-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RgkcuYsK6tziNQc4B/oaxi0vWZ0whYN8+Q6dXh5CaRbEE/8H+RWy3VzIk9MuqoLo XuqWug5/x480Yxi3p5jUQg== 0000356028-96-000008.txt : 19961016 0000356028-96-000008.hdr.sgml : 19961016 ACCESSION NUMBER: 0000356028-96-000008 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19961011 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHEYENNE SOFTWARE INC CENTRAL INDEX KEY: 0000738830 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133175893 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-37554 FILM NUMBER: 96642822 BUSINESS ADDRESS: STREET 1: 3 EXPRESSWAY PLZ CITY: ROSLYN HEIGHTS STATE: NY ZIP: 11577 BUSINESS PHONE: 5164845110 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHEYENNE SOFTWARE INC CENTRAL INDEX KEY: 0000738830 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133175893 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-37554 FILM NUMBER: 96642823 BUSINESS ADDRESS: STREET 1: 3 EXPRESSWAY PLZ CITY: ROSLYN HEIGHTS STATE: NY ZIP: 11577 BUSINESS PHONE: 5164845110 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 132857434 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11788 BUSINESS PHONE: 5163425224 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 132857434 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11788 BUSINESS PHONE: 5163425224 SC 14D1 1 SCHEDULE 14D-1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14D-l TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 CHEYENNE SOFTWARE, INC. __________________________________________________________________ (Name of Subject Company) TSE-TSEHESE-STAESTSE, INC. COMPUTER ASSOCIATES INTERNATIONAL, INC. __________________________________________________________________ (Bidder) COMMON STOCK, PAR VALUE $.01 PER SHARE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS __________________________________________________________________ (Title of Class of Securities) 166888107 __________________________________________________________________ (CUSIP Number of Class of Securities) SANJAY KUMAR TSE-TSEHESE-STAESTSE, INC. C/O COMPUTER ASSOCIATES INTERNATIONAL, INC. ONE COMPUTER ASSOCIATES PLAZA ISLANDIA, NEW YORK 11788-7000 TELEPHONE: (516) 342-5224 __________________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) COPIES TO: SCOTT F. SMITH, ESQ. HOWARD, DARBY & LEVIN 1330 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 TELEPHONE: (212) 841-1000 __________________________________________________________________ CALCULATION OF FILING FEE =========================================== TRANSACTION VALUATION* AMOUNT OF FILING FEE $1,150,198,432 $230,040 =========================================== * Estimated for purposes of calculating the amount of filing fee only. The amount assumes the purchase of 37,711,424 shares of common stock, par value $.01 per share, including associated Preferred Stock Purchase Rights (the "Shares"), at a price per Share of $30.50 in cash. Such number of Shares represents all of the Shares outstanding as of October 7, 1996. __ 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: None. Form or Registration No.: Not applicable. Filing Party: Not applicable. Date Filed: Not applicable. Page 1 of 7 Pages Exhibit Index begins on Page 7 2 1. Security and Subject Company. (a) The name of the subject company is Cheyenne Software, Inc., a Delaware corporation (the "Company"), and the address of its principal executive offices is 3 Expressway Plaza, Roslyn Heights, New York 11577. (b) This Statement on Schedule 14D-1 relates to the offer by Merger Subsidiary (defined below), to purchase all outstanding shares of Common Stock, par value $.01 per share, including associated Preferred Stock Purchase Rights (the "Shares"), of the Company at $30.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2) (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). The information set forth in the Introduction to the Offer to Purchase (the "Introduction") is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. 2. Identity and Background. (a)-(d) and (g) This Statement on Schedule 14D-1 is filed by Tse-tsehese-staestse, Inc. ("Merger Subsidiary") and Computer Associates International, Inc. ("Computer Associates"), each of which is a Delaware corporation. Merger Subsidiary is a wholly-owned subsidiary of Computer Associates. Information concerning the principal business and the addresses of the principal offices of Merger Subsidiary and Computer Associates is set forth in Section 8 ("Certain Information Concerning Merger Subsidiary and Computer Associates") of the Offer to Purchase, and is incorporated herein by reference. The names, business addresses, present principal occupations or employments, material occupations, positions, offices or employment during the last five years and citizenship of the directors and executive officers of Merger Subsidiary and Computer Associates are set forth in Schedule I to the Offer to Purchase and are incorporated herein by reference. (e) and (f) None of Merger Subsidiary, Computer Associates or, to the best knowledge of such corporations, any of the persons listed on Schedule I to the Offer of Purchase, has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been 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 of such laws. 3. Past Contacts, Transactions or Negotiations with the Subject Company. (a) and (b) The information set forth in (i) the Introduction, Section 10 ("Background of the Offer; Past Contacts, Transactions or Negotiations with the Company"), Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights") and Schedule I to the 3 Offer to Purchase, (ii) the Agreement and Plan of Merger, dated as of October 7, 1996 (the "Merger Agreement"), among the Company, Computer Associates and Merger Subsidiary, a copy of which is attached as Exhibit (c)(1) hereto, and (iii) the Confidentiality Agreement, dated October 1, 1996 (the "Confidentiality Agreement"), between Computer Associates and the Company, a copy of which is attached as Exhibit (c)(2) hereto, respectively, is incorporated herein by reference. 4. Source and Amount of Funds or Other Consideration. (a) and (b) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. (a)-(e) The information set forth in the Introduction and Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. (f) and (g) The information set forth in Section 12 ("Effect of the Offer on the Market for the Shares; Stock Quotations, Registration Under the Exchange Act") of the Offer to Purchase is incorporated herein by reference. 6. Interest in Securities of the Subject Company. (a) None. (b) Not applicable. 7. Contracts, Arrangements, Understandings or Relation- ships with Respect to the Subject Company's Securities. The information set forth in (i) the Introduction, Section 8 ("Certain Information Concerning Merger Subsidiary and Computer Associates"), Section 10 ("Background of the Offer; Past Contacts, Transactions or Negotiations with the Company") and Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights") of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Confidentiality Agreement, respectively, is incorporated herein by reference. 8. Persons Retained, Employed or to be Compensated. The information set forth in Section 17 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. 4 9. Financial Statements of Certain Bidders. The information set forth in Section 8 ("Certain Information Concerning Merger Subsidiary and Computer Associates") of the Offer to Purchase, and such information and the consolidated financial statements of Computer Associates in Computer Associates' Annual Report on Form 10-K for the fiscal year ended March 31, 1996 and Quarterly Report for the three months ended June 30, 1996, respectively, are incorporated herein by reference. 10. Additional Information. (a) The information set forth in Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. (b)-(d) The information set forth in Section 16 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in (i) the Offer to Purchase, (ii) the Letter of Transmittal, (iii) the Merger Agreement, and (iv) the Confidentiality Agreement, respectively, is incorporated herein by reference. 11. Material to be Filed as Exhibits. (a)(1) Offer to Purchase dated October 11, 1996. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. (a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Text of joint press release issued by Computer Associates and the Company dated October 7, 1996. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Form of summary advertisement dated October 11, 1996. (b)(1) $1,300,000,000 Amended and Restated Credit Agreement, dated as of July 3, 1996 (previously filed as an exhibit to 5 Computer Associates' 10-Q for the three months ended June 30, 1996 (File No. 0-10180) and incorporated herein by reference). (b)(2) $700,000,000 Credit Agreement, dated as of July 3, 1996 (previously filed as an exhibit to Computer Associates' 10-Q for the three months ended June 30, 1996 (File No. 0-10180) and incorporated herein by reference). (c)(1) Agreement and Plan of Merger, dated as of October 7, 1996, among the Company, Computer Associates and Merger Subsidiary. (c)(2) Confidentiality Agreement, dated October 1, 1996, between Computer Associates and the Company. (d) None. (e) Not applicable. (f) None. 6 SIGNATURE After due inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: October 11, 1996 TSE-TSEHESE-STAESTSE, INC. By/s/ Peter Schwartz ------------------------- Name: Peter Schwartz Title: Vice President and Treasurer COMPUTER ASSOCIATES INTERNATIONAL, INC. By/s/ Peter Schwartz ------------------------- Name: Peter Schwartz Title: Senior Vice President and Chief Financial Officer 7
EXHIBIT INDEX Exhibit Number Exhibit Name - ------ ------------- (a)(1) Offer to Purchase dated October 11, 1996. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. (a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Text of joint press release issued by Computer Associates and the Company dated October 7, 1996. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Form of summary advertisement dated October 11, 1996. (b)(1) $1,300,000,000 Amended and Restated Credit Agreement, dated as of July 3, 1996 (previously filed as an exhibit to Computer Associates' 10-Q for the three months ended June 30, 1996 (File No. 0-10180) and incorporated herein by reference). (b)(2) $700,000,000 Credit Agreement, dated as of July 3, 1996 (previously filed as an exhibit to Computer Associates' 10-Q for the three months ended June 30, 1996 (File No. 0-10180) and incorporated herein by reference). (c)(1) Agreement and Plan of Merger, dated as of October 7, 1996, among the Company, Computer Associates and Merger Subsidiary. (c)(2) Confidentiality Agreement, dated October 1, 1996, between Computer Associates and the Company. (d) None. (e) Not applicable. (f) None.
EX-99.A1 2 OFFER TO PURCHASE EXHIBIT 99(a)(1) Offer to Purchase for Cash All Outstanding Shares of Common Stock (including the associated Rights) of Cheyenne Software, Inc. at $30.50 Net Per Share by Tse-tsehese-staestse, Inc. a wholly owned subsidiary of Computer Associates International, Inc. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 8, 1996, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE (INCLUDING THE ASSOCIATED RIGHTS (DEFINED HEREIN)) (THE "SHARES"), OF CHEYENNE SOFTWARE, INC. (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED BY TSE-TSEHESE-STAESTSE, INC. ("MERGER SUBSIDIARY") AND COMPUTER ASSOCIATES INTERNATIONAL,INC. ("COMPUTER ASSOCIATES"), WOULD REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS AND (2) THE EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS UNANIMOUSLY APPROVED THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES. __________________________ Any stockholder desiring to tender Shares should either (i) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and deliver it with the certificate(s) representing such tendered Shares and all other required documents to the Depositary or follow the procedure for book-entry tender of Shares set forth in Section 3 or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if such stockholder desires to tender such Shares. Any stockholder who desires to tender Shares and whose certificate(s) representing such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3. Questions and requests for assistance or additional copies of this Offer to Purchase or the Letter of Transmittal may be directed to the Information Agent at its addresses and telephone numbers specified on the back cover of this Offer to Purchase. _________________________ The Information Agent for the Offer is: D.F. King & Co., Inc. October 11, 1996
TABLE OF CONTENTS Page INTRODUCTION.....................................................1 1. Terms of the Offer..........................................3 2. Acceptance for Payment and Payment..........................5 3. Procedure for Tendering Shares..............................6 4. Withdrawal Rights...........................................9 5. Certain Tax Consequences...................................10 6. Price Range of Shares; Dividends...........................11 7. Certain Information Concerning the Company.................11 8. Certain Information Concerning Merger Subsidiary and Computer Associates.......................................13 9. Source and Amount of Funds.................................15 10. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company.............................16 11. Purpose of the Offer; Merger Agreement; Appraisal Rights...19 12. Effect of the Offer on the Market for the Shares; Stock Quotations; Registration Under the Exchange Act...........30 13. Dividends and Distributions................................31 14. Extension of Tender Period; Termination; Amendment.........32 15. Certain Conditions of the Offer............................33 16. Certain Legal Matters; Regulatory Approvals................36 17. Fees and Expenses..........................................38 18. Miscellaneous..............................................39 Schedule I Directors and Executive Officers...................I-1
To the Holders of Common Stock of CHEYENNE SOFTWARE, INC.: INTRODUCTION Tse-tsehese-staestse, Inc., a Delaware corporation ("Merger Subsidiary") and a wholly owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), hereby offers to purchase all outstanding shares of Common Stock, par value $.01 per share (including the associated Rights (defined below) (collectively, except where the context otherwise requires, the "Shares"), of Cheyenne Software, Inc., a Delaware corporation (the "Company"), at $30.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). Tendering stockholders of the Company (the stockholders of the Company are referred to herein as the "Stockholders") will not be obligated to pay brokerage fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. Computer Associates will pay all charges and expenses of The Bank of New York (the "Depositary") and D.F. King & Co., Inc. (the "Information Agent") in connection with the Offer. The Board of Directors of the Company has unanimously determined that the Offer and the transactions contemplated by the Merger Agreement (defined below) are fair to, and in the best interests of, the Stockholders of the Company, has unanimously approved the Offer and the transactions contemplated by the Merger Agreement, and unanimously recommends that the Stockholders of the Company accept the Offer and tender their Shares. Pursuant to the Merger Agreement, the Company has represented to Computer Associates that Lazard Freres & Co. LLC ("Lazard Freres"), the Company's financial advisor, has delivered to the Company's Board of Directors its written opinion to the effect that the $30.50 per Share to be paid in the Offer and the Merger is fair to the holders of the Shares from a financial point of view. The opinion of Lazard Freres is set forth in full in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), being mailed to Stockholders with this Offer to Purchase. Stockholders are urged to read this opinion in its entirety. The Offer is conditioned upon, among other things, (1) there being validly tendered by the Expiration Date (defined below) and not withdrawn a number of Shares which, together with the Shares then owned by Computer Associates and Merger Subsidiary, would represent at least a majority of the total number of outstanding Shares, assuming the exercise of all outstanding options, rights and convertible securities (if any) and the issuance of all Shares that the Company is obligated to issue (such total number of outstanding Shares being hereinafter referred to as the "Fully Diluted Shares") (the "Minimum Condition") and (2) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). See Section 15, which sets forth in full the conditions to the Offer. 2 The Company has represented to Computer Associates that, as of October 7, 1996, there were 37,711,424 Shares issued and outstanding, and 5,003,136 Shares reserved for issuance upon the exercise of stock options outstanding under various employee and director stock option plans. Based upon the foregoing, as of October 7, 1996, there were approximately 42,714,560 Shares outstanding on a fully diluted basis. Neither Computer Associates nor Merger Subsidiary owns any Shares. Accordingly, Computer Associates believes that the Minimum Condition would be satisfied (based on the foregoing assumptions) if approximately 21,357,281 Shares are validly tendered pursuant to the Offer and not withdrawn. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of October 7, 1996 (the "Merger Agreement"), among the Company, Computer Associates and Merger Subsidiary, which has been unanimously approved by the Company's Board of Directors. The Merger Agreement provides, among other things, that, after consummation of the Offer, and upon the later of (i) November 30, 1996, provided that as of such date the conditions to the Merger set forth in the Merger Agreement shall be fulfilled or waived and (ii) the first business day on which such conditions to the Merger shall be fulfilled or waived, Merger Subsidiary will be merged into the Company (the "Merger"), with the Company continuing as the surviving corporation (the "Surviving Corporation"). Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each outstanding Share (other than Shares owned by Computer Associates, Merger Subsidiary or any subsidiary of either of them or held by the Company as treasury stock (which shall be canceled) or by Stockholders exercising appraisal rights under Delaware Law (defined below)) will be converted into the right to receive $30.50 in cash or any higher price paid for each Share in the Offer, without interest. If the Minimum Condition is satisfied and Merger Subsidiary purchases Shares pursuant to the Offer, Merger Subsidiary will have the power to approve the Merger without the affirmative vote of any other Stockholder. In the event that Merger Subsidiary owns 90% or more of the Shares then outstanding, the "short-form" merger provisions of the Delaware General Corporation Law ("Delaware Law") would permit the Merger to occur without a meeting or a vote of the Stockholders. See Section 11. Pursuant to the Merger Agreement, at the Effective Time, all outstanding stock options under the Company's various stock option plans shall by virtue of the Merger become fully exercisable and vested and be assumed by Computer Associates. See Section 11. In connection with the execution of the Merger Agreement, the Company amended its Rights Agreement, dated as of April 15, 1996, as amended (the "Rights Agreement"), between the Company and Continental Stock Transfer & Trust Company, as Rights Agent, to make it and the Preferred Share Purchase Rights issued thereunder (the "Rights") inapplicable to the Offer and the Merger. See Section 11. Upon acceptance for payment by Merger Subsidiary of such number of Shares which satisfies the Minimum Condition, Computer Associates is entitled, pursuant to the Merger Agreement, to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors and (ii) the percentage that the number of Shares owned by Computer Associates or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all necessary action to cause Computer Associates' designees to be elected or 3 appointed to the Company's Board of Directors; provided that, prior to the Effective Time, the Company's Board of Directors shall always have one member who is neither a designee nor an affiliate of Computer Associates or Merger Subsidiary nor an employee of the Company (an "Independent Director"). No action proposed to be taken by the Company to amend or terminate the Merger Agreement or waive any action by Computer Associates or Merger Subsidiary shall be effective without the approval of the Independent Director. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. Terms of the Offer. Upon the terms and subject to the conditions set forth in the Offer, Merger Subsidiary will accept for payment and purchase, at the time and in the manner set forth in Section 2, all Shares that are validly tendered by the Expiration Date and not withdrawn as provided in Section 4. Unless and until certificates representing Rights ("Rights Certificates") are issued, a tender of Shares pursuant to the Offer will constitute a tender of associated Rights evidenced by the certificates for such Shares. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Friday, November 8, 1996, unless Merger Subsidiary shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Merger Subsidiary, shall expire. The Offer is subject to certain conditions set forth in Section 15, including satisfaction of the Minimum Condition and expiration or termination of the waiting period applicable to Merger Subsidiary's acquisition of Shares pursuant to the Offer under the HSR Act. If any such condition is not satisfied, Merger Subsidiary may, except as otherwise described below, (i) terminate the Offer and return all tendered Shares to tendering Stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth in Section 4, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition (except the Minimum Condition) and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered by the Expiration Date and not withdrawn or (iv) delay acceptance for payment or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions to the Offer. Notwithstanding the foregoing, but subject to Computer Associates' or the Company's ability to terminate the Merger Agreement under certain circumstances (described in Section 11 below), if the applicable waiting period under the HSR Act shall not have expired or been terminated as of the date the Offer would otherwise have expired, Merger Subsidiary has agreed, pursuant to the Merger Agreement, to extend the Offer from time to time until the earlier of (x) the date that is 30 days after the first scheduled Expiration Date and (y) the date that such waiting period has expired or been terminated. For a description of Merger Subsidiary's right to extend the period of time during which the Offer is open and to amend, delay or terminate the Offer, see Section 14. Merger Subsidiary acknowledges that Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires Merger Subsidiary to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer. 4 Pursuant to the Merger Agreement, Computer Associates and Merger Subsidiary expressly reserve the right to waive any of the conditions to the Offer and to make any change in the terms or conditions of the Offer; provided that, without the written consent of the Company, no change may be made which changes the form of consideration to be paid in the Offer, decreases the price per Share or the number of Shares being sought in the Offer, imposes conditions to the Offer in addition to those expressly set forth in the Merger Agreement, changes or waives the Minimum Condition, extends the Offer (except as set forth in the Merger Agreement) or makes any other change to any condition to the Offer set forth in the Merger Agreement which is adverse to the holders of Shares. Any extension, delay in payment, amendment or termination of the Offer will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Merger Subsidiary may choose to make any public announcement, subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes), Merger Subsidiary shall have no obligation except as otherwise required by applicable law) to publicly advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. Subject to the Merger Agreement, if Merger Subsidiary makes any material change in the terms of the Offer or the information concerning the Offer, or waives any condition to the Offer that results in a material change to the circumstances of the Offer, Merger Subsidiary will disseminate additional tender offer materials and extend the Offer to the extent required to comply with Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The Securities and Exchange Commission (the "Commission") has interpreted such rules to prescribe that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information changed. With respect to a change in price or a change in the percentage of securities sought, a minimum period of ten business days may be required to allow for adequate dissemination to stockholders and investor response. As used in this Offer to Purchase, "business day" means any day other than a Saturday, Sunday or a federal holiday and shall consist of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The Company has provided Merger Subsidiary with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 5 2. Acceptance for Payment and Payment. Subject to the terms of the Offer and the satisfaction (or waiver to the extent permitted by the Merger Agreement) of all the conditions to the Offer, Merger Subsidiary shall accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration of the Offer and shall pay for all such shares promptly after acceptance; provided that Merger Subsidiary may extend the Offer if, at the scheduled expiration date of the Offer or any extension thereof any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and Merger Subsidiary may extend the Offer for a further period of time of not more than 20 business days to meet the objective (which is not a condition to the Offer) that there shall be validly tendered prior to the Expiration Date (as so extended) and not withdrawn a number of Shares, which, together with Shares then owned by Computer Associates and Merger Subsidiary, represents at least 90% of the Fully Diluted Shares. For a description of Merger Subsidiary's right to terminate the Offer (subject to the terms of the Merger Agreement) and not accept for payment or pay for Shares or to delay acceptance for payment or payment for Shares, see Section 14. For purposes of the Offer, Merger Subsidiary shall be deemed to have accepted for payment tendered Shares when, as and if Merger Subsidiary gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares. In all cases, upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for the tendering Stockholders for the purpose of receiving payments from Merger Subsidiary and transmitting such payments to tendering Stockholders. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or of a confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (defined in Section 3)), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or an Agent's Message (defined below) in connection with a book-entry transfer and (iii) any other required documents. Accordingly, payment may be made to tendering Stockholders at different times if delivery of the Shares and other required documents occur at different times. For a description of the procedure for tendering Shares pursuant to the Offer, see Section 3. Under no circumstances will interest be paid by Merger Subsidiary on the consideration paid for Shares pursuant to the Offer, regardless of any delay in making such payment. The term "Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares which are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Merger Subsidiary may enforce such agreement against such participant. 6 If Merger Subsidiary increases the consideration to be paid for Shares pursuant to the Offer, Merger Subsidiary will pay such increased consideration for all Shares purchased pursuant to the Offer. Merger Subsidiary reserves the right to transfer or assign, in whole or from time to time in part, to one or more of Computer Associates or any of its wholly owned subsidiaries, the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Merger Subsidiary of its obligations under the Offer or prejudice the rights of tendering Stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained at one of the Book-Entry Transfer Facilities), without expense to the tendering Stockholder, as promptly as practicable following the expiration or termination of the Offer. 3. Procedure for Tendering Shares. To tender Shares pursuant to the Offer, either (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), or an Agent's Message in connection with a book-entry transfer of such Shares, and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (a) certificates for such Shares to be tendered must be received by the Depositary at one of such addresses or (b) such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a Book-Entry Confirmation received by the Depositary), in each case by the Expiration Date, or (ii) the guaranteed delivery procedure described below must be complied with. The Depositary will establish an account with respect to the Shares at The Depository Trust Company and Philadelphia Depository Trust Company (collectively referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. However, although delivery of Shares may be effected through book-entry transfer, the Letter of Transmittal (or facsimile thereof), or an Agent's Message in connection with such book-entry transfer, and any other required documents must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase by the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of the Letter of Transmittal and any other required documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. 7 Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a bank, broker, dealer, credit union, savings association or other entity that is a member of a recognized Medallion Program approved by The Securities Transfer Association, Inc. (an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (i) if the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates representing Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made to, or certificates for unpurchased Shares are to be issued or returned to, a person other than the registered holder, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, signed exactly as the name or names of the registered holder or holders appear on the certificates, with the signatures on the certificates or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates representing Shares are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or facsimile thereof) must accompany each such delivery. If a Stockholder desires to tender Shares pursuant to the Offer and cannot deliver such Shares and all other required documents to the Depositary by the Expiration Date, or such Stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered if all of the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Merger Subsidiary, is received by the Depositary (as provided below) by the Expiration Date; and (iii) the certificates for all physically delivered Shares (or a Book-Entry Confirmation of all Shares delivered electronically), as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal, are received by the Depositary within three trading days on the American Stock Exchange, Inc. (the "AMEX") after the date of execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. 8 The method of delivery of Shares and all other required documents, including delivery through any Book-Entry Transfer Facility, is at the option and risk of the tendering Stockholder, and the delivery will be deemed made only when actually received by the Depositary. If certificates for Shares are sent by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of the certificates for such Shares, or a Book-Entry Confirmation of the delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain Stockholders pursuant to the Offer. In order to avoid such backup withholding, each tendering Stockholder must provide the Depositary with such Stockholder's correct taxpayer identification number and certify that such Stockholder is not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. By executing a Letter of Transmittal, a tendering Stockholder irrevocably appoints designees of Merger Subsidiary as such Stockholder's proxies in the manner set forth in the Letter of Transmittal to the full extent of such Stockholder's rights with respect to the Shares tendered by such Stockholder and accepted for payment by Merger Subsidiary (and any and all other Shares or other securities issued or issuable in respect of such Shares on or after October 7, 1996). All such proxies shall be considered coupled with an interest in the tendered Shares. Such appointment is effective only upon the acceptance for payment of such Shares by Merger Subsidiary. Upon such acceptance for payment, all prior proxies and consents granted by such Stockholder with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given nor subsequent written consents executed by such Stockholder (and, if given or executed, will not be deemed to be effective). Such designees of Merger Subsidiary will be empowered to exercise all voting and other rights of such Stockholder as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent or otherwise. Merger Subsidiary reserves the right to require that, in order for Shares to be validly tendered, immediately upon Merger Subsidiary's acceptance for payment of such Shares, Merger Subsidiary is able to exercise full voting rights with respect to such Shares and other securities (including voting at any meeting of stockholders then scheduled or acting by written consent without a meeting). All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by Merger Subsidiary, in its sole discretion, which determination shall be final and binding on all parties. Merger Subsidiary reserves the absolute right to reject any or all tenders of Shares determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of Merger Subsidiary's counsel, be unlawful. Merger Subsidiary also reserves the absolute right to waive any defect or irregularity in any tender of Shares, whether or not similar defects or irregularities are 9 waived in the case of any other tender of Shares. None of Merger Subsidiary, Computer Associates, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liability for failure to give any such notification. Merger Subsidiary's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. The acceptance for payment of Shares tendered pursuant to any one of the procedures described above will constitute an agreement between the tendering Stockholder and Merger Subsidiary upon the terms and subject to the conditions of the Offer. 4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn on or after December 9, 1996 unless theretofore accepted for payment as provided in this Offer to Purchase. If Merger Subsidiary extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Merger Subsidiary's rights under the Offer, the Depositary may, on behalf of Merger Subsidiary, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this Section 4. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering Stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Merger Subsidiary, in its sole discretion, which determination shall be final and binding. None of Merger Subsidiary, Computer Associates, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification. 10 5. Certain Tax Consequences. This summary sets forth material anticipated Federal income tax consequences to Stockholders of their disposition of Shares pursuant to the Offer and the Merger. The summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as currently in effect. Such laws or interpretations may differ on the date of the consummation of the Offer or at the Effective Time, and relevant facts may also differ. The summary does not address any foreign, state or local tax consequences, nor does it address estate or gift tax considerations. Neither the consummation of the Offer nor the effectiveness of the Merger is conditioned upon the receipt of any ruling from the Internal Revenue Service or any opinion of counsel as to tax matters. This summary is for general information only. The tax treatment of each Stockholder will depend in part upon his particular situation. Special tax consequences not described below may be applicable to particular classes of taxpayers, including financial institutions, pension funds, mutual funds, broker-dealers, persons who are not citizens or residents of the United States or who are foreign corporations, foreign partnerships or foreign estates or trusts, Stockholders who own actually or constructively (under certain attribution rules contained in the Code) 5% or more of the Shares, Stockholders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation, and persons who receive payments in respect of options to acquire Shares. All Stockholders should consult with their own tax advisers as to the particular tax consequences of the Offer and the Merger to them, including the applicability and effect of any state, local and foreign tax laws. Sales of Shares by Stockholders pursuant to the Offer (or the Merger) will be taxable transactions for Federal income tax purposes and may also be taxable transactions under applicable state, local, foreign and other tax laws. In general, a Stockholder will recognize gain or loss equal to the difference between the tax basis of such Stockholder's Shares and the amount of cash received in exchange for the Shares. This gain or loss will be capital gain or loss if the Shares are capital assets in the hands of the Stockholder and will be long-term capital gain or loss if the holding period for the Shares is more than 12 months as of the date of the sale of such Shares. 11 6. Price Range of Shares; Dividends. The Shares are traded on the AMEX. The following table sets forth for the periods indicated the high and low closing prices per Share as reported by the AMEX.
