevard
Dearborn, MI 48126
Lodewijk C. Van Director Chairman of the Supervisory Board, Royal Dutch Petroleum
Wachem Royal Dutch Petroleum Company Company
Citizenship: 30, Carel van Bylandtlaan
Netherlands 2596 HR
The Hague, The
Netherlands
Charles M. Vest Director President, Massachusetts Institute of Massachusetts Institute of
Technology Technology
77 Massachusetts Ave.
Cambridge, MA 02139
EXECUTIVE OFFICERS OF IBM
NAME POSITION
---- --------
Louis V. Gerstner, Jr. Chairman of the Board and Chief Executive Officer
Samuel J. Palmisano President and Chief Operating Officer
John M. Thompson Vice Chairman of the Board
Nicholas M. Donofrio Senior Vice President, Corporate Technology and
Manufacturing
Douglas T. Elix Senior Vice President and Group Executive
Citizenship:
Australia
J. Bruce Harreld Senior Vice President, Strategy
Paul M. Horn Senior Vice President, Research
John R. Joyce Senior Vice President and Chief Financial Officer
David B. Kalis Senior Vice President, Communications
John E. Kelly, III Senior Vice President and Group Executive
Abby F. Kohnstamm Senior Vice President, Marketing
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NAME POSITION
---- --------
Joseph C. Lane Senior Vice President and Group Executive, Global
Financing
J. Michael Lawrie Senior Vice President, and Group Executive
J. Randall MacDonald Senior Vice President, Human Resources
Steven A. Mills Senior Vice President and Group Executive
Lawrence R. Ricciardi Senior Vice President and General Counsel
Linda S. Sanford Senior Vice President and Group Executive
William M. Zeitler Senior Vice President and Group Executive
Daniel E. O'Donnell Vice President and Secretary
Mark Loughridge Vice President and Controller
Robert F. Woods Vice President and Treasurer
11