High Low Fiscal 1995: First quarter ended September 30,1994 $ 13.38 $7.75 Second quarter ended December 31,1994 13.88 9.13 Third quarter ended March 31, 1995 17.75 13.25 Fourth quarter ended June 30, 1995 20.00 12.38 Fiscal 1996: First quarter ended September 30,1995 22.00 16.63 Second quarter ended December 31,1995 27.75 16.88 Third quarter ended March 31, 1996 26.38 14.13 Fourth quarter ended June 30, 1996 24.25 15.00 Fiscal 1997: First quarter ended September 30, 1996 22.50 14.38
On October 4, 1996, the last day of trading prior to the issuance by the Company and Computer Associates of a joint press release announcing the execution of the Merger Agreement, the closing price per Share on the AMEX was $22.38. On October 9, 1996, the second to last day of trading prior to the commencement of the Offer, the closing price per Share on the AMEX was $30.13. Stockholders are urged to obtain current market quotations for the Shares. As reported by the Company, the Company has not paid any dividends on its Common Stock for the periods presented above. As of October 9, 1996, there were approximately 1,000 holders of record of outstanding Shares. 7. Certain Information Concerning the Company. The Company is a Delaware corporation with its principal executive offices located at 3 Expressway Plaza, Roslyn Heights, New York 11577. According to the Company's Annual Report on Form 10-K for its fiscal year ended June 30, 1996 (the "Company 10-K"), the Company is engaged in the development, sale, and support of software products for use in desktop and networked Local Area Network and Wide Area Network applications. According to the Company 10-K, the Company's strategy is to provide storage, management, security and communications software for desktops and distributed enterprise networks. The following selected consolidated financial data relating to the Company and its subsidiaries has been taken or derived from the audited financial statements contained in the Company 10-K. More comprehensive financial information is included in the Company 10-K and the other documents filed by the Company with the Commission, and the financial data set forth below is qualified in its entirety by reference to such reports and other documents including the financial statements (and any related notes) contained therein. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission in the manner set forth below. 12
CHEYENNE SOFTWARE, INC. SELECTED CONSOLIDATED FINANCIAL DATA (In thousands, except per share data) Income Statement Fiscal Year Ended Data June 30, ------------------------------- 1996 1995 1994 ---- ---- ---- Total revenues $174,096 $127,927 $ 97,737 Total costs and expenses 136,439 90,121 52,435 Operating income 37,657 37,806 45,302 Net income 27,228 38,504 32,538 Income per share $0.70 $0.97 $0.82
Balance Sheet Data At June 30, ------------------- 1996 1995 Working capital $ 86,822 $ 57,786 Total assets 176,472 129,394 Total liabilities 25,950 13,065 Total stockholders' equity 150,522 116,310
The information concerning the Company contained herein has been taken from or is based upon reports and other documents on file with the Commission or otherwise publicly available. Although Computer Associates and Merger Subsidiary do not have any knowledge that would indicate that any statements contained herein based upon such reports and documents are untrue, Computer Associates and Merger Subsidiary do not take any responsibility for the accuracy or completeness of the information contained in such reports and other documents or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but that are unknown to Computer Associates or Merger Subsidiary. The Company is subject to the informational requirements of the Exchange Act and files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and should also be available for inspection and copying at the 13 regional offices of the Commission in New York (Seven World Trade Center, New York, New York 10048) and Chicago (500 West Madison Street (Suite 1400), Chicago, Illinois 60661). Copies of such material can also be obtained from the Public Reference Section of the Commission in Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site on the Internet that contains reports, proxy statements and other information (http://www.sec.gov). 8. Certain Information Concerning Merger Subsidiary and Computer Associates. Merger Subsidiary, a Delaware corporation and a wholly owned subsidiary of Computer Associates, was organized to acquire the Company and has not conducted any unrelated activities since its organization on October 4, 1996. Computer Associates, a Delaware corporation, is engaged in the design, development, marketing and support of standardized computer software products for use with a broad range of desktop, midrange and mainframe computers from many different hardware manufacturers. Its products include a broad range of standardized systems management software (which enables customers to use their total data processing resources more efficiently), information management software (which is generally used in connection with database management systems and applications generators), business management software (which is used in financial, human resource, manufacturing, distribution and banking systems applications), and desktop computer software. The principal executive offices of Computer Associates and Merger Subsidiary are located at One Computer Associates Plaza, Islandia, New York 11788. The name, business address, principal occupation or employment and citizenship of each director and executive officer of Merger Subsidiary and Computer Associates are set forth in Schedule I hereto. The following selected consolidated financial data relating to Computer Associates and its subsidiaries has been taken or derived from the audited financial statements contained in Computer Associates' Annual Report on Form 10-K for the year ended March 31, 1996, and the unaudited financial statements contained in Computer Associates' Quarterly Report on Form 10-Q for the three months ended June 30, 1996. The information set forth below gives effect to the acquisitions of Legent Corporation in fiscal 1996 and The ASK Group, Inc. in fiscal 1994. More comprehensive financial information is included in such Annual Report, such Quarterly Report and the other documents filed by Computer Associates with the Commission, and the financial data set forth below is qualified in its entirety by reference to such reports and other documents including the financial statements (and any related notes) contained therein. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission in the same manner as set forth with respect to the Company in Section 7. 14
COMPUTER ASSOCIATES INTERNATIONAL, INC. SELECTED CONSOLIDATED FINANCIAL DATA (In thousands, except per share data) Income Statement Data Fiscal Year Ended Three Months Ended March 31, June 30, -------------------------- ------------------ (Unaudited) 1996 1995 1994 1996 1995 ---- ---- ---- ---- ---- Total revenue $3,504,629 $2,622,992 $2,148,470 $792,099 $577,452 (Loss) income before income taxes (100,611) 696,619 626,972 190,138 140,554 Net(loss)income (56,354) 431,904 401,262 119,787 88,549 Net(loss)income per common share(1) $(0.15) $1.14 $1.04 $0.32 $0.23 Dividends declared per common share(1) $0.09 $0.08 $0.06 $0.05 $0.04
Balance Sheet Data At March 31, At June 30, 1996 ------------------------ ---------------- 1996 1995 (Unaudited) ---- ---- Working capital $ (53,757) $ 299,673 $ (132,567) Total assets 5,015,966 3,269,428 4,876,939 Long-term debt (less current maturities) 944,506 50,489 845,804 Stockholders' equity 1,481,662 1,578,125 1,592,705 __________ (1) Adjusted to reflect three-for-two stock splits effective August 12, 1995 and June 19, 1996, respectively.
Computer Associates is subject to the informational requirements of the Exchange Act and files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Computer Associates is required to disclose in such proxy statements certain information, as of particular dates, concerning its directors and officers, their remuneration, stock options granted to them, the principal holders of its securities and any material interests of such persons in transactions with Computer Associates. Such reports, proxy statements and other information should be available for inspection and copying at the offices of the Commission in the same manner as set forth with respect to the Company in Section 7. 15 Neither Computer Associates, Merger Subsidiary nor, to their knowledge, any of the persons listed in Schedule I or any associate or majority-owned subsidiary of any of the foregoing, beneficially owns or has the right to acquire any equity securities of the Company, nor has Computer Associates, Merger Subsidiary or, to their knowledge, any of the persons or entities referred to above or any of the respective executive officers, directors or subsidiaries of any of the foregoing, effected any transaction in the equity securities of the Company during the past 60 days. Except as described in this Offer to Purchase, neither Computer Associates, Merger Subsidiary nor, to their knowledge, any of the persons listed in Schedule I, has any contract, arrangement, understanding or relationship 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 or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as described in this Offer to Purchase, there have been no contracts, negotiations or transactions between Computer Associates, Merger Subsidiary or any other subsidiary of Computer Associates or, to their knowledge, any of the persons listed in Schedule I, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. Except as described in this Offer to Purchase, none of Computer Associates, Merger Subsidiary, any other subsidiary of Computer Associates, or, to their knowledge, any of the persons listed in Schedule I, has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure pursuant to the rules and regulations of the Commission. 9. Source and Amount of Funds. The total amount of funds required by Merger Subsidiary to purchase Shares pursuant to the Offer and the Merger and to pay related fees and expenses is estimated to be approximately $1.2 billion. Merger Subsidiary has not conditioned the Offer on obtaining financing. Merger Subsidiary plans to obtain all funds needed for the Offer and the Merger from Computer Associates by means of a capital contribution, loan or a combination thereof. Computer Associates will obtain such funds (i) from its general corporate funds and (ii) by borrowing under its existing $1,300,000,000 Amended and Restated Credit Agreement, dated as of July 3, 1996 (the "$1.3 Billion Credit Agreement"), and $700,000,000 Credit Agreement, dated as of July 3, 1996 (the "$700 Million Credit Agreement") (together, the "Credit Agreements"), in each case among Computer Associates, as Borrower, the banks and other financial institutions party thereto, as Banks (the "Banks"), and Credit Suisse, as Agent. The $1.3 Billion Credit Agreement provides for borrowings of up to an aggregate of $1.3 billion of loans, in each case on an unsecured basis and at interest rates (at Computer Associates' option) of (i) the London inter bank offered rate plus a margin of 0.175% (as adjusted from time to time based upon the financial performance of Computer Associates) or (ii) the higher of (x) the Credit Suisse base lending rate and (y) the federal funds rate plus a margin of 0.50%. The $700 Million Credit Agreement provides for borrowings of up to an aggregate of $700 million of loans, in each case on an unsecured basis 16 and at interest rates (at Computer Associates' option) of (i) the London inter bank offered rate plus a margin of .070% (as adjusted from time to time based upon the financial performance of Computer Associates) or (ii) the higher of (x) the Credit Suisse base lending rate and (y) the federal funds rate plus a margin of 0.50%. Loans under the Credit Agreements are repayable (with a right to borrow) on the last of each interest period applicable thereto, with full and final repayment due, in the case of the $1.3 Billion Credit Agreement, on July 2, 2001 and, in the case of the $700 Million Credit Agreement, on July 9, 1997 (unless, in the case of the $700 Million Credit Agreement, extended pursuant to annual evergreen provisions by mutual agreement between Computer Associates and the Banks). The Credit Agreements include customary covenants by Computer Associates, including financial covenants. As of October 8, 1996, Computer Associates had (i) approximately $200 million in cash, cash equivalents and marketable securities and (ii) availability to borrow up to an additional $1.13 billion of loans under the Credit Agreements. The foregoing summary of the source and amount of funds is qualified in its entirety by reference to the text of the Credit Agreements, copies of which are filed as exhibits to Computer Associates' Quarterly Report on Form 10-Q for the three months ended June 30, 1996 filed with the Commission and are incorporated in this Offer to Purchase by reference and may be inspected in the same manner as set forth with respect to the Company in Section 7. Although no definitive plan or arrangement for repayment of borrowings under the Credit Agreements have been made, Computer Associates anticipates such borrowings will be repaid with internally generated funds (including, if the Merger is accomplished, those of the Company) and from other sources which may include the proceeds of future bank refinancings or the public or private sale of debt or equity securities. No decision has been made concerning the method Computer Associates will use to repay the borrowings under the Credit Agreements. Such decision will be made based on Computer Associates' review from time to time of the advisability of particular actions, as well as prevailing interest rates, financial and other economic conditions and such other factors as Computer Associates may deem appropriate. 10. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company. Computer Associates and the Company have various licensing and development arrangements pursuant to which the Company develops software to be compatible with certain Computer Associates products, Computer Associates licenses Company products to sell as part of Computer Associates product offerings and the Company licenses to sell Computer Associates products that include Company software. Representatives of Computer Associates and the Company have met from time to time over the past several years to discuss the technical and marketing aspects of these arrangements. As part of those discussions, Charles B. Wang, Chairman and Chief Executive Officer of Computer Associates, Sanjay Kumar, President and Chief Operating Officer of Computer Associates, and ReiJane Huai, Chairman and Chief Executive Officer of the Company, have met to discuss the existing relationships, synergies of the companies and ways of expanding the existing relationships. 17 During May 1996, Mr. Wang and Mr. Kumar discussed with Mr. Huai the synergies that might result from developing a closer relationship between the two companies. On June 2, Mr. Huai and Elliot Levine, Chief Financial Officer of the Company, met at Mr. Kumar s home with Mr. Wang, Mr. Kumar and Charles P. McWade, Senior Vice President of Computer Associates, to discuss the synergies of a possible stock-for-stock business combination in which the Company s shareholders would receive shares of Computer Associates common stock. Shortly thereafter, Computer Associates and the Company, together with their respective counsel, discussed entering into a confidentiality agreement to permit each party to engage in a due diligence review of the other party. Mr. Kumar had several discussions with Mr. Huai over the terms of the confidentiality agreement. Before coming to agreement on the terms of the confidentiality agreement, the Company and Computer Associates ceased discussions. Mr. Kumar had further discussions with Mr. Huai in early July and again in early August about the possibility of beginning due diligence and discussing terms of a business combination. At the August meeting of the Computer Associates Board of Directors, Mr. Kumar discussed several strategic options for Computer Associates, including a possible business combination with the Company. On August 7, 1996, representatives of the parties met, at the initiation of Computer Associates, and discussed the possibility of a stock-for-stock transaction. No understanding was reached with respect to the basic financial terms. Accordingly, the parties determined not to enter into a confidentiality agreement, exchange information or engage in further discussions at that time. On September 27, Mr. Huai was meeting with Mr. Wang on unrelated business, when the possibility of a combination was again raised. Later that day, Mr. Kumar asked Mr. Huai for a meeting with him and representatives of Lazard, Freres & Co. LLC, financial advisors to the Company, to discuss the steps required to be taken toward discussing a possible business combination with the Company. On the morning of September 29, Mr. Kumar met with the Lazard representatives to discuss a possible transaction between Computer Associates and the Company. Later that day, Mr. Kumar discussed the possibility of a transaction with Mr. Huai, and agreed to discuss entering into a confidentiality agreement and the process to complete a transaction. On the morning of October 1, Mr. Kumar and Mr. McWade met with Mr. Huai and the Lazard representatives to discuss the next steps in exploring a possible business combination. Later that day, Computer Associates and the Company entered into a confidentiality agreement, and Computer Associates began a due diligence review of the Company. Between October 1 and October 5, Computer Associates and the Company, and their legal and financial advisors, discussed the terms of a merger agreement. During that time, Computer Associates conducted its due diligence review in New York City and on Long Island, and Mr. Kumar had several long and detailed discussions with Mr. Huai on strategic issues, management and operations and retention of the Company s employees. On October 4, Mr. Kumar presented the transaction to the Computer Associates Board as an all cash transaction in a range of values that Computer Associates believed would be appropriate to complete a business combination with the Company. The Board unanimously 18 approved the transaction and authorized Mr. Kumar to proceed to negotiate a merger agreement, subject to due diligence and final valuation. On the morning of October 6, Mr. Kumar met with Mr. Huai, together with each of their legal advisors and representatives of Lazard, to discuss certain terms of the merger agreement and valuation. After reaching an impasse, with Computer Associates offering a price of $30.30 per Share and the Company seeking a higher price, Computer Associates delivered a letter to Mr. Huai and the Company s Board proposing that Computer Associates would acquire the Company in a transaction in which the Company s shareholders would receive $28.50 per share in cash. In the late afternoon of October 6, the Company s legal counsel advised Computer Associates that the Company s Board had considered the proposal and rejected it. Later in the evening, Mr. Kumar held discussions with representatives of Lazard and with Mr. Huai on the outstanding issues in the merger agreement, including valuation. Following those discussions, Mr. Kumar sent a second letter to Mr. Huai offering to enter into a merger transaction with the Company in which its shareholders would receive $30.30 per share in cash. In that letter, Mr. Kumar stated: This letter will confirm Computer Associates International, Inc. s offer to enter into a transaction in which Cheyenne s stockholders would receive in cash $30.30 per share. We only want to pursue this offer with the full support of your Board of Directors as well as your management. As we have discussed in detail during the past week,a merger of our companies would involve no fundamental changes in Cheyenne, its business relationships, its management or its employees. We respect what the management team and you have achieved. Together we can create a combined enterprise that will offer greater opportunities for your employees and a broader range of products for your customers. Importantly, our plans are premised on all of Cheyenne s employees continuing with the combined company. Because of our close geographic location, we see a great opportunity for continuity. We also believe that CA s financial strength, industry leadership, strong customer base and technological expertise can add tremendous value for Cheyenne s growth and expansion. As you know, as of this morning we were in substantial agreement with respect to the terms and conditions of our proposed merger agreement. The transaction would be subject, among other things, to the receipt of regulatory approvals and third-party consents as well as the completion of all necessary actions to eliminate the applicability of, or to satisfy, any anti-takeover or other defensive provisions contained in the corporate statutes or your company s charter and by-laws. I have discussed our interest with members of our senior management team and our Board of Directors, all of whom share my enthusiasm for this transaction. We are willing to discuss any aspect of the merger with the Board and its advisors tonight. In the absence of your Board s approval tonight, we plan to announce prior to the open of the stock market tomorrow that we made the offer and it was not accepted. We would prefer to present our offer to your stockholders as the joint effort of Computer Associates and Cheyenne Software s Board of Directors and management. 19 Later that night, Mr. Kumar had discussions with Mr. Huai on the outstanding issues in the merger agreement and the strategic value of a business combination. Mr. Kumar also had discussions with representatives of Lazard about the terms of transaction, timing and valuation. Shortly after midnight on October 7, in a meeting with Mr. Huai and Mr. Levine, Computer Associates increased its offer to $30.50 per share and came to agreement over the other remaining issues in the merger agreement. Computer Associates was later advised that the Company s Board had unanimously approved the offer. Representatives of the Company and Computer Associates, their legal counsel and representatives of Lazard then met to complete the merger agreement, which was signed shortly before the opening of the New York and American Stock Exchanges on October 7. 11. Purpose of the Offer; Merger Agreement; Appraisal Rights. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. Following the Offer, Computer Associates and Merger Subsidiary intend to acquire any remaining equity interest in the Company not acquired in the Offer by consummating the Merger. The Merger Agreement. The following description of the Merger Agreement is qualified in its entirety by reference to the text of such agreement, a copy of which is attached as an exhibit to the Schedule 14D-1 of Merger Subsidiary and Computer Associates filed with the Commission in connection with the Offer (the "Schedule 14D-1") and is incorporated in this Offer to Purchase by reference and may be inspected in the same manner as set forth with respect to the Company in Section 7. The Offer. The Merger Agreement provides for the making of the Offer. The obligation of Merger Subsidiary to accept for payment or pay for Shares is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 15 hereof. Pursuant to the Merger Agreement, Computer Associates and Merger Subsidiary expressly reserve the right to waive the conditions to the Offer and to make any change in the terms or conditions of the Offer; provided that, without the written consent of the Company, no change may be made which changes the form of consideration to be paid, decreases the price per Share or the number of Shares being sought in the Offer, imposes conditions to the Offer in addition to those set forth in the Merger Agreement, changes or waives the Minimum Condition, extends the Offer (except as set forth in the Merger Agreement), or makes any other change to any condition to the Offer set forth in the Merger Agreement which is adverse to the holders of Shares. In addition, subject to Computer Associates' or the Company's ability to terminate the Merger Agreement under certain circumstances, if the applicable waiting period under the HSR Act shall not have expired or been terminated as of the date the Offer would otherwise have expired, Merger Subsidiary has agreed, pursuant to the Merger Agreement, to extend the Offer from time to time until the earlier of (x) the date that is 30 days after the first scheduled Expiration Date and (y) the date that such waiting period has expired or been terminated. Consideration to be Paid in the Merger. The Merger Agreement provides that, following the purchase of Shares pursuant to the Offer and upon the terms (but subject to the conditions) set forth in the 20 Merger Agreement, Merger Subsidiary will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation (the "Surviving Corporation"). In the Merger, each outstanding Share not held by Computer Associates, Merger Subsidiary or any subsidiary of either of them or by the Company as treasury stock (and other than Shares as to which appraisal rights have been exercised pursuant to Section 262 of the Delaware Law ("Dissenting Shares")) will be converted into the right to receive $30.50 in cash or any higher price paid for each Share in the Offer, without interest. Each share of common stock of Merger Subsidiary issued and outstanding immediately prior to the time of the Merger will be converted into and become one share of common stock of the Surviving Corporation, which will thereupon become a wholly owned subsidiary of Computer Associates. The Merger Agreement provides that (i) the closing of the Merger shall take place, after consummation of the Offer, on the later of (a) November 30, 1996, provided that as of such date the conditions to the Merger set forth in the Merger Agreement shall be fulfilled or waived and (b) the first business day on which all of the conditions to the Merger set forth in the Merger Agreement shall be fulfilled or waived and (ii) as soon as practicable following the closing of the Merger, the Company and Merger Subsidiary will file a certificate of merger with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware or, with the consent of the Independent Director referred to below, at such later time as is specified in the certificate of merger (the "Effective Time"). Board Representation. The Merger Agreement provides that, effective upon acceptance for payment by Merger Subsidiary of such number of Shares which satisfies the Minimum Condition, Computer Associates shall be entitled to designate the number of directors, rounded up to the nearest whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors and (ii) the percentage that the number of Shares owned by Computer Associates or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares outstanding. The Company has agreed that it will take all action necessary to cause Computer Associates' designees to be elected or appointed to the Company's Board of Directors, including increasing the number of directors or seeking and accepting resignations of incumbent directors or both; provided that, prior to the Effective Time, the Company's Board of Directors shall always have one member who is neither a designee nor an affiliate of Computer Associates or Merger Subsidiary nor an employee of the Company (an "Independent Director"). No action proposed to be taken by the Company to amend or terminate the Merger Agreement or waive any action by Computer Associates or Merger Subsidiary shall be effective without the approval of the Independent Director. The Merger Agreement provides that, from and after the Effective Time, the directors and officers of Merger Subsidiary at the Effective Time will be the initial directors and officers of the Surviving Corporation, each to hold office until his or her respective successors are duly elected and qualified. Pursuant to the Merger Agreement, the Certificate of Incorporation (except for a change in the name of the corporation) and the By-Laws of Merger Subsidiary, as in effect immediately prior to the Effective Time, will be the Certificate of Incorporation and By-Laws of the Surviving Corporation. 21 Stockholder Meeting. The Merger Agreement provides that, if required by applicable law, the Company will call a meeting of its Stockholders to be held as soon as reasonably practicable for the purpose of voting on the approval and adoption of the Merger Agreement and the Merger. Under the Merger Agreement, at any such meeting, Computer Associates has agreed to make a quorum and to vote all Shares acquired in the Offer or otherwise beneficially owned by it in favor of adoption of the Merger Agreement. If the Minimum Condition is satisfied pursuant to the Offer, Merger Subsidiary will hold at least a majority of the outstanding Shares on a Fully Diluted Basis and will be able to assure that the requisite number of affirmative votes in favor of approval and adoption of the Merger Agreement will be received, even if no other Stockholder votes in favor thereof. If Merger Subsidiary obtains at least 90% of the outstanding Shares, it may effect the Merger without any notice to and without the authorization of the Stockholders of the Company pursuant to the "short-form" merger provisions of Delaware Law. Representations and Warranties. The Merger Agreement contains various representations and warranties of the parties thereto. These include representations and warranties of the Company with respect to corporate existence and power, corporate authorization, governmental authorization, non-contravention, capitalization, subsidiaries, Commission filings, financial statements, absence of certain changes, undisclosed liabilities, litigation, taxes, employee benefits, brokers, compliance with laws, contracts and debt instruments, intellectual property and technology and other matters. Computer Associates and Merger Subsidiary have also made certain representations and warranties with respect to corporate existence and power, corporate authorization, governmental authorization, non- contravention, brokers, financing and other matters. Conduct of Business Pending the Merger. The Company has agreed that, during the period from the date of the Merger Agreement to the Effective Time, the Company will, and will cause its subsidiaries to, carry on their respective businesses in the ordinary course in substantially the same manner as theretofore conducted and, to the extent consistent therewith, use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them. The Company has further agreed that, during the period from the date of the Merger Agreement to the Effective Time, the Company will not, and will not permit any of its subsidiaries to, without the prior written approval of Computer Associates, (i)(a) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than dividends and distributions by any direct or indirect wholly owned subsidiary of the Company to its parent, (b) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (c) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (other than in connection with the exercise of outstanding company stock options); (ii) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of 22 Shares upon the exercise of company stock options outstanding on the date of the Merger Agreement in accordance with their terms on such date); (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents; (iv) (a) mortgage or otherwise encumber or subject to any lien any of the Company's intellectual property or any other material properties or assets, (b) except in the ordinary course of business consistent with past practice and pursuant to existing contracts or commitments, sell,lease, transfer or otherwise dispose of any of the Company's intellectual property or any other material properties or assets or (c) except in the ordinary course of business consistent with past practice or pursuant to existing contracts or commitments, license any of the Company's intellectual property; (v) make or agree to make any new capital expenditures individually in excess of $250,000; (vi) make any material tax election (unless required by law) or settle or compromise any material income tax liability; (vii) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice and in accordance with their terms, of (i) liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the documents filed with the Commission or (ii) liabilities incurred in the ordinary course of business consistent with past practice, or subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by counsel to the Company waive the benefits of, or agree to modify in any manner, any confidentiality, standstill or similar agreement to which the Company or any of its subsidiaries is a party; (viii) commence a lawsuit other than (a) for the routine collection of bills, (b) to enforce the Merger Agreement or (c) in such cases where the Company in good faith determines that the failure to commence suit would result in a material impairment of a valuable aspect of the Company's business, provided that the Company consults with Computer Associates prior to filing such suit; (ix) (a) enter into or amend any employment agreement, (b) enter into any customer sale or license agreement with non-standard terms or at discounts from list prices from that typically granted to similarly situated customers in accordance with past practice; provided that such action with respect to a customer sale or license agreement that is immaterial in amount and term will not be deemed to violate this provision if the Company has (1) used its best efforts to ensure compliance with this provision and (2) taken prompt corrective action in the event of a violation sufficient to ensure that no similar violation will occur in the future, (c) pay commissions to sales employees except pursuant to quarterly draws consistent with past practice or on the basis of executed customer contracts with respect to products actually delivered to customers, (d) without the consent of Computer Associates which shall not be unreasonably withheld or delayed, enter into any contracts or series of related contracts in excess of $500,000 for any contract or $1,000,000 for any series of related contracts, (e) enter into or amend any agreement or arrangement for professional services or advice except in the ordinary course of business consistent with past practice, (f) enter into or amend any customer agreements providing for product replacements except in the ordinary course of business consistent with past practice or (g) make any determination as to amounts payable under any plan, arrangement or agreement, providing for discretionary incentive compensation or bonus to any officer, director, employee or independent contractor of the Company or any of its subsidiaries, (x) hire additional employees except in accordance with existing budgets; provided that the aggregate number of employees of the Company and its subsidiaries shall not be increased by more than eight percent per quarter over the number of employees on the date of the Merger Agreement; (xi) authorize any of, or commit or agree to take any of, the foregoing actions; or (xii) (a) take or agree or commit to take any action that would make any representation or warranty of the Company under the Merger Agreement inaccurate in any respect at, or as of any time prior to, the Effective Time or (b) omit or agree or commit to omit 23 to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. The Company has agreed to give Computer Associates and its representatives access (during normal business hours and upon reasonable notice)to the offices,properties,books and records,of the Company and its subsidiaries, and to furnish Computer Associates and its representatives with such other information concerning its business, properties and personnel as such persons may reasonably request. Pursuant to the Merger Agreement, each of Computer Associates and the Company has agreed to (i) promptly make or cause to be made the filings required of such party or any of its subsidiaries under the HSR Act with respect to the transactions contemplated by the Merger Agreement, (ii) comply at the earliest practicable date with any request under the HSR Act for additional information, documents, or other material received by such party or any of its subsidiaries from any Governmental Entity (defined below in this Section) in respect of such filings or such transactions, and (iii) cooperate with the other party in connection with any such filing and in connection with resolving any investigation or other inquiry of any such agency or other Governmental Entity under any Antitrust Laws (defined below in this Section) with respect to any such filing or any such transaction. Each of Computer Associates and the Company has agreed, pursuant to the Merger Agreement, to promptly inform the other of any communication with, and any proposed understanding, undertaking, or agreement with, any Governmental Entity regarding any such filings or any such transaction. The Merger Agreement prohibits both Computer Associates and the Company from participating in any meeting with any Governmental Entity in respect of any such filings, investigation, or other inquiry without giving the other notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend and participate. Each of Computer Associates and the Company has agreed, pursuant to the Merger Agreement, to use all reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental Entity with respect to the transactions contemplated by the Merger Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other Federal, state or foreign statutes, rules, regulations, orders or decrees that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, "Antitrust Laws"). In connection therewith, if any administrative or judicial action or proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by the Merger Agreement as violative of any Antitrust Law, and, if by mutual agreement, Computer Associates and the Company decide that litigation is in their best interests, each of Computer Associates and the Company have agreed, pursuant to the Merger Agreement, to cooperate and use all reasonable efforts vigorously to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent (each an "Order"), that is in effect and that prohibits, prevents, or restricts consummation of the Merger or any such other transactions. Pursuant to the Merger Agreement, each of Computer Associates and the Company have agreed to use all reasonable efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of the Merger Agreement. 24 Subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by counsel to the Company, each of Computer Associates and the Company has agreed, pursuant to the Merger Agreement, to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Offer, the Merger, and the other transactions contemplated by the Merger Agreement. Notwithstanding the foregoing, the Merger Agreement provides that (i) neither Computer Associates nor any of its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, (ii) neither Computer Associates nor any of its subsidiaries shall be required to take or agree to take any other action or agree to any limitation that could reasonably be expected to have a material adverse effect on the business, assets, financial condition, results of operations or prospects of Computer Associates and its subsidiaries taken as a whole or of Computer Associates combined with the Surviving Corporation after the Effective Time, (iii) neither the Company nor its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, or to take or agree to take any other action or agree to any limitation that could reasonably be expected to have a Material Adverse Effect (defined below in Section 15), (iv) no party shall be required to agree to the imposition of, or to comply with, any condition, obligation or restriction on Computer Associates or any of its subsidiaries or on the Surviving Corporation or any of its subsidiaries of the type described in clause (a) or (b) of Section 15 and (v) neither Computer Associates nor Merger Subsidiary shall be required to waive any of the conditions to the Offer described in Section 15 or any of the conditions to the Merger described in this Section 11. Agreements with respect to Employee Matters. Computer Associates has agreed in the Merger Agreement to honor in accordance with their terms all of the Company's employee benefit plans (including employment agreements) previously delivered to Computer Associates and all accrued benefits vested thereunder; provided that nothing in the Merger Agreement shall prevent Computer Associates from terminating any such benefit plan in accordance with its terms. Computer Associates has also agreed to provide employees of the Company and its subsidiaries retained by Computer Associates with employee benefits in the aggregate no less favorable than those benefits provided to Computer Associates' similarly situated employees; provided that Computer Associates shall be under no obligation to retain any employee or group of employees of the Company or its subsidiaries. Pursuant to the Merger Agreement, at the Effective Time, each of the then outstanding Company Options (defined below) shall by virtue of the Merger, and without any further action on the part of any holder thereof, become fully exercisable and vested and be assumed by Computer Associates and converted into an option to purchase that number of shares of common stock, par value $.10 per share ("Computer Associates Common Stock"), of Computer Associates determined by multiplying the number of Shares subject to such Company Option at the Effective Time by the quotient obtained by dividing (x) $30.50 by (y) the average closing price of Computer Associates Common Stock on the New York Stock Exchange Composite Tape for the 20 consecutive trading days immediately prior to the Effective Time (such quotient, the "Conversion Number"), at an exercise price per share of Computer Associates Common Stock equal to the quotient obtained by dividing (x) the exercise price per Share of 25 such Company Option immediately prior to the Effective Time by (y) the Conversion Number. If the foregoing calculation results in an assumed Company Option being exercisable for a fraction of a share of Computer Associates Common Stock, then the number of shares of Computer Associates Common Stock subject to such option shall be rounded down to the nearest whole number of shares. Except as otherwise set forth in the Merger Agreement, the term, status as an "incentive stock option" under Section 422 of the Code, if applicable, and all other terms and conditions of Company Options will, to the extent permitted by law and otherwise reasonably practicable, be unchanged. Pursuant to the Merger Agreement, the Company agreed to take, or cause to be taken, all actions which are necessary, proper or advisable under the Stock Plans (defined below) to make effective the transactions described in this paragraph. "Company Options" means any option granted, and not exercised or expired, to a current or former employee, director or independent contractor of the Company or any of its subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock option, stock bonus, stock award, or stock purchase plan, program, or arrangement of the Company or any of its subsidiaries or any predecessor thereof (collectively, the "Stock Plans") or any other contract or agreement entered into by the Company or any of its subsidiaries. Pursuant to the Merger Agreement, Computer Associates agreed to take all corporate action necessary to reserve for issuance a sufficient number of shares of Computer Associates Common Stock for delivery pursuant to the terms described in the immediately preceding paragraph. Pursuant to the Merger Agreement, Computer Associates agreed to cause the shares of Computer Associates Common Stock issuable upon exercise of the assumed Company Options to be registered, or to be issued pursuant to a then effective registration statement, no later than 90 days after the Effective Time on Form S-8 promulgated by the Commission, and to use its best efforts to maintain the effectiveness of such registration statement or registration statements for so long as such assumed Company Options remain outstanding. The Merger Agreement provides that, with respect to those individuals who subsequent to the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act, Computer Associates shall administer the Company Options assumed pursuant to the Merger Agreement in a manner that complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but shall have no responsibility for such compliance by the Company or its predecessors. Other Offers. Pursuant to the Merger Agreement, the Company has agreed that the Company and its subsidiaries will not, and will not authorize or permit the officers, directors, employees or other agents of the Company and its subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal (defined below) or (ii) subject to the fiduciary duties of the Board of Directors under applicable law, as advised in writing by counsel to the Company, engage in negotiations with, or disclose any nonpublic information relating to the Company or any of its subsidiaries or afford access to the properties, books or records of the Company or any of its subsidiaries to, any person that has advised the Company or otherwise publicized the fact that it may be considering making, or that has made, an Acquisition Proposal; provided, nothing herein shall prohibit the Company's Board of Directors from taking and disclosing to the Company's stockholders a position with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. The Company has agreed to promptly notify Computer Associates after receipt of any Acquisition Proposal or any notice that any person is considering making an Acquisition Proposal or any request for nonpublic information relating to the Company or any of its subsidiaries or for access to the properties, books or records of the Company or any of its 26 subsidiaries by any person that has advised the Company or otherwise publicized the fact that it may be considering making, or that has made, an Acquisition Proposal and will keep Computer Associates informed of the status and details of any such Acquisition Proposal, indication or request. "Acquisition Proposal" means any offer or proposal for, or any written indication of interest in, a merger or other business combination involving the Company or any of its subsidiaries or the acquisition of any significant equity interest in, or a significant portion of the assets of, the Company or any of its subsidiaries, other than the transactions contemplated by the Merger Agreement. Rights Agreement. In connection with the execution of the Merger Agreement, the Company amended the Rights Agreement to make it and the Rights inapplicable to the Offer and the Merger. The Merger Agreement provides that, except with respect to amending the Rights Agreement to make it and the Rights inapplicable to the Offer and the Merger, the Company shall not redeem the Rights or amend or terminate the Rights Agreement prior to the Effective Time unless required to do so by a court of competent jurisdiction. Agreement with respect to Director and Officer Indemnification and Insurance. Pursuant to the Merger Agreement, Computer Associates has agreed, subject to any limitation imposed from time to time under applicable law, that, for a period of six years after the Effective Time, it will indemnify and hold harmless the present and former officers, directors, employees and agents of the Company in respect of acts or omissions occurring on or prior to the Effective Time to the extent provided under the Company's certificate of incorporation and bylaws in effect on the date of the Merger Agreement. Computer Associates has further agreed that, for four years after the Effective Time, it will cause the Surviving Corporation to provide officers' and directors' liability insurance in respect of acts or omissions occurring on or prior to the Effective Time covering each such person currently covered by the Company's officers' and directors' liability insurance policy on terms substantially similar to those of such policy in effect on the date of the Merger Agreement, provided that in satisfying such obligation, Computer Associates is not obligated to cause the Surviving Corporation to pay premiums in excess of 105% of the amount per annum the Company paid in its last full fiscal year, and if the Surviving Corporation is unable to obtain such insurance, it shall obtain as much comparable insurance as possible for an annual premium equal to such maximum amount. Computer Associates has also agreed that, in the event any such indemnified person is or becomes involved in any capacity in any action, proceeding or investigation in connection with any matter relating to the Merger, the Offer or the Merger Agreement occurring on or prior to the Effective Time, it will pay as incurred such indemnified person's reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. Other Agreements. Computer Associates has agreed that it will take all action necessary to cause Merger Subsidiary to perform its obligations under the Merger Agreement and to consummate the Offer and the Merger on the terms and conditions set forth in the Merger Agreement. Computer Associates also agreed, pursuant to the Merger Agreement, to hold in confidence all confidential information concerning the Company and its subsidiaries in accordance with the terms of the Confidentiality Agreement, dated October 1, 1996, between Computer Associates and the Company, a copy of which is filed as an exhibit to the Schedule 14D-1 and is incorporated in this Offer to Purchase by reference. 27 Conditions to the Merger. Pursuant to the Merger Agreement, the respective obligations of each party to consummate the Merger are subject to the satisfaction or waiver, where permissible, at or before the Effective Time of the following conditions: (i) Computer Associates or Merger Subsidiary shall have purchased Shares in an amount equal to at least the Minimum Condition pursuant to the Offer, (ii) the adoption and approval of the Merger Agreement by the affirmative vote of the Stockholders by requisite vote in accordance with Delaware Law, if such vote is required by Delaware Law, (iii) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger, (iv) any applicable waiting period under the HSR Act relating to the Merger shall have expired, and (v) other than filing the certificate of merger in accordance with Delaware Law, all consents, approvals, orders or authorizations of, or registrations, declarations or filings with or exemptions by (collectively, "Consents") any Federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign (a "Governmental Entity") required to consummate the Merger shall have been filed, occurred or been obtained (other than any such Consents the failure to occur, obtain or file, in the aggregate, could not reasonably be expected to (a) have a Material Adverse Effect (defined below in Section 15) or (b) prevent or materially delay the consummation of the Merger). Termination. The Merger Agreement may be terminated at any time prior to the Effective Time (notwithstanding any approval of the Merger Agreement by the Stockholders) (i) by mutual written consent of the Company and Computer Associates, (ii) by either the Company or Computer Associates, if the Merger has not been consummated by April 7, 1997 (provided that the party seeking to terminate the Merger Agreement shall not have breached its obligations under the Merger Agreement in any material respect),(iii)by either the Company or Computer Associates, if there shall be any law or regulation that makes consummation of the Merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Computer Associates or the Company from consummating the Merger is entered and such judgment, injunction, order or decree shall become final and nonappealable, (iv) by either the Company or Computer Associates, (a) if Computer Associates shall have failed to commence the Offer within five business days following the date of the Merger Agreement (provided that Computer Associates shall not be entitled to terminate the Merger Agreement in the circumstance described in this sub-clause (a) as a result of its breach of the Merger Agreement), (b) if Computer Associates or Merger Subsidiary shall not have purchased any Shares pursuant to the Offer prior to February 21, 1997 or (c) if the Offer shall have been terminated without Computer Associates or Merger Subsidiary having purchased any Shares pursuant to the Offer, (v) by Computer Associates, upon the occurrence of any Trigger Event (defined below), or (vi) by the Company, if the Company shall have entered into, or shall have publicly announced its intention to enter into, an agreement or an agreement in principle with respect to any Acquisition Proposal. Fees and Expenses. Each party to the Merger Agreement has agreed to pay its own fees and expenses and there are no provisions for payment by the Company of the fees and expenses of Computer Associates or Merger Subsidiary or vice versa, if the Merger Agreement is terminated, except as stated below. The Company has agreed to pay Computer Associates a fee in immediately available funds, promptly, but in no event later than two business days, after the termination of the Merger Agreement as a result of the occurrence of any of the events set forth below (a "Trigger Event") in an amount equal to (a) $37,500,000, in the case of 28 the occurrence of a Trigger Event described in clause (i) or (iii) below and (b) $20,000,000, in the case of the occurrence of a Trigger Event described in clause (ii) below: (i) the Company shall have entered into, or shall have publicly announced its intention to enter into, an agreement or an agreement in principle with respect to any Acquisition Proposal, (ii) the Company shall have breached or failed to perform in any respect any of its obligations, covenants or agreements under the Merger Agreement or any representation or warranty of the Company set forth in the Merger Agreement (other than breaches or failures to perform or comply that, in the aggregate, do not have a Material Adverse Effect), or (iii) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified its approval or recommendation of the Offer, the Merger or the Merger Agreement. The Company has also agreed that, if the Merger Agreement is terminated as a result of the occurrence of a Trigger Event, it shall assume and pay, or reimburse Computer Associates for, all fees payable and expenses incurred by Computer Associates (including the fees and expenses of its counsel) in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement, up to a maximum of $5,000,000. Timing. The exact timing and details of the Merger will depend upon legal requirements and a variety of other factors, including the number of Shares acquired by Merger Subsidiary pursuant to the Offer. Although Computer Associates has agreed to cause the Merger to be consummated on the terms set forth above, there can be no assurance as to the timing of the Merger. Computer Associates and Merger Subsidiary reserve the right to acquire additional Shares following the expiration or termination of the Offer through open market transactions, private purchases, other tender offers or otherwise, on terms and at prices that may be the same as, or more or less favorable than, those of the Offer. Appraisal Rights. Stockholders do not have dissenters' rights as a result of the Offer. However,if the Merger is consummated, Stockholders of the Company at the time of the Merger who do not vote in favor of or consent in writing to the Merger will have the right under Delaware Law to dissent and demand appraisal of their Shares in accordance with Section 262 of the Delaware Law. Under Delaware Law, dissenting stockholders who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any. Any such judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the price paid in the Offer (or the Merger) and the market value of the Shares. Stockholders should recognize that the value so determined could be higher or lower than the price per Share paid pursuant to the Offer or the Merger. Moreover, Computer Associates or Merger Subsidiary may argue in an appraisal proceeding that, for purposes of such a proceeding, the fair value of the Shares is less than the price paid in the Offer (or the Merger). The foregoing summary of the rights of dissenting Stockholders does not purport to be a complete statement of procedures to be followed by Stockholders desiring to exercise their dissenters' rights. 29 Delaware Law. In addition, the Merger would have to comply with other applicable procedural and substantive requirements of Delaware Law, including any duties to other stockholders imposed upon a controlling or, if applicable, majority stockholder. Several recent decisions by the Delaware courts, which may or may not apply to the Merger, have held that a controlling stockholder of a company involved in a merger has a fiduciary duty to other stockholders which requires that the merger be "entirely fair" to such other stockholders. In determining whether a merger is fair to minority stockholders, Delaware courts have considered, among other things, the type and amount of the consideration to be received by the stockholders and whether there was fair dealing among the parties. The Company is incorporated under the laws of the State of Delaware, which has adopted certain laws regarding business combinations. In general, Section 203 of Delaware Law prevents an "interested stockholder" (generally, a stockholder owning 15% or more of a corporation's outstanding voting stock or an affiliate or associate thereof) from engaging in a "business combination" (defined to include a merger and certain other transactions) with a Delaware corporation for a period of three years following the time that such stockholder became an interested stockholder unless (i) prior to such time the corporation's board of directors approved either the business combination or the transaction which resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the corporation's voting stock outstanding at the time the transaction commenced (excluding shares owned by certain employee stock plans and persons who are directors and also officers of the corporation) or (iii) at or subsequent to such time the business combination is approved by the corporation's board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock not owned by the interested stockholder. The Board of Directors of the Company has approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, for purposes of Section 203. Accordingly, the restrictions of Section 203 do not apply to the transactions contemplated by this Offer to Purchase. Other Matters. Any merger or other similar business combination proposed by Computer Associates would also have to comply with any applicable Federal law. In particular, the Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions. Computer Associates believes that Rule 13e-3 will not be applicable to the Merger unless the Merger is consummated more than one year after termination of the Offer or if an alternative merger transaction were to provide for stockholders to receive consideration for their Shares in an amount less than the price per Share paid pursuant to the Offer. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the proposed transaction and the consideration offered to minority stockholders in such a transaction be filed with the Commission and distributed to such stockholders prior to consummation of the transaction. 30 If for any reason the Merger is not consummated, Computer Associates and Merger Subsidiary will evaluate their alternatives. Such alternatives could include purchasing additional Shares in the open market, in privately negotiated transactions, in another tender or exchange offer or otherwise, or taking no further action to acquire additional Shares. Any additional purchases of Shares could be at a price greater or less than the price to be paid for Shares in the Offer and could be for cash or other consideration. Alternatively, Merger Subsidiary may sell or otherwise dispose of any or all Shares acquired pursuant to the Offer or otherwise. Such transactions may be effected on terms and at prices then determined by Computer Associates or Merger Subsidiary, which may vary from the price to be paid for Shares in the Offer. In the joint press release issued by Computer Associates and the Company in connection with the execution of the Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and is incorporated herein by reference, Computer Associates stated, among other things, that it intended to retain all of the Company's employees, and that the Company would operate as a division of Computer Associates. Computer Associates intends to conduct a review of the Company and its assets, corporate structure, dividend policy, capitalization, operations, properties and policies and to consider, subject to the terms of the Merger Agreement, what, if any, changes would be desirable in light of the circumstances then existing, and reserves the right to take such actions or effect such changes as it deems desirable. Such changes could include changes in the Company's business, operations, corporate structure, capitalization, Board of Directors, policies or dividend policy. Except as otherwise described in this Offer to Purchase, Computer Associates and Merger Subsidiary have no current plans or proposals that would relate to, or result in, any extraordinary corporate transaction involving the Company, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries, a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, any material change in the Company's capitalization or dividend policy or any other material change in the Company's business, corporate structure, Board of Directors or management. 12. Effect of the Offer on the Market for the Shares; Stock Quotations; Registration under the Exchange Act. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by Stockholders other than Computer Associates or Merger Subsidiary. Computer Associates cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future market prices to be greater or less than the Offer price. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the standards for continued inclusion on the AMEX. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the standards for continued inclusion on the AMEX, the market for the Shares could be adversely affected. 31 The extent of the public market for the Shares and availability of quotations therefor would, however, depend upon such factors as the number of holders and/or the aggregate market value of the publicly- held Shares at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act and other factors. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares. Depending upon factors similar to those described above regarding listing and market quotations, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and, therefore, could no longer be used as collateral for loans made by brokers. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are less than 300 holders of record. Termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of Shares and to the Commission and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy or information statement in connection with stockholder action and the related requirement of an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 or 144A promulgated under the Securities Act of 1933, as amended. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for trading on the AMEX. Merger Subsidiary intends to seek to cause the Company to terminate registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration of the Shares are met. 13. Dividends and Distributions. If on or after October 7, 1996, the Company should (notwithstanding the fact that the following actions may be prohibited under the Merger Agreement) (i) split, combine or otherwise change the Shares or its capitalization, (ii) acquire or otherwise cause a reduction in the number of outstanding Shares or (iii) issue or sell any additional Shares (other than Shares issued pursuant to and in accordance with the terms in effect on October 7, 1996 of employee stock options outstanding prior to such date), shares of any other class or series of capital stock, other voting securities or any securities convertible into, or options, rights, or warrants, conditional or otherwise, to acquire, any of the foregoing, then, without prejudice to Merger Subsidiary's rights under Section 15, Merger Subsidiary may, in its sole discretion, make such adjustments in the purchase price and other terms of the Offer as it deems appropriate including the number or type of securities to be purchased. If, on or after October 7, 1996, the Company should (notwithstanding the fact that the following actions are prohibited under the Merger Agreement) declare or pay any dividend on the Shares 32 or any distribution with respect to the Shares (including the issuance of additional Shares or other securities or rights to purchase of any securities) that is payable or distributable to Stockholders of record on a date prior to the transfer to the name of Merger Subsidiary or its nominee or transferee on the Company's stock transfer records of the Shares purchased pursuant to the Offer, then, without prejudice to Merger Subsidiary's rights under Section 15, (i) the purchase price per Share payable by Merger Subsidiary pursuant to the Offer may be reduced to the extent of any such cash dividend or distribution and (ii) the whole of any such non-cash dividend or distribution to be received by the tendering Stockholders will (a) be received and held by the tendering Stockholders for the account of Merger Subsidiary and will be required to be promptly remitted and transferred by each tendering Stockholder to the Depositary for the account of Merger Subsidiary, accompanied by appropriate documentation of transfer, or (b) at the direction of Merger Subsidiary, be exercised for the benefit of Merger Subsidiary, in which case the proceeds of such exercise will promptly be remitted to Merger Subsidiary. Pending such remittance and subject to applicable law, Merger Subsidiary will be entitled to all rights and privileges as owner of any such non-cash dividend or distribution or proceeds thereof and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Merger Subsidiary in its sole discretion. 14. Extension of Tender Period; Termination; Amendment. Merger Subsidiary reserves the right, at any time or from time to time, in its sole discretion, (i) to extend the period of time during which the Offer is open if, at the scheduled expiration date of the Offer or any extension thereof, any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and for a further period of time as described below in this paragraph, in any case by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension or (ii) except to the extent otherwise provided in the Merger Agreement, to amend the Offer in any respect by making a public announcement of such amendment. There can be no assurance that Merger Subsidiary will exercise its right to extend or amend the Offer. Notwithstanding the foregoing, but subject to Computer Associates' or the Company's ability to terminate the Merger Agreement under certain circumstances (described in Section 11), if the applicable waiting period under the HSR Act shall not have expired or been terminated as of the date the Offer would otherwise have expired, Merger Subsidiary has agreed, pursuant to the Merger Agreement, to extend the Offer from time to time until the earlier of (x) the date that is 30 days after the first scheduled Expiration Date and (y) the date that such waiting period has expired or been terminated. Subject to the terms of the Offer and the satisfaction (or waiver to the extent permitted by the Merger Agreement) of the conditions to the Offer, Merger Subsidiary shall accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration of the Offer and shall pay for all such Shares promptly after acceptance; provided, that Merger Subsidiary may extend the Offer for a period of time of not more than 20 business days to meet the objective (which is not a condition to the Offer) that there shall be validly tendered prior to the Expiration Date (as so extended) and not withdrawn a number of Shares, which, together with Shares then owned by Computer Associates and Merger Subsidiary, represents at least 90% of the Fully Diluted Shares. If Merger Subsidiary shall decide, in its sole discretion, subject to the terms of the Merger Agreement, to increase the consideration to 33 be paid for Shares pursuant to the Offer and the Offer is scheduled to expire at any time before the expiration of a period of 10 business days from, and including, the date that notice of such increase is first published, sent or given in the manner specified below, the Offer will be extended until the expiration of such period of 10 business days. If Merger Subsidiary makes a material change in the terms of the Offer (other than a change in price or percentage of securities sought) or in the information concerning the Offer, or waives a material condition of the Offer, Merger Subsidiary will extend the Offer, if required by applicable law, for a period sufficient to allow stockholders to consider the amended terms of the Offer. Merger Subsidiary also reserves the right, in its sole discretion, subject to the terms of the Merger Agreement, in the event any of the conditions specified in Section 15 shall not have been satisfied and so long as Shares have not theretofore been accepted for payment, to delay (except as otherwise required by applicable law and the rules of the Commission including Rule 14e-1) acceptance for payment of or payment for Shares or to terminate the Offer and not accept for payment or pay for Shares. If Merger Subsidiary extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Merger Subsidiary's rights under the Offer, the Depositary may, on behalf of Merger Subsidiary, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in Section 4. The reservation by Merger Subsidiary of the right to delay acceptance for payment of or payment for Shares is subject to applicable law, which requires that Merger Subsidiary pay the consideration offered or return the Shares deposited by or on behalf of Stockholders promptly after the termination or withdrawal of the Offer. Any extension, termination or amendment of the Offer will be followed as promptly as practicable by a public announcement thereof. In the case of an extension of the Offer, Merger Subsidiary will make a public announcement of such extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Merger Subsidiary may choose to make any public announcement, Merger Subsidiary will have no obligation (except as otherwise required by applicable law) to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. 15. Certain Conditions of the Offer. Notwithstanding any other provision of the Offer, Computer Associates and Merger Subsidiary shall not be required to accept for payment or pay for any Shares, and may terminate the Offer, if (i) by the expiration of the Offer, the Minimum Condition shall not have been satisfied, (ii) by the expiration of the Offer, the applicable waiting period under the HSR Act shall not have expired or been terminated, or (iii) at any time on or after October 7, 1996 and prior to the acceptance for payment of Shares, any of the following conditions exist: (a) there shall be instituted or pending any action or proceeding by any Governmental Entity or by any other person, domestic or foreign, before any Governmental Entity or arbitrator, (i) challenging or seeking to make illegal, to delay materially or 34 otherwise directly or indirectly to restrain or prohibit the making of the Offer, the acceptance for payment of or payment for some of or all the Shares by Computer Associates or Merger Subsidiary or the consummation by Computer Associates or Merger Subsidiary of the Merger, seeking to obtain material damages or otherwise directly or indirectly relating to the transactions contemplated by the Merger Agreement, the Offer or the Merger, (ii) seeking to restrain or prohibit Computer Associates' or Merger Subsidiary's ownership or operation (or that of their respective subsidiaries or affiliates) of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Computer Associates and its subsidiaries, taken as a whole, or to compel Computer Associates or any of its subsidiaries or affiliates to dispose of or hold separate all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Computer Associates and its subsidiaries, taken as a whole, (iii) seeking to impose material limitations on the ability of Computer Associates or any of its subsidiaries or affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Shares acquired or owned by Computer Associates or any of its subsidiaries or affiliates on all matters properly presented to the Company's stockholders, (iv) seeking to require divestiture by Computer Associates or any of its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the judgment of Computer Associates, is likely to materially adversely affect the business, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, or Computer Associates and its subsidiaries, taken as a whole; provided that, in the case of any instituted or pending action or proceeding described in this subsection (a) above by a person other than a Governmental Entity, there is a substantial probability of a determination material and adverse to Computer Associates or any of its subsidiaries or the Company or any of its subsidiaries in such action or proceeding; or (b) there shall be any action taken, or any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to the Merger Agreement, the Offer or the Merger, by any Governmental Entity or arbitrator other than the application of the waiting period provisions of the HSR Act to the Merger Agreement, the Offer or the Merger, that, in the judgment of Computer Associates, is likely, directly or indirectly, to result in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; or (c) any change shall have occurred or been threatened (or any development shall have occurred or been threatened involving a prospective change) in the business, financial condition or results of operations of the Company or any of its subsidiaries that, in the reasonable judgment of Computer Associates, is or is likely to have a Material Adverse Effect (defined below); or (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. or on the AMEX, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any Governmental Entity on the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which would 35 reasonably be expected to have a Material Adverse Effect or prevent (or materially delay) the consummation of the Offer or (v) in the case of any of the foregoing existing at the time of commencement of the Offer, a material acceleration or worsening thereof; or (e) any Consent (other than the filing of a certificate of merger or approval by the stockholders of the Company of the Merger (if required by Delaware Law)) required to be filed, occurred or been obtained by the Company or any of its subsidiaries or Computer Associates or any of its subsidiaries (including Merger Subsidiary) in connection with the execution and delivery of the Merger Agreement, the Offer and the consummation of the transactions contemplated by the Merger Agreement shall not have been filed, occurred or been obtained (other than any such Consents the failure to file, occur or obtain in the aggregate, could not reasonably be expected to (1) have a Material Adverse Effect or (2) prevent or materially delay the consummation of the Offer or the Merger); or (f) the Company shall have breached or failed to perform in any material respect any of its covenants or agreements under the Merger Agreement, or any of the representations and warranties of the Company set forth in the Merger Agreement that is qualified as to materiality shall not be true when made or at any time prior to consummation of the Offer as if made at and as of such time, or any of the representations and warranties set forth in the Merger Agreement that is not so qualified shall not be true in any material respect when made or at any time prior to the consummation of the Offer as if made at and as of such time; or (g) the Merger Agreement shall have been terminated in accordance with its terms; or (h) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified its approval or recommendation of the Offer, the Merger or the Merger Agreement; or (i) the Company shall have entered into, or shall have publicly announced its intention to enter into, an agreement or agreement in principle with respect to any Acquisition Proposal; which, in the sole judgment of Computer Associates in any such case, and regardless of the circumstances (including any action or omission by Computer Associates or Merger Subsidiary) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. The term "Material Adverse Effect" means a material adverse effect on the financial condition, business or results of operations of the Company and its subsidiaries taken as a whole, except that occurrences due solely to a disruption of the Company's or its subsidiary's businesses solely as a result of the announcement of the execution of the Merger Agreement and the transactions proposed to be consummated by the Merger Agreement shall be excluded from consideration for purposes of the effect of an action or inaction on the Company and its subsidiaries taken as a whole. The foregoing conditions are for the sole benefit of Computer Associates and Merger Subsidiary and may be asserted by Computer Associates in its sole discretion regardless of the circumstances 36 (including any action or omission by Computer Associates or Merger Subsidiary) giving rise to any such condition or (other than the Minimum Condition) may be waived by Computer Associates and Merger Subsidiary in their sole discretion in whole at any time or in part from time to time. The failure by Computer Associates or Merger Subsidiary at any time to exercise its rights under any of the foregoing conditions shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right which may be asserted at any time or from time to time. Any determination by Computer Associates concerning the events described in this Section 15 will be final and binding upon all parties to the Merger Agreement. 16. Certain Legal Matters; Regulatory Approvals. General. Except as set forth in this Section 16, based on its examination of publicly available information filed by the Company with the Commission and other publicly available information concerning the Company, Merger Subsidiary is not aware of any license or regulatory permit that appears to be material to the Company's business that might be adversely affected by Merger Subsidiary's acquisition of Shares as contemplated herein or of any approval or other action by any government or governmental authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by Merger Subsidiary or Computer Associates as contemplated herein. Should any such approval or other action be required, it is currently contemplated that, except as described below under "State Takeover Statutes", such approval or other action will be sought. Except as described under "Antitrust", however, there is no current intent to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to the Company's business or certain parts of the Company's business might not have to be disposed of, any of which could cause Merger Subsidiary to elect to terminate the Offer without the purchase of Shares thereunder. Merger Subsidiary's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 15. State Takeover Statutes. A number of states have adopted laws which, to varying degrees, seek to regulate attempts to acquire corporations that are incorporated in, or have substantial connections with, the state. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. Based on publicly available information concerning the Company, Computer Associates does not believe that any of these laws will, by their terms, apply to the Offer or the Merger. In addition, the constitutional validity of state statutes regulating acquisition attempts has been the subject of considerable litigation. In its 1982 decision in Edgar v. MITE Corp., the Supreme Court of the United States invalidated an Illinois law that, among other things, gave Illinois officials authority to block a tender offer for any corporation having certain defined connections with the state. In 1987, however, the Supreme Court upheld an Indiana law that prevented acquirors of a controlling stake in certain Indiana corporations from voting the acquired shares until the other shareholders had approved the acquisition. The Court distinguished between state statutes that affect 37 acquisitions of entities incorporated outside the state and those that address the internal governance, including the scope and exercise of shareholder voting rights, of in-state corporations. While the lower federal courts have relied on a similar distinction in subsequent cases, the precise extent to which an individual state may regulate acquisitions of out-of-state corporations remains unclear. If any government official or third party should seek to apply any state takeover law to the Offer or the Merger, Computer Associates will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, Computer Associates or Merger Subsidiary might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and Merger Subsidiary might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. In such case, Merger Subsidiary may not be obligated to accept for payment or pay for any tendered Shares. See Section 15. Antitrust. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The purchase of Shares pursuant to the Offer is subject to such requirements. Computer Associates filed a Notification and Report Form with respect to the Offer and the Merger with the Antitrust Division and the FTC on October 9, 1996, and expects the Company to have filed such form on or about October 10, 1996. Based upon a filing date of October 9, 1996 with respect to the Notification and Report Form filed by Computer Associates, the waiting period applicable to the purchase of Shares pursuant to the Offer would be scheduled to expire at 11:59 P.M., New York City time, on Thursday, October 24, 1996. However, prior to such time, the Antitrust Division or the FTC may extend the waiting period by requesting additional information or documentary material relevant to the Offer from Computer Associates. If such a request is made, the waiting period will be extended until 11:59 P.M., New York City time, on the tenth day after substantial compliance by Computer Associates with such request. Thereafter, such waiting period can be extended only by court order. A request will be made for early termination of the waiting period applicable to the Offer. There can be no assurance, however, that the 15-day HSR waiting period will be terminated early. Shares will not be accepted for payment or paid for pursuant to the Offer until the expiration or earlier termination of the applicable waiting period under the HSR Act. See Section 15. Any extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. The Merger Agreement provides that, if by the expiration of the Offer, the applicable waiting period under the HSR Act shall not have expired or been terminated, Merger Subsidiary shall extend the Offer from time to time until the earlier of (x) the date that is 30 days after the first scheduled Expiration Date and (y) the date that such waiting period has expired or been terminated. 38 The Merger would not require an additional filing under the HSR Act if Computer Associates owns 50% or more of the outstanding Shares at the time of the Merger or if the Merger occurs within one year after the HSR Act waiting period applicable to the Offer expires or is terminated. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the acquisition of Shares by Merger Subsidiary pursuant to the Offer. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of the Shares so acquired or divestiture of substantial assets of Computer Associates or the Company. Private parties (including individual States) may also bring legal actions under the antitrust laws. Computer Associates does not believe that the consummation of the Offer will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See Section 15 for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. Foreign Approvals. According to the Company 10-K, the Company also owns property and conducts business in a number of other foreign countries and jurisdictions including, without limitation, Canada, Germany, France, Brazil, Japan, Singapore, and the United Kingdom. In connection with the acquisition of the Shares pursuant to the Offer, the laws of certain of those foreign countries and jurisdictions may require the filing of information with, or the obtaining of the approval of, governmental authorities in such countries and jurisdictions. The governments in such countries and jurisdictions might also attempt to impose additional conditions on Computer Associates' or the Company's operations conducted in such countries and jurisdictions as a result of the acquisition of the Shares pursuant to the Offer. There can be no assurance that any such approval can be obtained, that Computer Associates will be able to cause the Company or its subsidiaries to satisfy or comply with such laws or that compliance or non-compliance will not have adverse consequences for Computer Associates or the Company or any subsidiary of either of them. The Offer is subject to certain conditions, including conditions relating to the legal matters referred to in this Section 16. See Section 15. Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X (the "Margin Credit Regulations") restrict the extension or maintenance of credit for the purpose of buying or maintaining margin stock, if the credit is secured directly or indirectly thereby. The borrowings under the Credit Agreements will not be directly secured by a pledge of the Shares. In addition, Computer Associates and Merger Subsidiary believe that such borrowings will not be "indirectly secured" within the meaning of the Margin Credit Regulations, as interpreted. Accordingly, Computer Associates and Merger Subsidiary believe that the Margin Credit Regulations are not applicable to the borrowings under the Credit Facility. 17. Fees and Expenses. Merger Subsidiary has retained D.F. King & Co., Inc. to act as the Information Agent and The Bank of New York to act as the Depositary in connection with the Offer. The Information Agent may contact holders of 39 Shares by mail, telephone, telex, telegraph and personal interviews and may request brokers, dealers and other nominee stockholders to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the federal securities laws. Merger Subsidiary will not pay any fees or commissions to any broker or dealer or any other person (other than the Information Agent and the Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by Merger Subsidiary for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. 18. Miscellaneous. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, Merger Subsidiary may, in its discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. No person has been authorized to give any information or make any representation on behalf of Merger Subsidiary not contained in this Offer to Purchase or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. Merger Subsidiary has filed with the Commission a Tender Offer Statement on Schedule 14D-l, together with exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer. The Schedule 14D-l and any amendments thereto, including exhibits, may be examined and copies may be obtained from the offices of the Commission in the manner set forth with respect to the Company in Section 7 of this Offer to Purchase (except that such information will not be available at the regional offices of the Commission). TSE-TSEHESE-STAESTSE,INC. SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF COMPUTER ASSOCIATES AND MERGER SUBSIDIARY 1. Directors and Executive Officers of Computer Associates. The following table sets forth the name, age, business address and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years of each director and executive officer of Computer Associates. Each such person is a citizen of the United States of America, except for Willem F.P. de Vogel who is a citizen of The Netherlands. Unless otherwise indicated below, the business address of each person is c/o Computer Associates International, Inc., One Computer Associates Plaza, Islandia, New York 11788. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Computer Associates.
DIRECTORS (INCLUDING EXECUTIVE OFFICERS WHO ARE DIRECTORS) Present Principal Occupation Name and or Employment; Material Positions Business Address Age Held During Past Five Years - ---------------- --- --------------------------------- Russell M. Artzt 49 Director of Computer Associates since 1980. Executive Vice President-Research and Development since April 1987 and the Senior Development Officer since 1976. Willem F.P. de Vogel 45 Director of Computer Associates since Three Cities 1991. President of Three Cities Research, Inc. Research, Inc., a private investment 135 East 57th management firm in New York City, since Street New York, 1981. From August 1981 to August 1990, New York 10022 Mr. de Vogel served as a director of Computer Associates. He is also a director of MLX Corp. Irving Goldstein 58 Director of Computer Associates since INTELSAT 1990. Director General and Chief 3400 International Executive Officer of INTELSAT, an Drive, N.W. international satellite Washington, D.C. telecommunications company, since 20008 February 1992. He was Chairman and Chief Executive Officer of Communications Satellite Corporation from October 1985 to February 1992 and President from May 1983 to October 1985, and was a director from May 1983 to February 1992.
Richard A. Grasso 49 Director of Computer Associates since New York Stock January 1994. Chairman and Chief Exchange Executive Officer of the New York Stock 11 Wall Street Exchange since June 1995. He was New York, New York Executive Vice Chairman of the New York 10005 Stock Exchange from 1991 to 1995 and President and Chief Operating Officer of the New York Stock Exchange from 1988 to 1995. Shirley Strum Kenny 61 Director of Computer Associates since President's Office July 1994. President of State State University of University of New York at Stony Brook New York at Stony since 1994. She was President of Brook Stony Brook, Queens College of the City University New York 11794 of New York from 1989 to 1994. She is also a director of Toys "R" Us, Inc. Sanjay Kumar 34 Director of Computer Associates since January 1994. President and Chief Operating Officer since January 1994. He was Senior Vice President--Planning from April 1989 to December 1992 and Executive Vice President--Operations from January 1993 to December 1993. Charles B. Wang 51 Director of Computer Associates since 1976. Chief Executive Officer since 1976 and Chairman of the Board since April 1980. He is also a director of Symbol Technologies, Inc.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS Present Principal Occupation Name and or Employment; Material Positions Business Address Age Held During Past Five Years - ---------------- --- -------------------------------------- Belden A. Frease 57 Senior Vice President since April 1985 and Secretary since May 1991. Charles P. McWade 51 Senior Vice President--Finance since April 1990. He was Senior Vice President and Treasurer from April 1988 to March 1994. Peter A. Schwartz 52 Senior Vice President--Finance and Chief Financial Officer since April 1987. Ira H. Zar 35 Senior Vice President and Treasurer since April 1994. He was Vice President--Finance from April 1990 to March 1994 and Assistant Vice President from April 1987 to March 1990. 2. Directors and Executive Officers of Merger Subsidiary. The following table sets forth the name and position with Merger Subsidiary of each director and executive officer of Merger Subsidiary and, with respect to Steven M. Woghin, his age, present principal occupation or employment, and material occupations, positions, offices or employments for the past five years. For further information regarding such persons (other than Steven M. Woghin), see paragraph 1 above.
Name Position with Merger Subsidiary - ---------- ------------------------------------ Sanjay Kumar Director and President of Merger Subsidiary since its incorporation on October 4, 1996. Peter A. Schwartz Director, Vice President and Treasurer of Merger Subsidiary since its incorporation on October 4, 1996. Steven M. Woghin 49 Director, Vice President and Secretary of Merger Subsidiary since its incorporation on October 4, 1996. Senior Vice President and General Counsel of Computer Associates since April 1995. He was Vice President--Legal of Computer Associates from April 1992 to March 1995. Prior to 1990 through April 1992, he was a partner in the law firm of Arter & Hadden.
None of the executive officers and directors of Computer Associates or Merger Subsidiary currently is a director of, or holds any position with, the Company. To the knowledge of Computer Associates and Merger Subsidiary, none of Computer Associates' or Merger Subsidiary's directors, executive officers, affiliates or associates beneficially owns any equity securities, or rights to acquire any equity securities, of the Company and none has been involved in any transactions with the Company or any of its directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission. Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: Facsimile Transmission (for By Hand or Overnight Tender and Exchange Eligible Institutions Only): Courier: Department (212) 815-6213 Tender and Exchange P.O. Box 11248 Department Church Street Station 101 Barclay Street New York, New York For Information Telephone: Receive & Deliver 10286-1248 (800) 507-9357 Window New York, New York 10286 Questions or requests for assistance or additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent at the address and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 (212) 269-5550 (Collect) (800) 697-6974 (Toll Free) EX-99.A2 3 LETTER OF TRANSMITTAL EXHIBIT 99(a)(2) LETTER OF TRANSMITTAL To Tender Shares of Common Stock (including the associated Rights) of CHEYENNE SOFTWARE, INC. Pursuant to the Offer to Purchase dated October 11, 1996 by TSE-TSEHESE-STAESTSE, INC. a wholly-owned subsidiary of COMPUTER ASSOCIATES INTERNATIONAL, INC. - ------------------------------------------------------------------------ | THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK | | CITY TIME, ON FRIDAY, NOVEMBER 8, 1996, UNLESS THE OFFER IS EXTENDED.| - ------------------------------------------------------------------------ The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: Facsimile Transmission By Hand or Overnight Tender and Exchange (for Eligible Courier: Department Institutions Only): Tender and Exchange P.O. Box 11248 (212) 815-6213 Department Church Street Station 101 Barclay Street New York, New York Receive & Deliver 10286-1248 For Information Window Telephone: New York, New York (800) 507-9357 10286 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used either if certificates representing Shares (defined below) are to be forwarded with this Letter of Transmittal or, unless an Agent's Message (defined in Section 2 of the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company or Philadelphia Depository Trust Company (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Stockholders who cannot deliver certificates for their Shares or who cannot deliver confirmation of the book-entry transfer of their Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (a "Book-Entry Confirmation") and all other documents required by this Letter of Transmittal to the Depositary by the Expiration Date (defined in Section 1 of the Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. 2 DESCRIPTION OF SHARES TENDERED - ---------------------------------------------------------------------- Name(s) and Address(es) of | Registered Holder(s) | (Please fill in, if | Shares Tendered blank, exactly as name(s) | (Attach additional signed appear(s)on certificate(s)) | list if necessary) - ----------------------------|----------------------------------------- |Certificate | Total Number | Total |Number(s)(1)| of Shares | Number | | Represented by | of Shares | | Certificate(s)(1)|Tendered(2) - ----------------------------|------------|------------------|----------- | | | - ----------------------------|------------|------------------|----------- | | | - ----------------------------|------------|------------------|----------- | | | - ----------------------------|------------|------------------|----------- |Total Shares| | - ------------------------------------------------------------------------ (1) Need not be completed by stockholders tendering by book-entry transfer. (2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4. ----------------------------------------------------------------------- NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution ------------------------------------ The Depository Trust Company Philadelphia Depository Trust Company Account Number ---------------------------------------------------- Transaction Code Number ------------------------------------------- CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): ----------------------------------- Date of Execution of Notice of Guaranteed Delivery: --------------- Name of Institution that Guaranteed Delivery: --------------------- 3 If delivery is by book-entry transfer, Check box of Book-Entry Transfer Facility: The Depository Trust Company Philadelphia Depository Trust Company Account Number ------------------------------------------------- Transaction Code Number ---------------------------------------- Ladies and Gentlemen: The undersigned hereby tenders to Tse-tsehese-staestse, Inc., a Delaware corporation ("Merger Subsidiary") and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), the above described shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares") pursuant to Merger Subsidiary's offer to purchase all outstanding Shares at a price of $30.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 11, 1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with any amendments or supplements thereto or hereto, collectively constitute the "Offer"). Merger Subsidiary reserves the right to transfer or assign, in whole or from time to time in part, to one or more of Computer Associates or any of its wholly-owned subsidiaries the right to purchase Shares tendered pursuant to the Offer. Subject to and effective upon acceptance for payment of the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, Merger Subsidiary all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after October 7, 1996) and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in- fact of the undersigned with respect to such Shares (and all such other Shares or securities), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares (and all such other Shares or securities), or transfer ownership of such Shares (and all such other Shares or securities) on the account books maintained by any of the Book-Entry Transfer Facilities, together, in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of Merger Subsidiary, (b) present such Shares (and all such other Shares or securities) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and all such other Shares or securities), all in accordance with the terms of the Offer. If, on or after October 7, 1996, the Company should declare or pay any cash or stock dividend or other distribution on or issue any rights with respect to the Shares, payable or distributable to stockholders of record on a date before the transfer to the name of Merger Subsidiary or its nominee or transferee on the Company's stock transfer records of the Shares accepted for payment pursuant to the Offer, then, subject to the provisions of the Offer to Purchase, (i) the purchase price per Share payable by Merger Subsidiary pursuant to the Offer will be reduced by the amount of any such cash dividend or cash distribution and (ii) the whole of any such non-cash dividend, distribution or right will be received and held by the tendering stockholder for the account of Merger Subsidiary and shall be required to be promptly remitted and transferred by each tendering stockholder to 4 the Depositary for the account of Merger Subsidiary, accompanied by appropriate documentation of transfer. Pending such remittance, Merger Subsidiary will be entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount of value thereof, as determined by Merger Subsidiary in its sole discretion. The undersigned hereby irrevocably appoints Mr. Sanjay Kumar, Mr. Peter A. Schwartz and Mr. Steven M. Woghin, and each of them, and any other designees of Merger Subsidiary as the attorneys and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or its substitute shall in its sole discretion deem proper with respect to, to execute any written consent concerning any matter as each such attorney and proxy or its substitute shall in its sole discretion deem proper with respect to, and to otherwise act as such attorney and proxy or its substitute shall in its sole discretion deem proper with respect to, all of the Shares tendered hereby which have been accepted for payment by Merger Subsidiary prior to the time of any vote or other action (and any and all other Shares or other securities issued or issuable in respect thereof on or after October 7, 1996), at any meeting of stockholders of the Company (whether annual or special and whether or not an adjourned meeting), by written consent or otherwise. This proxy is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by Merger Subsidiary in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy or written consent granted by the undersigned at any time with respect to such Shares (and all such other Shares or securities), and no subsequent proxies will be given or written consents will be executed by the undersigned (and if given or executed, will not be deemed to be effective). The undersigned acknowledges that in order for Shares to be deemed validly tendered, immediately upon the acceptance for payment of such Shares, Merger Subsidiary or Merger Subsidiary's designee must be able to exercise full voting and other rights of a record and beneficial holder with respect to such Shares. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after October 7, 1996), that the undersigned own(s) the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that such tender of Shares complies with Rule 14e-4 under the Exchange Act, and that when the same are accepted for payment by Merger Subsidiary, Merger Subsidiary will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Merger Subsidiary to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other Shares or securities). All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall not be affected by, and shall survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors, assigns, administrators, trustees in bankruptcy, personal and legal representatives of the undersigned. Except as stated in the Offer, this tender is irrevocable, provided that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date or at any time on or after December 9, 1996, unless theretofore accepted for payment. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Merger Subsidiary upon the terms and subject to the conditions of the Offer. The undersigned recognizes 5 that under certain circumstances set forth in the Offer to Purchase, Merger Subsidiary may not be required to accept for payment any Shares tendered hereby. Unless otherwise indicated under "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and/or return any certificates for Shares not tendered or not accepted for payment, in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered" (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Similarly, unless otherwise indicated under "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and any certificates for Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered" shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and return any certificates for Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) in the name(s) of, and mail said check and any certificates (and accompanying documents, as appropriate) to, the person(s) so indicated. The undersigned recognizes that Merger Subsidiary has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if Merger Subsidiary does not accept for payment any of the Shares so tendered. 6 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5, 6 and 7) (See Instructions 5 and 7) To be completed ONLY if the check To be completed ONLY if the check for the purchase price of Shares for the purchase price of Shares purchased or certificates for purchased or certificates for Shares not tendered or not Shares not tendered or not purchased are to be issued in the purchased are to be mailed to name of someone other than the someone other than the undersigned, or if Shares undersigned or to the undersigned tendered by book-entry transfer at an address other than that that are not purchased are to be shown above. returned by credit to an account at one of the Book-Entry Transfer Mail check and/or certificates Facilities other than that to: designated above. Name Issue check and/or certificates ---------------------------- to: (Please Print) Address Name ------------------------- --------------------------- (Please Print) --------------------------------- (Include Zip Code) Address ------------------------ - ------------------------------- (Include Zip Code) - ------------------------------- (Taxpayer Identification or Social Security No.) Credit unpurchased Shares tendered by book-entry transfer to the account set forth below: The Depository Trust Company Philadelphia Depository Trust Company Account Number ------------------------ 7 - ------------------------------------------------------------------------ SIGN HERE (Please complete Substitute Form W-9 below) - ------------------------------------------------------------------------ Signature(s) of Holder(s) of Shares - ----------------------------------------------------------------------- Dated: , 1996 (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s) ------------------------------------------------------------ (Please Print) - ------------------------------------------------------------------- Capacity (full title) (See Instruction 5) -------------------------- Address ------------------------------------------------------------ - ------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No. ---------------------------------------- Tax Identification or Social Security No.: ------------------------- Guarantee of Signature(s) (If Required - See Instructions 1 and 5) Authorized Signature ----------------------------------------------- Name --------------------------------------------------------------- Name of Firm ------------------------------------------------------ Address ------------------------------------------------------------ (Include Zip Code) Area Code and Telephone No. ---------------------------------------- Dated: , 1996 8 INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a bank, broker, dealer, credit union, savings association or other entity that is a member of a recognized Medallion Program approved by The Securities Transfer Association, Inc. (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) have not completed the instruction entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if delivery of Shares is to be made by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a Book-Entry Confirmation of all Shares delivered electronically, as the case may be, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or, in connection with a book-entry transfer, an Agent's Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal by the Expiration Date. If a stockholder's certificate for Shares is not immediately available or time will not permit all required documents to reach the Depositary by the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such stockholder's Shares may nevertheless be tendered pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by Merger Subsidiary must be received by the Depositary by the Expiration Date and (c) the certificates for all physically delivered Shares, or a Book-Entry Confirmation, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three trading days on the American Stock Exchange, Inc. after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. The method of delivery of Shares and all other required documents, including delivery through any Book-Entry Transfer Facility, is at the option and risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the Depositary. If certificates for Shares are sent by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. By executing this Letter of Transmittal (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. Inadequate Space. If the space provided herein is inadequate, the 9 certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. Partial Tenders (not applicable to stockholders who tender by book-entry transfer). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby is held of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made, or Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Merger Subsidiary of the authority of such person so to act must be submitted. 6. Stock Transfer Taxes. Except as set forth in this Instruction 6, Merger Subsidiary will pay any stock transfer taxes with respect to the sale and transfer of purchased Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificates listed in this Letter of Transmittal. 10 7. Special Payment and Delivery Instructions. If the check for the purchase price of any Shares purchased is to be issued, or any Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at any of the Book-Entry Transfer Facilities as such Stockholder may designate under "Special Payment Instructions". If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facilities designated above. 8. Waiver of Conditions. Subject to the terms of the Offer, Merger Subsidiary reserves the absolute right in its sole discretion to waive any of the specified conditions of the Offer (other than the Minimum Condition), in whole or in part, in the case of any Shares tendered. 9. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the correct TIN, the Internal Revenue Service may subject the stockholder or other payee to a $50 penalty. In addition, payments that are made to such stockholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to 31% backup withholding. Certain stockholders (including among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the stockholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Depositary is required to withhold 31% of any such payments made to the stockholder or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service, provided that the required information is given to the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% on all payments made prior to the time a properly certified Taxpayer Identification Number is provided to the Depositary. However, such amounts will be refunded to such Stockholder if a Taxpayer Identification Number is provided to the Depositary within 60 days. The stockholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult 11 the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10. Requests for Assistance or Additional Copies. Requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent at its address or telephone number set forth below. Questions may be directed to the Information Agent. 11. Lost, Destroyed or Stolen Certificates. If any certificate representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. 12. Acceptance of Tendered Shares. Upon the terms and subject to the conditions of the Offer, Merger Subsidiary will have accepted for payment (and thereby purchased) Shares validly tendered and not withdrawn when, as and if Merger Subsidiary gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares pursuant to the Offer. 13. Withdrawal Rights. Tendered Shares may be withdrawn only pursuant to the procedure set forth in Section 4 of the Offer to Purchase. Important: This Letter of Transmittal or a facsimile copy hereof or, in the case of a book-entry delivery, an Agent's Message (together with certificates for, or a Book-Entry Confirmation with respect to, tendered Shares with any required signature guarantees and all other required documents) must be received by the Depositary, or the Notice of Guaranteed Delivery must be received by the Depositary, by the Expiration Date. 12 - ---------------------------------------------------------------------- PAYER'S NAME: The Bank of New York - ---------------------------------------------------------------------- Part 1--PLEASE PROVIDE Social Security Number SUBSTITUTE YOUR TIN IN THE BOX AT or Employer Identification RIGHT AND CERTIFY BY Number SIGNING AND DATING BELOW. FORM W-9 ----------------- Department of the Treasury Internal Revenue Service Payer's Request for Taxpayer Identification Number ("TIN") Part 2--Certification--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions--You must cross out Item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on you tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). Part 3- SIGNATURE DATE , 1996 ------ ---- Awaiting TIN NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 13 YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld, but that such amounts will be refunded to me if I then provide a Taxpayer Identification Number within sixty (60) days. Signature Date , 1996 ----------------------- --------- 14 The Depositary for the Offer is THE BANK OF NEW YORK By Mail: Facsimile Transmission By Hand or Overnight Tender and Exchange (for Eligible Courier: Department Institutions Only): Tender and Exchange P.O. Box 11248 (212) 815-6213 Department Church Street Station 101 Barclay Street New York, New York Receive & Deliver 10286-1248 Window For Information Telephone: New York, New York (800) 507-9357 10286 The Information Agent for the Offer is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 (212) 269-5550 (Collect) (800) 697-6974 (Toll Free) EX-99.A3 4 NOTICE OF GUARANTEED DELIVERY Exhibit 99(a)(3) NOTICE OF GUARANTEED DELIVERY for Tender of Shares of Common Stock (including the associated Rights) of CHEYENNE SOFTWARE, INC. This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (defined below) if (i) certificates representing shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares"), are not immediately available, (ii) the procedure for book-entry transfer cannot be completed on a timely basis or (iii) time will not permit all required documents to reach The Bank of New York (the "Depositary") prior to the expiration of the Offer. This Notice of Guaranteed Delivery may be delivered by hand, facsimile transmission or mail to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: THE BANK OF NEW YORK By Mail: Facsimile Transmission By Hand or Overnight Tender and Exchange (for Eligible Courier: Tender and Exchange Department Institutions Only): Department P.O. Box 11248 (212) 815-6213 101 Barclay Street Church Street Station Receive & Deliver New York, New York Window 10286-1248 New York, New York For Information Telephone: 10286 (800) 507-9357 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE APPROPRIATE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to Tse-tsehese-staestse, Inc., a Delaware corporation ("Merger Subsidiary") and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated October 11, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer"), receipt of which is hereby acknowledged, _____________ shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares"), pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Certificate No(s).: Name(s) of Record Holder(s): (if available) - ------------------------------- --------------------------------- - ------------------------------- --------------------------------- (Please type or print) (Check one box if Shares will be Address(es): tendered by book-entry transfer) --------------------- --------------------------------- [ ] The Depository Trust Company (Zip Code) [ ] Philadelphia Depository Trust Company -------------- Area Code and Tel. No.: ---------- (Daytime telephone number) Account Number: Signature(s): ------------------- -------------------- Dated: , 1996 ---------------------- -------------------------------- GUARANTEE (Not to be used for signature guarantee) The undersigned, an Eligible Institution (defined in Section 3 of the Offer to Purchase), hereby (i) represents that the tender of shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended and (ii) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Shares tendered hereby, in proper form for transfer, or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (defined in Section 3 of the Offer to Purchase), in either case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an Agent's Message (defined in Section 2 of the Offer to Purchase), together with any other documents required by the Letter of Transmittal, all within three trading days on the American Stock Exchange, Inc. after the date hereof. Name of Firm: ----------------------- -------------------------- (Authorized Signature) Address: ---------------------------- Name: --------------------- - ------------------------------------ (Please type or print) (Zip Code) Title: --------------------- Area Code and Tel. No.: Date: , 1996 ------------- --------------- NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A4 5 LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS. Exhibit 99(a)(4) Offer to Purchase for Cash All Outstanding Shares of Common Stock (including the associated Rights) of CHEYENNE SOFTWARE, INC. at $30.50 Net Per Share by TSE-TSEHESE-STAESTSE, INC. a wholly owned subsidiary of COMPUTER ASSOCIATES INTERNATIONAL, INC. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 8, 1996, UNLESS THE OFFER IS EXTENDED. October 11, 1996 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing the material listed below in connection with the offer by Tse-tsehese-staestse, Inc., a Delaware corporation ("Merger Subsidiary") and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares"), at $30.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in Merger Subsidiary's Offer to Purchase, dated October 11, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer"). For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase; 2. Letter of Transmittal for your use and for the information of your clients; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents cannot be delivered to the Depositary by the Expiration Date (defined in Section 1 of the Offer to Purchase) or 2 if the procedure for book-entry transfer cannot be completed by the Expiration Date; 4. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding; and 6. Return envelope addressed to The Bank of New York, the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER, 8, 1996, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or an Agent's Message (defined in Section 2 of the Offer to Purchase) in connection with a book-entry delivery of Shares, and all other required documents should be sent to the Depositary, and (ii) either certificates representing the tendered Shares should be delivered to the Depositary, or such Shares should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book-Entry Transfer Facilities (described in Section 3 of the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. Merger Subsidiary will not pay any fees or commissions to any broker or dealer or other person (other than the Information Agent and the Depositary as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. Merger Subsidiary will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. Merger Subsidiary will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Information Agent at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, TSE-TSEHESE-STAESTSE, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF TSE-TSEHESE-STAESTSE, INC., COMPUTER ASSOCIATES INTERNATIONAL, INC., THE INFORMATION AGENT OR THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THEM OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION 3 WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.A5 6 LETTER TO CLIENTS Exhibit 99(a)(5) Offer to Purchase for Cash All Outstanding Shares of Common Stock (including the associated Rights) of CHEYENNE SOFTWARE, INC. at $30.50 Net Per Share by TSE-TSEHESE-STAESTSE, INC. a wholly owned subsidiary of COMPUTER ASSOCIATES INTERNATIONAL, INC. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 8, 1996, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated October 11, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to an offer by Tse-tsehese-staestse, Inc., a Delaware corporation ("Merger Subsidiary") and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), to purchase all outstanding shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares"), at a purchase price of $30.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. Holders of Shares whose certificates for such Shares are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary, or complete the procedure for book-entry transfer set forth in Section 3 of the Offer to Purchase, prior to the Expiration Date (defined in Section 1 of the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS 2 FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is directed to the following: 1. The tender price is $30.50 per Share, net to you in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2. The Board of Directors of the Company has unanimously determined that the Offer and the transactions contemplated by the Merger Agreement (defined in the Introduction to the Offer to Purchase) are fair to, and in the best interests of, the stockholders of the Company, has unanimously approved the Offer and the transactions contemplated by the Merger Agreement, and unanimously recommends that the stockholders of the Company accept the Offer and tender their Shares. 3. The Offer and withdrawal rights expire at 12:00 Midnight, New York City time, on Friday, November 8, 1996, unless the Offer is extended. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a confirmation of a book-entry transfer of such Shares as described in Section 2 of the Offer to Purchase), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or an Agent's Message (defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. 4. The Offer is conditioned upon, among other things, (i) there being validly tendered by the Expiration Date and not withdrawn a number of Shares which, together with the Shares then owned by Merger Subsidiary and Computer Associates, would represent at least a majority of the Fully Diluted Shares (defined in the Introduction to the Offer to Purchase) and (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. 5. Merger Subsidiary will pay any stock transfer taxes applicable to the sale of Shares to Merger Subsidiary pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions should be forwarded promptly to permit us to submit a tender on your behalf by the expiration of the Offer. If you do not instruct us to tender your Shares, they will not be tendered. 3 The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. 4 Instructions with respect to Offer to Purchase for Cash All Outstanding Shares of Common Stock (including the associated Rights) of CHEYENNE SOFTWARE, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated October 11, 1996, and the related Letter of Transmittal, relating to the offer by Tse-tsehese-staestse, Inc., a Delaware corporation and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Shares Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares"). This will instruct you to tender the number of Shares indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in such Offer to Purchase and the related Letter of Transmittal. Dated: _________________, 1996 Number of Shares to be Tendered --------------------------------- ______ Shares* (Signature) --------------------------------- Please Print Names(s) --------------------------------- Address -------------------------- --------------------------------- Include Zip Code Area Code and Telephone No. --------------------- Taxpayer Identification or Social Security No. ------------ ---------------------------------- _________________________ * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.A6 7 JOINT PRESS RELEASE Exhibit 99(a)(6) Contact: Doug Robinson, CA Investor Relations, (516) 342-2745 Bob Gordon, CA Public Relations, (516) 342-2391 Elliot Levine, Cheyenne Software, (516) 465-4411 Jeff Finkle, Cheyenne Software, (516) 465-5580 COMPUTER ASSOCIATES TO ACQUIRE CHEYENNE SOFTWARE, INC. Storage Management, Anti-Virus, And Communications Software To Strengthen CA's Management Solutions Deal Valued At Approximately $1.2 Billion ISLANDIA, NY, October 7, 1996 - Computer Associates International, Inc. (NYSE: CA) and Cheyenne Software, Inc. (AMEX: CYE) have entered into a merger agreement for CA to acquire Cheyenne Software through a cash tender offer. A wholly-owned subsidiary of CA will offer to purchase all outstanding shares of Cheyenne's common stock for $30.50 per share. The merger has been unanimously approved by the Boards of Directors of both Cheyenne and CA. CA will fund the acquisition through cash balances and existing credit facilities. "We are extremely excited by the synergistic nature of this acquisition," said CA Chairman and CEO Charles B. Wang. "Cheyenne is the recognized leader in storage management solutions for the Windows NT and NetWare environments. The addition of its product suite will strengthen our efforts in the desktop and LAN environments. Cheyenne's products, along with CA's Unicenter family of enterprise management products, will offer an unbeatable combination for solving the complex management problems that clients are facing today." "In addition to a strong product offering, Cheyenne's employees are an integral part of the value in this acquisition. In recognition of their skills and talents, CA intends to retain all of Cheyenne's employees. It is expected that Cheyenne will operate as a division of CA, and that it will continue to aggressively support its current distribution channel strategy." "This is a tremendous opportunity for our clients, business partners, employees, and shareholders," said Cheyenne Chairman and CEO ReiJane Huai. "CA's unparalleled development and support capabilities and financial resources will now be available to our clients, along with Cheyenne's award-winning solutions in storage management, anti-virus, and communications software. Equally exciting is the fact that all of us at Cheyenne will have the opportunity to participate in the next chapter of Cheyenne's growth." In the tender offer, CA seeks to purchase at least a majority of Cheyenne's outstanding shares. Consummation of the tender offer will be subject to the expiration or termination of any applicable antitrust waiting period and the receipt of all regulatory approvals. Following completion of the tender offer, the subsidiary of CA will be merged into Cheyenne, and all of Cheyenne's shares not owned by CA will be converted into the right to receive $30.50 per share in cash. Computer Associates International, Inc. (NYSE: CA), with headquarters in Islandia, NY, is the world leader in mission-critical software. The company develops, licenses, and supports more than 500 integrated products that include enterprise computing and information management, application development, manufacturing and financial applications. CA has 9000 people in 130 offices in 40 countries and had revenue of more than $3.5 billion in fiscal year 1996. CA can be reached by visiting http://www.cai.com on the World Wide Web, emailing info@cai.com, or calling 1-516-342-5224. Cheyenne Software, Inc. is an international developer of essential software solutions for NetWare, Windows NT, UNIX Macintosh, OS/2, Windows 3.1 and Windows 95 operating systems. Its enterprise-wide offerings include an array of storage management, security, and communications products, including Cheyenne HSM, JETserve, InocuLAN, FAXserve, and its flagship product line, the ARCserve family of network backup software. Cheyenne can be contacted at (800) 243-9462 (U.S. or Canada) or (516) 465-4000, or by visiting its WWW home page at: http://www.cheyenne.com ### All referenced product names are trademarks of their respective companies. EX-99.A3 8 GUIDELINES FOR CERTIFICATION OF TAXPAYER Exhibit 99(a)(7) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- ---------------------------------- ---------------------------------- For this type Give the name and For this type Give the name of account: SOCIAL SECURITY of account: and EMPLOYER number of -- IDENTIFICATION number of-- - ---------------------------------- ---------------------------------- 1.An The individual 6. A valid trust, The legal entity individual's estate, or (Do not furnish account pension trust the identifying number of the 2.Two or The actual owner personal more of the account or, representative individuals if combined funds, or trustee (joint any one of the unless the legal account) individuals(1) entity itself is not designated 3.Custodian The minor(2) in the account account of a title.)(4) minor (Uniform Gift to Minors 7. Corporate The corporation Act) account 4.(a)The usual The grantor- 8. Religious, The organization revocable trustee(1) charitable, or savings trust educational account(grantor organization is also account trustee) 9. Partnership The partnership (b)So-called The actual owner(1) trust account 10.Association, The organization that is not a club, or other legal or valid tax-exempt trust under organization State law 11.A broker or The broker or 5.Sole The owner(3) registered nominee proprietorship nominee account 12.Account with The public the Department entity of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments 13.Sole The owner(3) proprietor- ship account (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show the name of the owner. You may also enter your business name. You may use your Social Security Number or Employer Identification Number. (4) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.
2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2
OBTAINING A NUMBER If you don't have a taxpayer Payments of tax-exempt interest(including identification number or you exempt-interest don't know your number, obtain dividends under section 852). Form SS-5, Application for a Payments described in Social Security Number Card, or section 6049(b)(5) to Form SS-4, Application for non-resident aliens. Employer Identification Number, Payments on tax-free at the local office of the Social covenant bonds under Security Administration or the section 1451. Internal Revenue Service and Payments made by certain apply for a number. foreign organizations. Mortgage interest paid to PAYEES EXEMPT FROM BACKUP an individual. WITHHOLDING Exempt payees described Payees specifically exempted from above should file Form backup withholding on ALL W-9 to avoid possible payments include the following: erroneous backup withholding. FILE THIS A corporation. FORM WITH THE PAYER, A financial institution. FURNISH YOUR TAXPAYER An organization exempt from IDENTIFICATION NUMBER, tax under section 501(a), or WRITE "EXEMPT" ON THE FACE an individual retirement plan OF THE FORM, AND RETURN or a custodial account under IT TO THE PAYER. IF THE Section 403(b)(7). PAYMENTS ARE INTEREST, The United States or any DIVIDENDS, OR PATRONAGE agency or instrumentality DIVIDENDS, ALSO SIGN AND thereof. DATE THE FORM. A State, the District of Columbia, a possession of the Certain payments, other United States, or any than interest, dividends, subdivision or and patronage dividends, instrumentality thereof. that are not subject to A foreign government, a information reporting, are political subdivision of a also not subject to backup foreign government, or any withholding. For details, agency or instrumentality see the regulations under thereof. sections 6041, 6041A(a), An international organization 6045, and 6050A. or any agency, or instrumentality thereof. PRIVACY ACT NOTICE -- A registered dealer in Section 6109 requires securities or commodities most recipients of registered in the U.S. or a dividend, interest, or possession of the U.S. other payments to give A real estate investment taxpayer identification trust. numbers to payers who A common trust fund operated must report the payments by a bank under section to IRS. IRS uses the 584(a). numbers for identification An exempt charitable purposes. Payers must remainder trust, or a non- be given the numbers exempt trust described in whether or not recipients section 4947(a)(1). are required to file tax An entity registered at all returns. Payers must times under the Investment generally withhold 31% of Company Act of 1940. taxable interest, A foreign central bank of dividend and certain issue. other payments to a payee A futures commission merchant who does not furnish a registered with the Commodity taxpayer identification Futures Trading Commission. number to a payer. A middleman known in the Certain penalties may investment community as a also apply. nominee or listed in the most recent publication of the PENALTIES American Society of Corporate Secretaries, Inc. Nominee (1) PENALTY FOR FAILURE List. TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- Payments of dividends and patronage If you fail to furnish dividends not generally subject to your taxpayer backup withholding include the identification number to following: a payer, you are subject to a penalty of $50 for Payments to nonresident each such failure unless aliens subject to withholding your failure is due to under section 1441. reasonable cause and Payments to partnerships not not to willful neglect. engaged in a trade or business in the U.S. and (2) CIVIL PENALTY FOR which have at least one FALSE INFORMATION WITH nonresident partner. RESPECT TO WITHHOLDING -- Payments of patronage If you make a false dividends where the amount statement with no received is not paid in reasonable basis which money. results in no imposition Payments made by certain of backup withholding, foreign organizations. you are subject to a penalty of $500. Payments of interest not generally subject to backup withholding (3) CRIMINAL PENALTY FOR include the following: FALSIFYING INFORMATION -- Falsifying certifications Payments of interest on or affirmations may obligations issued by subject you to criminal individuals. Note: You may penalties including be subject to backup fines and/or imprisonment. withholding if this interest is $600 or more and is paid FOR ADDITIONAL INFORMATION in the course of the payer's CONTACT YOUR TAX trade or business and you CONSULTANT OR THE have not provided your INTERNAL REVENUE SERVICE. correct taxpayer identification number to the payer.
EX-99.A8 9 FORM OF SUMMARY ADVERTISEMENT DATED OCTOBER 11, 1996 Exhibit 99(a)(8) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated October 11, 1996 and the related Letter of Transmittal and any amendments or supplements thereto and is being made to all holders of Shares. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require that the Offer be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Merger Subsidiary by one or more registered brokers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock (including the associated Rights) of Cheyenne Software, Inc. at $30.50 Net Per Share by Tse-tsehese-staestse, Inc. a wholly-owned subsidiary of Computer Associates International, Inc. Tse-tsehese-staestse, Inc., a Delaware corporation ("Merger Subsidiary") and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), is offering to purchase all outstanding shares of Common Stock, par value $.01 per share, of Cheyenne Software, Inc., a Delaware corporation (the "Company"), including the associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996, as amended, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent (the shares and the Rights collectively referred to as the "Shares"), at $30.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 11, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Tendering stockholders of the Company will not be obligated to pay brokerage fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 8, 1996, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (1) there being validly tendered by the expiration of the Offer and not withdrawn a number of Shares which, together with the Shares then owned by Computer Associates and Merger Subsidiary, would represent at least a majority of the total number of outstanding Shares on a fully diluted basis and (2) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of October 7, 1996 (the "Merger Agreement"), among the Company, Computer Associates and Merger Subsidiary, which has been unanimously approved by the Company's Board of Directors. The Merger Agreement provides, among other things, that, after consummation of the Offer, and upon the later of (i) November 30, 1996, provided that as of such date the conditions to the Merger set forth in the Merger Agreement shall be fulfilled or waived and (ii) the first business day on which such conditions to the Merger shall be fulfilled or waived, Merger Subsidiary will be merged into the Company (the "Merger"), with the Company continuing as the surviving corporation (the "Surviving Corporation"). Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each outstanding Share (other than Shares owned by Computer Associates, Merger Subsidiary or any subsidiary of either of them or held by the Company as treasury stock (which shall be canceled) or by stockholders exercising appraisal rights under the Delaware General Corporation Law) will be converted into the right to receive $30.50 in cash or any higher price paid for each Share in the Offer, without interest. The Board of Directors of the Company has unanimously determined that the Offer and the transactions contemplated by the Merger Agreement are fair to, and in the best interests of, the stockholders of the Company, has unanimously approved the Offer and the transactions contemplated by the Merger Agreement, and unanimously recommends that the Stockholders of the Company accept the Offer and tender their Shares. Merger Subsidiary reserves the right, at any time and from time to time, in its sole discretion, to extend the period of time during which the Offer is open if, at the scheduled expiration date of the Offer or any extension thereof, any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and for a further period of time of not more than 20 business days, regardless of whether or not any of the conditions to the Offer have been satisfied, to meet the objective (which is not a condition to the Offer) that there be validly tendered and not withdrawn at least 90% of the Shares on a fully diluted basis. Any such extension will be made by giving oral or written notice thereof to the Depositary (defined below) and will be followed as promptly as practicable by public announcement thereof. For purposes of the Offer, Merger Subsidiary shall be deemed to have accepted for payment tendered Shares when, as and if Merger Subsidiary gives oral or written notice to The Bank of New York (the "Depositary") of its acceptance of the tenders of such Shares. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or of a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (defined in the Offer to Purchase)), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or an Agent's Message (defined in the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other required documents. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the expiration of the Offer. Thereafter, such tenders are irrevocable, except that they may be withdrawn on or after December 9, 1996 unless theretofore accepted for payment as provided in the Offer to Purchase. If Merger Subsidiary extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Merger Subsidiary's rights under the Offer, the Depositary may, on behalf of Merger Subsidiary, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in the Offer to Purchase. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth in the Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution (defined in the Offer to Purchase)) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in the Offer to Purchase at any time prior to the expiration of the Offer. The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided Merger Subsidiary with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. The Offer to Purchase and the related Letter of Transmittal contain important information which should be read before any decision is made with respect to the Offer. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at Merger Subsidiary's expense. No fees or commissions will be payable by Merger Subsidiary to brokers, dealers or other persons (other than the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 (212) 269-5550 (Collect) 1-800-697-6974 (Toll Free) October 11, 1996 EX-99.C1DESCRIPTION> 10 EXHIBIT 99(C)(1) AGREEMENT AND PLAN OF MERGER Dated as of October 7, 1996 Among COMPUTER ASSOCIATES INTERNATIONAL, INC., TSE-TSEHESE-STAESTSE, INC. And CHEYENNE SOFTWARE, INC. TABLE OF CONTENTS
Page ARTICLE I THE OFFER SECTION 1.1. The Offer................................1 SECTION 1.2. Company Action...........................2 SECTION 1.3. Directors................................2 ARTICLE II THE MERGER SECTION 2.1. The Merger...............................3 SECTION 2.2. Conversion of Shares.....................4 SECTION 2.3. Surrender and Payment....................4 SECTION 2.4. Dissenting Shares........................5 SECTION 2.5. Stock Options............................5 ARTICLE III THE SURVIVING CORPORATION SECTION 3.1. Certificate of Incorporation.............6 SECTION 3.2. Bylaws...................................6 SECTION 3.2. Directors and Officers...................6 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties of the Company......................................6 (a) Organization, Standing and Corporate Power......7 (b) Subsidiaries....................................7 (c) Capital Structure...............................7 (d) Authority; Noncontravention.....................8 (e) SEC Documents; Financial Statements; No Undisclosed Liabilities.......................9 (f) Disclosure Documents............................9 (g) Absence of Certain Changes or Events...........10 (h) Litigation.....................................11 (i) Absence of Changes in Stock and Benefit Plans..11 (j) Participation and Coverage in Benefit Plan.....11 (k) ERISA Compliance...............................12 (l) Taxes..........................................13 (m) State Takeover Statutes; Rights Agreement......14 (n) Brokers; Schedule of Fees and Expenses.........14 (o) Permits; Compliance with Laws..................14 (p) Contracts; Debt Instruments....................14 (q) Opinion of Financial Advisor...................16 (r) Interests of Officers and Directors...........16
Page (s) Technology.....................................16 (t) Change of Control..............................17 SECTION 4.2. Representations and Warranties of Parent and Merger Subsidiary.....................17 (a) Organization, Standing and Corporate Power......17 (b) Authority; Noncontravention.....................17 (c) Disclosure Documents............................18 (d) Brokers.........................................18 (e) Delaware Law....................................18 (f) Financing.......................................18 ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1. Conduct of Business....................19 SECTION 5.2. Stockholder Meeting; Proxy Material....20 SECTION 5.3. Access to Information..................21 SECTION 5.4. Other Offers...........................21 SECTION 5.5. State Takeover Statutes; Rights Agreement..............................21 ARTICLE VI COVENANTS OF PARENT AND MERGER SUBSIDIARY SECTION 6.1. Obligations of Merger Subsidiary.......22 SECTION 6.2. Voting of Shares.......................22 SECTION 6.3. Indemnification........................22 SECTION 6.4. Employees..............................22 ARTICLE VII ADDITIONAL AGREEMENTS SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification..........................23 SECTION 7.2. Public Announcements...................24 SECTION 7.3. Confidentiality........................25 ARTICLE VIII CONDITIONS TO THE MERGER SECTION 8.1. Conditions to the Obligations of Each Party............................25
Page ARTICLE IX TERMINATION SECTION 9.1. Termination............................25 SECTION 9.2. Effect of Termination..................26 ARTICLE X GENERAL PROVISIONS SECTION 10.1. Nonsurvival of Representations and Warranties.......................26 SECTION 10.2. Notices...............................26 SECTION 10.3. Amendments; No Waivers................27 SECTION 10.4. Fees and Expenses.....................28 SECTION 10.5. Successors and Assigns................28 SECTION 10.6. Governing Law.........................28 SECTION 10.7. Counterparts; Effectiveness...........28
AGREEMENT AND PLAN OF MERGER dated as of October 7, 1996 among Computer Associates International, Inc., a Delaware corporation ("Parent"), Tse-Tsehese-Staestse, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Subsidiary"), and Cheyenne Software, Inc., a Delaware corporation (the "Company"). The parties agree as follows: ARTICLE I THE OFFER SECTION 1.1. The Offer. (a) Provided that nothing shall have occurred that would result in a failure to satisfy any of the conditions set forth in Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the date hereof, but in no event later than five business days following the public announcement of the terms of this Agreement, commence an offer (the "Offer") to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), including the associated Rights (defined below in Section 4.1(c)) of the Company at a price of $30.50 per Share (including such associated Rights), net to the seller in cash. The Offer shall be subject to the condition that there shall be validly tendered in accordance with the terms of the Offer prior to the expiration date of the Offer and not withdrawn a number of Shares which, together with the Shares then owned by Parent and Merger Subsidiary, represents at least a majority of the total number of outstanding Shares, assuming the exercise of all outstanding options, rights and convertible securities (if any) and the issuance of all Shares that the Company is obligated to issue (such total number of outstanding Shares being hereinafter referred to as the "Fully Diluted Shares") (the "Minimum Condition") and to the other conditions set forth in Annex I hereto. Parent and Merger Subsidiary expressly reserve the right to waive the conditions to the Offer and to make any change in the terms or conditions of the Offer; provided that, without the written consent of the Company, no change may be made which changes the form of consideration to be paid, decreases the price per Share or the number of Shares sought in the Offer, imposes conditions to the Offer in addition to those set forth in Annex I, changes or waives the Minimum Condition, extends the Offer (except as set forth in the following sentence), or makes any other change to any condition to the Offer set forth in Annex I which is adverse to the holders of Shares. Subject to the terms of the Offer in this Agreement and the satisfaction (or waiver to the extent permitted by this Agreement) of the conditions to the Offer, Merger Subsidiary shall accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the applicable expiration date of the Offer and shall pay for all such Shares promptly after acceptance; provided that Merger Subsidiary may extend the Offer if, at the scheduled expiration date of the Offer or any extension thereof any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and Merger Subsidiary may extend the Offer for a further period of time of not more than 20 business days to meet the objective (which is not a condition to the Offer) that there be validly tendered, in accordance with the terms of the Offer, prior to the expiration date of the Offer (as so extended) and not withdrawn a number of Shares, which together with Shares then owned by Parent and Merger Subsidiary, represents at least 90% of the Fully Diluted Shares. Subject to Section 9.1, if the condition set forth in clause (ii) of the first paragraph of Annex I is not satisfied as of the date the Offer would otherwise have expired, Merger Subsidiary shall extend the Offer until the earlier of (i) the date that is 30 days after the first scheduled expiration date and (ii) the date the condition set forth in clause (ii) of the first paragraph of Annex I is satisfied. (b) As soon as practicable on the date of commencement of the Offer, Parent and Merger Subsidiary shall (i) file with the SEC (defined below in Section 4.1(a)) a Tender Offer Statement on Schedule 14D-l with respect to the Offer which will contain the offer to purchase 2 and form of the related letter of transmittal (together with any supplements or amendments thereto, collectively the "Offer Documents") and (ii) cause the Offer Documents to be disseminated to holders of Shares. Parent, Merger Subsidiary and the Company each agrees promptly to correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect. Parent and Merger Subsidiary agree to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-l prior to its being filed with the SEC. SECTION 1.2. Company Action. (a) The Company hereby consents to the Offer and represents that its Board of Directors, at a meeting duly called and held, has (i) unanimously determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger (defined below in Section 2.1), are fair to and in the best interest of the Company's stockholders, (ii) unanimously approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, which approval satisfies in full the requirements of Section 203 of the General Corporation Law of the State of Delaware (the "Delaware Law"), and (iii) unanimously resolved to recommend acceptance of the Offer and approval and adoption of this Agreement and the Merger by its stockholders. The Company further represents that Lazard Freres & Co. LLC has delivered to the Company's Board of Directors its opinion that the consideration to be paid in the Offer and the Merger is fair to the holders of Shares from a financial point of view. The Company has been advised that all of its directors and executive officers presently intend either to tender their Shares pursuant to the Offer or to vote in favor of the Merger. The Company will promptly furnish Parent and Merger Subsidiary with a list of its stockholders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, in each case as of the most recent practicable date, and will provide to Parent and Merger Subsidiary such additional information (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Parent or Merger Subsidiary may reasonably request in connection with the Offer. (b) As soon as practicable on the day that the Offer is commenced the Company will file with the SEC and disseminate to holders of Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of the Company's Board of Directors referred to above, subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company. The Company, Parent and Merger Subsidiary each agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect. The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to its being filed with the SEC. SECTION 1.3. Directors. (a) Effective upon the acceptance for payment by Merger Subsidiary of a majority of the Shares pursuant to the Offer, Parent shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors (giving effect to the election of any additional directors pursuant to this Section) and (ii) the percentage that the number of Shares owned by Parent or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all action necessary to cause Parent's designees to be elected or appointed to the Company's Board of Directors, including, without limitation, increasing the number of directors, or seeking and accepting resignations of 3 incumbent directors, or both; provided that, prior to the Effective Time (defined below in Section 2.1), the Company's Board of Directors shall always have one member who is neither a designee nor an affiliate of Parent or Merger Subsidiary nor an employee of the Company (an "Independent Director"). If the number of Independent Directors is reduced below one for any reason prior to the Effective Time, the departing Independent Director shall be entitled to designate a person to fill such vacancy. No action proposed to be taken by the Company to amend or terminate this Agreement or waive any action by Parent or Merger Subsidiary shall be effective without the approval of the Independent Director. At such times, the Company will use its best efforts to cause individuals designated by Parent to constitute the same percentage as such individuals represent on the Company's Board of Directors of (x) each committee of the Board, (y) each board of directors of each subsidiary (defined below in Section 4.1(a)) and (z) each committee of each such board. (b) The Company's obligations to appoint designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act (defined below in Section 4.1(d)) and Rule 14f-l promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-l in order to fulfill its obligations under this Section 1.3 and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-l to fulfill its obligations under this Section 1.3. Parent will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. ARTICLE II THE MERGER SECTION 2.1. The Merger. (a) At the Effective Time, Merger Subsidiary shall be merged (the "Merger") with and into the Company in accordance with the Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation"). (b) The closing of the Merger (the "Closing") shall take place on the later of (x) November 30, 1996 and (y) the first business day on which all of the conditions set forth in Article VIII hereof shall be fulfilled or waived in accordance with this Agreement. As soon as practicable following the Closing, the Company and Merger Subsidiary will file a certificate of merger with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware or, with the consent of the Independent Director, at such later time as is specified in the certificate of merger (the "Effective Time"). (c) From and after the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises and be subject to all of the restrictions, disabilities and duties of the Company and Merger Subsidiary, all as provided under Delaware Law. SECTION 2.2. Conversion of Shares. At the Effective Time: (a) each Share held by the Company as treasury stock or owned by Parent, Merger Subsidiary or any subsidiary of either of them immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto; (b) each share of common stock of Merger Subsidiary outstanding immediately prior to the Effective Time shall be converted 4 into and become one share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and (c) each Share outstanding immediately prior to the Effective Time shall, except as otherwise provided in Section 2.2(a) or as provided in Section 2.4 with respect to Shares as to which appraisal rights have been exercised, be converted into the right to receive $30.50 in cash or any higher price paid for each Share in the Offer, without interest (the "Merger Consideration"). SECTION 2.3. Surrender and Payment. (a) Prior to the Effective Time, Parent shall appoint a bank or trust company (the "Exchange Agent") for the purpose of exchanging certificates representing Shares for the Merger Consideration. Parent will make available to the Exchange Agent, as needed, the Merger Consideration to be paid in respect of the Shares (the "Exchange Fund"). For purposes of determining the Merger Consideration to be made available, Parent shall assume that no holder of Shares will perfect his right to appraisal of his Shares. Promptly after the Effective Time, Parent will send, or will cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal for use in such exchange (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the certificates representing Shares to the Exchange Agent). The Exchange Agent shall, pursuant to irrevocable instructions, make the payments provided in this Section 2.3. The Exchange Fund shall not be used for any other purpose, except as provided in this Agreement. (b) Each holder of Shares that have been converted into a right to receive the Merger Consideration, upon surrender to the Exchange Agent of a certificate or certificates representing such Shares, together with a properly completed letter of transmittal covering such Shares and such other documents as may be reasonably requested, will be entitled to receive the Merger Consideration payable in respect of such Shares. Until so surrendered, each such certificate shall, after the Effective Time, represent for all purposes, only the right to receive such Merger Consideration. (c) If any portion of the Merger Consideration is to be paid to a person other than the registered holder of the Shares represented by the certificate or certificates surrendered in exchange therefor, it shall be a condition to such payment that the certificate or certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such Shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. For purposes of this Agreement, "person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. (d) After the Effective Time, there shall be no further registration of transfers of Shares. If, after the Effective Time, certificates representing Shares are presented to the Surviving Corporation, they shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article II. (e) Any portion of the Exchange Fund made available to the Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by the holders of Shares six months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged his Shares for the Merger Consideration in accordance with this Section 2.3 prior to that time shall thereafter look only to Parent for payment of the Merger Consideration in respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable to any holder of Shares for any amount paid to a public official pursuant to applicable abandoned property laws. Any amounts remaining unclaimed by holders of Shares 5 immediately prior to such time as such amounts would otherwise escheat to or become property of any governmental entity shall, to the extent permitted by applicable law, become the property of Parent free and clear of any claims or interest of any person previously entitled hereto. (f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which appraisal rights have been perfected shall be returned to Parent, upon demand. SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Delaware Law shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. If after the Effective Time such holder fails to perfect or withdraws or loses his right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of Shares, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. SECTION 2.5. Stock Options. (a) At the Effective Time, each of the then outstanding Company Options (defined below) shall by virtue of the Merger, and without any further action on the part of any holder thereof, become fully exercisable and vested and be assumed by Parent and converted into an option to purchase that number of shares of common stock, par value $.10 per share ("Parent Common Stock"), of Parent determined by multiplying the number of Shares subject to such Company Option at the Effective Time by the quotient obtained by dividing (x) $30.50 by (y) the average closing price of Parent Common Stock on the New York Stock Exchange Composite Tape for the 20 consecutive trading days immediately prior to the Effective Time (such quotient, the "Conversion Number"), at an exercise price per share of Parent Common Stock equal to the quotient obtained by dividing (x) the exercise price per Share of such Company Option immediately prior to the Effective Time by (y) the Conversion Number. If the foregoing calculation results in an assumed Company Option being exercisable for a fraction of a share of Parent Common Stock, then the number of shares of Parent Common Stock subject to such option shall be rounded down to the nearest whole number of shares. Except as otherwise set forth in this Section 2.5, the term, status as an "incentive stock option" under Section 422 of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder (the "Code"), if applicable, and all other terms and conditions of Company Options will, to the extent permitted by law and otherwise reasonably practicable, be unchanged. The Company shall take, or cause to be taken, all actions which are necessary, proper or advisable under the Stock Plans to make effective the transactions contemplated by this Section 2.5. "Company Options" means any option granted, and not exercised or expired, to a current or former employee, director or independent contractor of the Company or any of its subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock option, stock bonus, stock award, or stock purchase plan, program, or arrangement of the Company or any of its subsidiaries or any predecessor thereof (collectively, the "Stock Plans") or any other contract or agreement entered into by the Company or any of its subsidiaries. (b) Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery pursuant to the terms set forth in this Section 2.5. Parent shall cause the shares of Parent Common Stock issuable upon exercise of the assumed Company Options to be registered, or to be issued pursuant to a then effective registration statement, no later than 90 days after the Effective Time on Form S-8 promulgated by the SEC and shall use its best efforts to maintain the effectiveness of such registration statement or registration statements for so long as such 6 assumed Company Options remain outstanding. With respect to those individuals who subsequent to the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act, Parent shall administer the Company Options assumed pursuant to this Section 2.5 in a manner that complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but shall have no responsibility for such compliance by the Company or its predecessors. ARTICLE III THE SURVIVING CORPORATION SECTION 3.1. Certificate of Incorporation. The certificate of incorporation of Merger Subsidiary in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law, except that the name of the Surviving Corporation shall be changed to the name of the Company. SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable law. SECTION 3.3. Directors and Officers. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (i) the directors of Merger Subsidiary at the Effective Time shall be the directors of the Surviving Corporation, and (ii) the officers of the Merger Subsidiary at the Effective Time shall be the officers of the Surviving Corporation. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties of the Company. The Company represents and warrants to Parent and Merger Subsidiary as follows: (a) Organization, Standing and Corporate Power. Each of the Company and each of its Significant Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has the requisite corporate power and authority to carry on its business as now being conducted. Each of the Company and each of its Significant Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) could not reasonably be expected to have a material adverse effect on the financial condition, business or results of operations of the Company and its subsidiaries taken as a whole except that occurrences due solely to a disruption of the Company's or its subsidiary's businesses solely as a result of the announcement of the execution of this Agreement and the transactions proposed to be consummated by this Agreement shall be excluded from consideration for purposes of the effect of an action or inaction on the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). The Company has delivered to Parent complete and correct copies of its Certificate of Incorporation and By- Laws and the certificates of incorporation and by-laws of its Significant Subsidiaries which are incorporated in the United States, in each case as amended to the date of this Agreement. For purposes of this Agreement, a "subsidiary" of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person; and a 7 "Significant Subsidiary" means any subsidiary of a person that constitutes a significant subsidiary of such person within the meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the "SEC"). (b) Subsidiaries. Section 4.1(b) of the disclosure schedule delivered by the Company to Parent and Merger Subsidiary prior to the execution of this Agreement (the "Disclosure Schedule") lists each subsidiary of the Company and its respective jurisdiction of incorporation and indicates whether such subsidiary is a Significant Subsidiary. All the outstanding shares of capital stock of each such subsidiary have been validly issued and are fully paid and nonassessable and are owned by the Company, by another subsidiary of the Company or by the Company and another such subsidiary, free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens") and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock), other than such Liens, limitations or restrictions arising in the ordinary and normal course under applicable law. Except for the capital stock of its subsidiaries, the Company does not own, directly or indirectly, any capital stock or other ownership interest in any person. (c) Capital Structure. The authorized capital stock of the Company consists of 75,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $.01 per share (the "Preferred Stock"). At the time of execution of this Agreement, (i) 37,711,424 shares of Common Stock were issued and outstanding, including associated Preferred Share Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996 (the "Rights Agreement"), between the Company and Continental Stock Transfer and Trust Company, as Rights Agent (the "Rights Agent"), (ii) no shares of Preferred Stock were issued and outstanding, (iii) 2,343,900 shares of Common Stock were held by the Company in its treasury or by any of the Company's subsidiaries, and (iv) 5,003,136 shares of Common Stock were reserved for issuance pursuant to outstanding Company Options. Except as set forth above, at the time of execution of this Agreement, no shares of capital stock or other voting securities of the Company are issued, reserved for issuance or outstanding. All outstanding shares of capital stock of the Company are, and all shares which may be issued pursuant to the Stock Plans will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. Other than the Shares, there are not any bonds, debentures, notes or other indebtedness or securities of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of the Company may vote. Except as set forth above and in Section 4.1(c) of the Disclosure Schedule, there are not any securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its subsidiaries is a party or by which any of them is bound obligating the Company or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or of any of its subsidiaries or obligating the Company or any of its subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. There are no outstanding rights, commitments, agreements, arrangements or undertakings of any kind obligating the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or other voting securities of the Company or any of its subsidiaries or any securities of the type described in the two immediately preceding sentences (other than in connection with the exercise of outstanding Company Options). The Company has delivered to Parent complete and correct copies of the Stock Plans and all forms of Company Options. Section 4.1(c) of the Disclosure Schedule sets forth a complete and accurate list of all Company Options outstanding as of the date of this Agreement and the exercise price of each outstanding Company Option. (d) Authority; Noncontravention. The Company has the requisite corporate power and authority to enter into this Agreement 8 and, except for any required approval by the Company's stockholders in connection with the consummation of the Merger, to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Company, except for any required approval by the Company's stockholders in connection with the consummation of the Merger. This Agreement has been duly executed and delivered by the Company and, assuming this Agreement constitutes a valid and binding agreement of Parent and Merger Subsidiary, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its subsidiaries under, (i) the Certificate of Incorporation or By-Laws of the Company or the comparable charter or organizational documents of any of its Significant Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to the Company or any of its subsidiaries or their respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its subsidiaries or their respective properties or assets, other than, in the case of clause (ii) or (iii) above, any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate could not reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under this Agreement or (C) prevent or materially delay consummation of any of the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with or exemption by (collectively, "Consents") any federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign (a "Governmental Entity"), is required by or with respect to the Company or any of its subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated by this Agreement, except for (i) the filing of a premerger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii) compliance with any applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act"), (iii) the filing of a certificate of merger in accordance with Delaware Law and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (iv) such notices, filings and consents as may be required under relevant state property transfer laws, and (v) such other consents, approvals, orders, authorizations, registrations, declarations and filings as (A) may be required under the laws of any foreign country in which the Company or any of its subsidiaries conducts any business or owns any property or assets or (B) as to which the failure to obtain or make could not reasonably be expected to (x) have a Material Adverse Effect or (y) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. (e) SEC Documents; Financial Statements; No Undisclosed Liabilities. The Company has filed all required reports, schedules, forms, statements and other documents with the SEC since July 1, 1993 (the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended, and the rules and regulations thereunder (the "Securities Act"), or the Exchange Act, as the case may be, applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and 9 regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the Company Filed SEC Documents, neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) and there is no existing condition, situation or set of circumstances which are required by generally accepted accounting principles to be set forth on a consolidated balance sheet of the Company and its consolidated subsidiaries or in the notes thereto, except for liabilities which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (f) Disclosure Documents. (i) Each document required to be filed by the Company with the SEC in connection with the transactions contemplated by this Agreement (the "Company Disclosure Documents"), including, without limitation, the Schedule 14D-9, the proxy or information statement of the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in connection with the Merger, and any amendments or supplements thereto will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act. (ii) At the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time such stockholders vote on adoption of this Agreement, the Company Proxy Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. At the time of the filing of any Company Disclosure Document other than the Company Proxy Statement and at the time of any distribution thereof, such Company Disclosure Document will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 4.1(f)(ii) will not apply to statements or omissions included in the Company Disclosure Documents based upon information furnished to the Company in writing by Parent or Merger Subsidiary specifically for use therein. (iii) The information with respect to the Company or any subsidiary that the Company furnishes to Parent or Merger Subsidiary in writing specifically for use in the Offer Documents will not, at the time of the filing thereof, at the time of any distribution thereof and at the time of the consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (g) Absence of Certain Changes or Events. Except as disclosed in the SEC Documents filed and publicly available prior to the date of this Agreement (the "Company Filed SEC Documents") and in Section 4.1(g) of the Disclosure Schedule, since June 30, 1996, the Company has conducted its business only in the ordinary course consistent with past practice, and there has not been (i) any event, occurrence or development of a state of circumstances which has had or could reasonably be expected to have a Material Adverse Effect, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company's capital stock or any repurchase, redemption or other acquisition by the Company or any of its subsidiaries of any outstanding shares of capital stock or other securities of the Company or any of its subsidiaries, (iii) any split, combination or reclassification of any of 10 its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iv) (A) any granting by the Company or any of its subsidiaries to any current or former director, officer or employee of the Company or any of its subsidiaries of any increase in compensation or benefits or severance or termination pay or benefits, except in the ordinary course of business consistent with past practice or as was required under employment, severance or termination agreements or plans in effect as of June 30, 1996, or (B) any entry by the Company or any of its subsidiaries into any employment, deferred compensation, severance or termination agreement with any such current or former director, officer or employee, except in the ordinary course of business consistent with past practice, (v) any damage, destruction or loss, whether or not covered by insurance, that has had or could have a Material Adverse Effect, (vi) any change in accounting methods, principles or practices by the Company or any of its subsidiaries, except insofar as may have been required by a change in generally accepted accounting principles, (vii) any amendment of any material term of any outstanding security of the Company or any of its subsidiaries, (viii) any incurrence, assumption or guarantee by the Company or any of its subsidiaries of any indebtedness for borrowed money in the amount of more than $1,000,000 in the aggregate, (ix) any creation or assumption by the Company or any of its subsidiaries of any Lien on any asset other than in the ordinary course of business consistent with past practice, but in no event in the amount of more than $500,000 for any one transaction or $1,000,000 in the aggregate, (x) any making of any loan, advance or capital contributions to or investment in any person other than in the ordinary course of business consistent with past practice, but in no event in the amount of more than $500,000 for any one transaction or $1,000,000 in the aggregate and other than investments in marketable securities made in the ordinary course of business consistent with past practice, (xi) any transaction or commitment made, or any contract or agreement entered into, by the Company or any of its subsidiaries relating to its assets or business (including the acquisition or disposition of any assets or the merger or consolidation with any person) or any relinquishment by the Company or any of its subsidiaries of any contract or other right, in either case, material to the Company and its subsidiaries taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practice and those contemplated by this Agreement, but (without the consent of Parent which shall not be unreasonably withheld or delayed) in no event representing commitments on behalf of the Company or any of its subsidiaries of more than $500,000 for any transaction or $1,000,000 for any series of transactions, (xii) any material labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any of its subsidiaries, which employees were not subject to a collective bargaining agreement at June 30, 1996, or any material lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees or (xiii) any agreement, commitment, arrangement or undertaking by the Company or any of its subsidiaries to perform any action described in clauses (i) through (xii). (h) Litigation. Except as disclosed in the Company Filed SEC Documents or in Section 4.1(h) of the Disclosure Schedule, there is no suit, action or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries that, individually or in the aggregate, could reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under this Agreement or (iii) prevent or materially delay the consummation of the Offer, the Merger or any of the other transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its subsidiaries having, or which, insofar as reasonably can be foreseen, in the future would have, any such effect. Section 4.1(h) of the Disclosure Schedule sets forth as of the date hereof, with respect to any pending suit, action or proceeding to which the Company or any its subsidiaries is a party and which involves claims which if adversely determined would exceed $500,000, the forum, the parties thereto, the subject matter thereof and the amount of damages claimed. 11 (i) Absence of Changes in Stock and Benefit Plans. Except as disclosed in the Company Filed SEC Documents or Section 4.1(i) of the Disclosure Schedule, since June 30, 1996, there has not been (i) any adoption or amendment by the Company or any of its subsidiaries of any Stock Plan or any acceleration, amendment or change of the period of exercisability or vesting of any Company Options or restricted stock, stock bonus or other awards under the Stock Plans (including any discretionary acceleration of the exercise periods or vesting by the Company's Board of Directors or any committee thereof or any other persons administering a Stock Plan) or authorization of cash payments in exchange for any Company Options, restricted stock, stock bonus or other awards granted under any of such Stock Plans; or (ii) any adoption or amendment by the Company or any of its subsidiaries of any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, stock appreciation right, retirement, vacation, severance, disability, death benefit, hospitalization, medical, workers' compensation, supplementary unemployment benefits or other plan, arrangement or understanding providing benefits to any current or former employee, officer or director of the Company or any of its subsidiaries or any beneficiary thereof entered into, maintained or contributed to, as the case may be, by the Company or any of its subsidiaries (collectively, "Benefit Plans") where the expense of such Benefit Plan, or amendment thereto, as the case may be, is material, other than those Benefit Plans maintained outside of the United States primarily for the benefit of persons substantially all of whom are non- resident aliens with respect to the United States ("Foreign Benefit Plans"). (j) Participation and Coverage in Benefit Plan. Except for amendments and other actions described in Section 4.1(i) of the Disclosure Schedule, except with respect to changes required by applicable law, and except as disclosed in the Company Filed SEC Documents or Section 4.1(j) of the Disclosure Schedule, there has been no written interpretation or announcement (whether or not written) by the Company or any of its subsidiaries relating to, or change in employee participation or coverage under, any Benefit Plan, other than a Foreign Benefit Plan, which would increase materially the expense of maintaining such Benefit Plan above the level of the expense incurred in respect thereof for the fiscal year ended on June 30, 1996. (k) ERISA Compliance. (i) Section 4.1(k) of the Disclosure Schedule contains a list of (A) all "employee pension benefit plans" (defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), "employee welfare benefit plans" (defined in Section 3(l) of ERISA) and all other Benefit Plans maintained, or contributed to, by the Company or any of its subsidiaries or ERISA affiliates (defined below) for the benefit of any current or former employees, officers or directors of the Company or any of its subsidiaries or ERISA affiliates or under which the Company or any of its subsidiaries or ERISA affiliates has any liability other than Foreign Benefit Plans ("U.S. Benefit Plans") and (B) all Stock Plans. For purposes of this Agreement, "ERISA affiliate" of the Company means any person which, together with the Company or any of its subsidiaries, would be treated as a single employer under Section 414 of the Code. The only Benefit Plans described in clause (A) of the preceding sentence which constitute an "employee pension benefit plan" defined in Section 3(2) of ERISA (the "Pension Plans") are identified as such in Section 4.1(k) of the Disclosure Schedule. (ii) Each material U.S. Benefit Plan has been maintained and administered in compliance in all material respects with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations, and is, to the extent required by applicable law or contract, fully funded without having any material deficit or material unfunded actuarial liability. Any Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified and, except as set forth in Section 4.1(k) of the Disclosure Schedule, nothing has occurred to cause the loss of such qualified status except where such occurrence could reasonably be expected to be cured without the incurrence by the Company of any liability or expense that would be material to the Company and its subsidiaries. 12 (iii) No Benefit Plan is covered by Title IV of ERISA or Section 412 of the Code. Neither the Company nor any of its subsidiaries has incurred or expects to incur any liability under Title IV of ERISA that has not already been satisfied or any liability or penalty under Section 4975 or 4980B of the Code or Section 502(i) of ERISA that has not already been satisfied. (iv) Except as disclosed in Section 4.1(k)(iv) of the Disclosure Schedule, there are no pending or anticipated claims against or otherwise involving any of the Benefit Plans and no suit, action or other litigation has been brought against or with respect to any Benefit Plan (excluding, in each case, claims for benefits incurred in the ordinary course of Benefit Plan activities) which would be material to the Company and its Subsidiaries. (v) All material contributions, reserves or premium payments required to be made as of the date hereof to or with respect to the Benefit Plans have been made or provided for except to the extent failure to do so would not impair the continued operation of the relevant Benefit Plan. (vi) Except as required by law or as disclosed in Section 4.1(k)(vi) of the Disclosure Schedule, neither the Company nor any of its subsidiaries has any material obligations for post-retirement or post-termination health and life benefits under any U.S. Benefit Plan. (l) Taxes. As used in this Agreement, "tax" or "taxes" shall include all Federal, state, local and foreign income, property, sales, excise and other taxes, tariffs or governmental charges or assessments of any nature whatsoever as well as any interest, penalties and additions thereto. Except as disclosed in Schedule 4.1(l) of the Disclosure Schedule: (i) The Company and each of its subsidiaries have timely filed all tax returns, statements, reports and forms required to be filed with any tax authority and in accordance with all applicable laws. All such tax returns are correct and complete in all material respects. All taxes owed by the Company and any of its subsidiaries (whether or not shown on any tax return) have been paid other than where failure to do so could reasonably be expected to be cured without the incurrence by the Company of any material liability. There are no material Liens on any of the assets of the Company or any of its subsidiaries that arose in connection with any failure (or alleged failure) to pay any tax. (ii) The Company and each of its subsidiaries has withheld and timely paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party other than where failure to do so could reasonably be expected to be cured without the incurrence by the Company of any material liability. (iii) Neither the Company nor any of its subsidiaries expects any authority to assess any additional taxes against the Company or any of its subsidiaries for any period for which tax returns have been filed. No dispute or claim concerning any tax liability of the Company or any of its subsidiaries has been proposed or claimed in writing by any authority. (iv) Neither the Company nor any of its subsidiaries has waived any statute of limitations in respect of taxes or agreed to any extension of time with respect to a tax assessment or deficiency. (v) Neither the Company nor any of its subsidiaries has filed a consent pursuant to Section 341(f) of the Code concerning collapsible corporations. Neither the Company nor any of its subsidiaries is a party to any tax allocation or sharing agreement. Neither the Company nor any of its subsidiaries has any material liability for the taxes of any person (other than the Company and any of 13 its subsidiaries that is currently a member of the Company's affiliated group filing a consolidated federal income tax return) under Treas. Reg. 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (vi) As of the date of the most recent financial statements included in the Company Filed SEC Documents, the unpaid taxes of the Company and its subsidiaries did not exceed the liability for taxes (rather than any reserve for deferred taxes established to reflect timing differences between book and tax income) set forth on the face of such financial statements. (vii) Neither the Company nor any of its subsidiaries is required to include in income any adjustment pursuant to Section 481(a) of the Code (or similar provisions of other law or regulations) in its current or in any future taxable period by reason of a change in accounting method; nor does the Company or any of its subsidiaries have any knowledge that the Internal Revenue Service (or other taxing authority) has proposed or is considering proposing, any such change in accounting method. Neither the Company nor any of its subsidiaries is a party to any agreement, contract, or arrangement that, individually or collectively, could give rise to the payment of any material amount (whether in cash or property, including Shares) that would not be deductible pursuant to the terms of Sections 162(a)(1), other than amounts which may be required to be capitalized pursuant to Section 263 or other applicable sections of the Code, 162(m), 162(n) or 280G of the Code. (m) State Takeover Statutes; Rights Agreement. (i) The Board of Directors of the Company has approved the Offer, the Merger and this Agreement, and such approval is sufficient to render inapplicable to the Offer, the Merger, this Agreement and the other transactions contemplated hereby, the provisions of Section 203 of Delaware Law. To the best of the Company's knowledge, no other "fair price", "moratorium", "control share acquisition", or other anti-takeover statute or similar statute or regulation, applies or purports to apply to the Offer, the Merger, this Agreement or any of the other transactions contemplated hereby. (ii) The Company has delivered to Parent a complete and correct copy of the Rights Agreement, including all amendments and exhibits thereto. The Company has taken, and as soon as possible after the date hereof (but in no event later than two business days after the date hereof), the Rights Agent will take, all actions necessary or appropriate to amend the Rights Agreement to ensure that the execution of this Agreement, the announcement or making of the Offer, the acquisition of Shares pursuant to the Offer and the Merger and the other transactions contemplated in this Agreement will not cause Parent or any of its affiliates to be considered an Acquiring Person (defined in the Rights Agreement), the occurrence of a Distribution Date or Shares Acquisition Date (each defined in the Rights Agreement) or the separation of the Rights from the underlying Shares, and will not give the holders thereof the right to acquire securities of any party hereto. (n) Brokers; Schedule of Fees and Expenses. No broker, investment banker, financial advisor or other person, other than Lazard Freres & Co. LLC and Broadview Associates LLC, the fees and expenses of which will be paid by the Company (and a copy of whose engagement letters and a calculation of the fees that would be due thereunder has been provided to Parent), is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its subsidiaries. Assuming consummation of the Offer and the Merger, no such engagement letter obligates the Company to continue to use their services or pay fees or expenses in connection with any future transaction. (o) Permits; Compliance with Laws. Each of the Company and its subsidiaries has in effect all federal, state, local and foreign governmental approvals, authorizations, certificates, filings, franchises, licenses, notices, permits and rights ("Permits") necessary 14 for it to own, lease or operate its properties and assets and to carry on its business as now conducted, and there has occurred no default under any such Permit, except for the absence of Permits and for defaults under Permits which absence or defaults, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries have been, and are, in compliance in all material respects with all applicable statutes, laws or material ordinances, regulations, rules, judgments, decrees or orders of any Governmental Entity, and neither the Company nor any of its subsidiaries has received any notice from any Governmental Entity or any other person that either the Company or any of its subsidiaries is in violation of, or has violated, in any material respect any applicable statutes, laws or material ordinances, regulations, rules, judgments, decrees or orders. (p) Contracts; Debt Instruments. (i) Except as otherwise disclosed in Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule, neither the Company nor any of its subsidiaries is a party to or subject to: (A) any union contract, or any employment, consulting, severance, termination, or indemnification agreement, contract or arrangement providing for future payments, written or oral, with any current or former officer, consultant, director or employee which (1) exceeds $200,000 per annum or (2) requires aggregate annual payments or total payments over the life of such agreement, contract or arrangement to such current or former officer, consultant, director or employee in excess of $100,000 or $250,000, respectively, and is not terminable by it or its subsidiary on 30 days' notice or less without penalty or obligation to make payments related to such termination; (B) any joint venture contract or arrangement or any other agreement which has involved or is expected to involve a sharing of revenues of $1,000,000 per annum or more with other persons; (C) any lease for real or personal property in which the amount of payments which the Company is required to make on an annual basis exceeds $1,000,000; (D) to the Company's knowledge, any material agreement, contract, policy, license, Permit, document, instrument, arrangement or commitment which has not been terminated or performed in its entirety and not renewed which may be, by its terms, terminated, impaired or adversely affected by reason of the execution of this Agreement, the closing of the Offer or the Merger, or the consummation of the other transactions contemplated hereby; (E) any agreement, contract, policy, license, Permit, document, instrument, arrangement or commitment that limits in any material respect the freedom of the Company or any subsidiary of the Company to compete in any line of business or with any person or in any geographic area or which would so limit in any material respect the freedom of the Company or any subsidiary of the Company after the Effective Time; or (F) any other agreement, contract, policy, license, Permit, document, instrument, arrangement or commitment not made in the ordinary course of business which is material to the Company and its subsidiaries taken as a whole. (ii) Neither the Company nor any subsidiary of the Company is in default in any material respect under the terms of any exclusive license or distribution agreement or arrangement that, by its terms, provides for payments to the Company or any of its subsidiaries of $500,000 or more per annum. To the knowledge of the Company, as of the date hereof, none of the parties to any of the contracts identified in Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule or otherwise 15 disclosed in the Company Filed SEC Documents has terminated, or in any way expressed an intent to materially reduce or terminate the amount of, its business with the Company or any of its subsidiaries in the future. (iii) Set forth in Section 4.1(p)(iii) of the Disclosure Schedule is (A) a list of all loan or credit agreements, notes, bonds, mortgages, indentures and other agreements and instruments pursuant to which any indebtedness of the Company or any of its subsidiaries in an aggregate principal amount in excess of $500,000 is outstanding or may be incurred and (B) the respective principal amounts currently outstanding thereunder. For purposes of this Section 4.1(p)(iii), "indebtedness" shall mean, with respect to any person, without duplication, (A) all obligations of such person for borrowed money, or with respect to deposits or advances of any kind to such person, (B) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (C) all obligations of such person upon which interest charges are customarily paid, (D) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person, (E) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding obligations of such person to creditors for raw materials, inventory, services and supplies incurred in the ordinary course of such person's business), (F) all capitalized lease obligations of such person, (G) all obligations of others secured by any Lien on property or assets owned or acquired by such person, whether or not the obligations secured thereby have been assumed, (H) all obligations of such person under interest rate or currency swap transactions (valued at the termination value thereof), (I) all letters of credit issued for the account of such person (excluding letters of credit issued for the benefit of suppliers to support accounts payable to suppliers incurred in the ordinary course of business), (J) all obligations of such person to purchase securities (or other property) which arises out of or in connection with the sale of the same or substantially similar securities or property, and (K) all guarantees and arrangements having the economic effect of a guarantee of such person of any indebtedness of any other person. (q) Opinion of Financial Advisor. The Company has received the opinion of Lazard Freres & Co. LLC, dated the date hereof, a copy of which has been or, within three business days of the date hereof, will be provided to Parent, to the effect that, as of such date, the consideration to be paid in the Offer and the Merger is fair to the Company's stockholders from a financial point of view. (r) Interests of Officers and Directors. None of the Company's or any of its subsidiaries' officers or directors has any interest in any property, real or personal, tangible or intangible, including inventions, patents, copyrights, trademarks, trade names, trade secrets or know-how, used in or pertaining to the business of the Company or that of its subsidiaries, or any supplier, distributor or customer of the Company or any of its subsidiaries, except for the normal rights of a stockholder and rights under existing employee benefit plans and except for any such interest which would not be required to be disclosed under the Exchange Act. (s) Technology. (i) The Company and its subsidiaries exclusively own, or are licensed to use, the rights to all patents, trademarks, trade names, service marks, copyrights and any applications therefor, maskworks, net lists, schematics, inventories, technology, trade secrets, source codes, know-how, computer software programs or applications and tangible or intangible proprietary information or material that in any material respect are used or proposed by the Company to be used in the business of the Company and any of its subsidiaries as currently conducted or proposed by the Company to be conducted (the "Company Intellectual Property Rights"). Section 4.1(s)(i) of the Disclosure Schedule lists, as of the date hereof, all material: (A) patents, trademarks, trade names, service marks, registered and unregistered copyrights, and any applications therefor included in the Company Intellectual Property Rights, the Company's currently marketed software products and a list of which, if any, of such products have been registered for copyright protection with the United States Copyright Office and any foreign offices; and (B) licenses and other agreements to which the Company or any of its subsidiaries is 16 a party and pursuant to which the Company or any of its subsidiaries is authorized to use any Company Intellectual Property Right. Neither the Company nor any of its subsidiaries is, or as a result of the execution, delivery or performance of the Company's obligations hereunder will be, in material violation of, or lose any rights pursuant to, any material license or agreement described in Section 4.1(s) of the Disclosure Schedule. (ii) As of the date hereof, no claims with respect to the Company Intellectual Property Rights have been asserted or, to the knowledge of the Company, are threatened by any person nor does the Company or any subsidiary of the Company know of any valid grounds for any bona fide claims against the use by the Company or any subsidiary of the Company of any Company Intellectual Property Rights. All granted and issued patents and all registered trademarks and service marks listed in Section 4.1(s)(i) of the Disclosure Schedule and all copyrights held by the Company or any of its subsidiaries are valid, enforceable and subsisting. To the Company's knowledge, as of the date hereof, there has not been and there is not any material unauthorized use, infringement or misappropriation of any of the Company Intellectual Property Rights by any third party, employee or former employee. (iii) No Company Intellectual Property Right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting in any manner the licensing thereof by the Company or any of its subsidiaries. Neither the Company nor any of its subsidiaries has entered into any agreement to indemnify any other person against any charge of infringement of any Company Intellectual Property Right, except infringement indemnities agreed to in the ordinary course included as part of the Company's license agreements. Neither the Company nor any of its subsidiaries has entered into any agreement granting any third party the right to bring infringement actions with respect to, or otherwise to enforce rights with respect to, any Company Intellectual Property Right owned by the Company. The Company and its subsidiaries have the exclusive right to file, prosecute and maintain all applications and registrations with respect to the Company Intellectual Property Rights owned by the Company. (t) Change of Control. Except as set forth in Section 4.1(i), 4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (i) result in or increase in any material respect the amount of any payment or benefit (including a payment or benefit contingent on the occurrence of one or more events including, without limitation, termination of employment) becoming due to any current or former employee, director or independent contractor of the Company or any of its subsidiaries, from the Company or any of its subsidiaries under the terms of any Stock Plan, Benefit Plan or employment or change of control agreement, or (ii) result in the acceleration of the time of payment, exercise or vesting of any such payment or benefits. SECTION 4.2. Representations and Warranties of Parent and Merger Subsidiary. Parent and Merger Subsidiary represent and warrant to the Company as follows: (a) Organization, Standing and Corporate Power. Each of Parent and Merger Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted. (b) Authority; Noncontravention. Parent and Merger Subsidiary have all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of Parent and Merger Subsidiary. This Agreement has been duly executed and delivered by Parent and Merger Subsidiary and, assuming this Agreement constitutes a valid and binding agreement of the Company, constitutes a valid and binding obligation of such party, enforceable against such 17 party in accordance with its terms. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Parent or any of its subsidiaries under, (i) the certificate of incorporation or by-laws of Parent or Merger Subsidiary or the comparable charter or organizational documents of any other subsidiary of Parent, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to Parent or Merger Subsidiary or their respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent, Merger Subsidiary or any other subsidiary of Parent or their respective properties or assets, other than, in the case of clause (ii) or (iii), any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate would not (A) have a material adverse effect on Parent and its subsidiaries taken as a whole, (B) impair the ability of Parent and Merger Subsidiary to perform their respective obligations under this Agreement or (C) prevent the consummation of any of the transactions contemplated by this Agreement. No Consent is required by or with respect to Parent, Merger Subsidiary or any other subsidiary of Parent in connection with the execution and delivery of this Agreement or the consummation by Parent or Merger Subsidiary, as the case may be, of any of the transactions contemplated by this Agreement, except for (i) the filing of a premerger notification and report form under the HSR Act, (ii) compliance with any applicable requirements of the Exchange Act, (iii) the filing of a certificate of merger in accordance with Delaware Law and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (iv) such notices, filings and consents as may be required under relevant state property transfer laws and (v) such other consents, approvals, orders, authorizations, registrations, declarations and filings as (A) may be required under the laws of any foreign country in which the Company or any of its subsidiaries conducts any business or owns any property or assets or (B) as to which the failure to obtain or make could not reasonably be expected to (x) have a Material Adverse Effect or (y) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. (c) Disclosure Documents. (i) The information with respect to Parent and its subsidiaries that Parent furnishes to the Company in writing specifically for use in any Company Disclosure Document will not contain, any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (A) in the case of the Company Proxy Statement at the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time the stockholders vote on adoption of this Agreement, and (B) in the case of any Company Disclosure Document other than the Company Proxy Statement, at the time of the filing thereof and at the time of any distribution thereof. (ii) The Offer Documents, when filed, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not at the time of the filing thereof, at the time of any distribution thereof or at the time of consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, provided, that this representation and warranty will not apply to statements or omissions in the Offer Documents based upon information furnished to Parent or Merger Subsidiary in writing by the Company specifically for use therein. (d) Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial 18 advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Merger Subsidiary. (e) Delaware Law. As of the time immediately prior to the execution of this Agreement, neither Parent nor any of its subsidiaries was (i) an "interested stockholder", as such term is defined in Section 203 of the Delaware Law or (ii) an Acquiring Person under the Rights Agreement. (f) Financing. Parent will provide or cause to be provided to Merger Subsidiary the funds necessary to consummate the Offer and the Merger in accordance with their terms and the terms of this Agreement. ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1. Conduct of Business. During the period from the date of this Agreement to the Effective Time, the Company shall, and shall cause its subsidiaries to, carry on their respective businesses in the ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent therewith, use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to, without the prior written approval of Parent: (a) (i) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than dividends and distributions by any direct or indirect wholly owned subsidiary of the Company to its parent, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (other than in connection with the exercise of Company Options); (b) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of Shares upon the exercise of Company Options outstanding on the date of this Agreement in accordance with their terms on such date); (c) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents; (d) (i) mortgage or otherwise encumber or subject to any Lien, any of the Company Intellectual Property Rights or any other material properties or assets, (ii) except in the ordinary course of business consistent with past practice and pursuant to existing contracts or commitments, sell, lease, transfer or otherwise dispose of any of the Company Intellectual Property Rights or any other material properties or assets, or (iii) except in the ordinary course of business consistent with past practice or pursuant to existing contracts or commitments, license any of the Company Intellectual Property Rights; 19 (e) make or agree to make any new capital expenditures individually in excess of $250,000; (f) make any material tax election (unless required by law) or settle or compromise any material income tax liability; (g) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice and in accordance with their terms, of (i) liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company Filed SEC Documents or (ii) liabilities incurred in the ordinary course of business consistent with past practice, or, subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company, waive the benefits of, or agree to modify in any manner, any confidentiality, standstill or similar agreement to which the Company or any of its subsidiaries is a party; (h) commence a lawsuit other than (i) for the routine collection of bills or (ii) to enforce this Agreement or (iii) in such cases where the Company in good faith determines that the failure to commence suit would result in a material impairment of a valuable aspect of the Company's business, provided that the Company consults with Parent prior to filing such suit; (i) (i) enter into or amend any employment agreement, (ii) enter into any customer sale or license agreement with non-standard terms or at discounts from list prices from that typically granted to similarly situated customers in accordance with past practice; provided that such action with respect to a customer sale or license agreement that is immaterial in amount and term will not be deemed to violate this provision if the Company has (A) used its best efforts to ensure compliance with this provision and (B) taken prompt corrective action in the event of a violation sufficient to ensure that no similar violation will occur in the future, (iii) pay commissions to sales employees except pursuant to quarterly draws consistent with past practice or on the basis of executed customer contracts with respect to products actually delivered to customers, (iv) without the consent of Parent which shall not be unreasonably withheld or delayed, enter into any contract or series of related contracts in excess of $500,000 for any contract or $1,000,000 for any series of related contracts, (v) enter into or amend any agreement or arrangement for professional services or advice except in the ordinary course of business consistent with past practice, (vi) enter into any customer agreements providing for product replacements except in the ordinary course of business consistent with past practice or (vii) make any determination as to amounts payable under any plan, arrangement, or agreement, providing for discretionary incentive compensation or bonus to any officer, director, employee or independent contractor of the Company or any of its subsidiaries; (j) hire additional employees except in accordance with existing budgets; provided that the aggregate number of employees of the Company and its subsidiaries shall not be increased by more than eight percent per quarter over the number of employees on the date of this Agreement; (k) authorize any of, or commit or agree to take any of, the foregoing actions; or (l) (i) take or agree or commit to take any action that would make any representation or warranty of the Company hereunder inaccurate in any respect at, or as of any time prior to, the Effective Time or (ii) omit or agree or commit to omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. 20 SECTION 5.2. Stockholder Meeting; Proxy Material. The Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable following Merger Subsidiary's acquisition of Shares in the Offer for the purpose of voting on the approval and adoption of this Agreement and the Merger unless a vote of stockholders of the Company is not required by Delaware Law. The Directors of the Company shall, subject to their fiduciary duties as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company, recommend approval and adoption of this Agreement and the Merger by the Company's stockholders. In connection with such meeting, the Company (i) will promptly prepare and file with the SEC, will use all reasonable efforts to have cleared by the SEC and will thereafter mail to its stockholders as promptly as practicable the Company Proxy Statement and all other proxy materials for such meeting, (ii) subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company, will use its best efforts to obtain the necessary approvals by its stockholders of this Agreement and the transactions contemplated hereby and (iii) will otherwise comply with all legal requirements applicable to such meeting. SECTION 5.3. Access to Information. From the date hereof until the Effective Time, the Company will give Parent, its counsel, financial advisors, auditors and other authorized representatives access (during normal business hours and upon reasonable notice) to the offices, properties, books and records of the Company and the subsidiaries, will furnish to Parent, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such persons may reasonably request and will instruct the Company's employees, counsel and financial advisors to cooperate with Parent in its investigation of the business of the Company and the subsidiaries; provided that no investigation pursuant to this Section 5.3 shall affect any representation or warranty given by the Company to Parent hereunder. SECTION 5.4. Other Offers. Until the termination of this Agreement, the Company and its subsidiaries will not, and will not authorize or permit the officers, directors, employees or other agents of the Company and its subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal (defined below) or (ii) subject to the fiduciary duties of the Board of Directors of the Company under applicable law, as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company, engage in negotiations with, or disclose any nonpublic information relating to the Company or any of its subsidiaries or afford access to the properties, books or records of the Company or any of its subsidiaries to, any person that has advised the Company or otherwise publicized the fact that such person may be considering making, or that has made, an Acquisition Proposal; provided, nothing herein shall prohibit the Company's Board of Directors from taking and disclosing to the Company's stockholders a position with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. The Company will promptly notify Parent after receipt of any Acquisition Proposal or any notice that any person is considering making an Acquisition Proposal or any request for nonpublic information relating to the Company or any of its subsidiaries or for access to the properties, books or records of the Company or any of its subsidiaries by any person that has advised the Company or otherwise publicized the fact that such person may be considering making, or that has made, an Acquisition Proposal and will keep Parent informed of the status and details of any such Acquisition Proposal, indication or request. For purposes of this Agreement, "Acquisition Proposal" means any offer or proposal for, or any written indication of interest in, a merger or other business combination involving the Company or any of its subsidiaries or the acquisition of any significant equity interest in, or a significant portion of the assets of, the Company or any of its subsidiaries, other than the transactions contemplated by this Agreement. SECTION 5.5. State Takeover Statutes; Rights Agreement. (a) If any "fair price", "control share acquisition", "moratorium" or other anti-takeover statute, or similar statute or regulation shall become applicable to the Offer, the Merger or this Agreement, or any other transactions contemplated hereby, the Company and its Board of 21 Directors shall take all action necessary to ensure that the Offer, the Merger and the other transactions contemplated hereby, may be consummated as promptly as practicable on the terms contemplated hereby and otherwise to minimize the effect of such statute or regulation on the Offer, the Merger and the other transactions contemplated hereby. (b) Except as otherwise provided in Section 4.1(m)(ii), the Company shall not redeem the Rights or amend (other than to delay the Distribution Date or to render the Rights inapplicable to the Offer and the Merger) or terminate the Rights Agreement prior to the Effective Time unless required to do so by a court of competent jurisdiction. ARTICLE VI COVENANTS OF PARENT AND MERGER SUBSIDIARY SECTION 6.1. Obligations of Merger Subsidiary. Parent will take all action necessary to cause Merger Subsidiary to perform its obligations under this Agreement and to consummate the Offer and the Merger on the terms and conditions set forth in this Agreement. SECTION 6.2. Voting of Shares. Parent agrees to make a quorum and vote all Shares acquired in the Offer or otherwise beneficially owned by it in favor of adoption of this Agreement at the Company Stockholder Meeting. SECTION 6.3. Indemnification. For six years after the Effective Time, Parent will indemnify and hold harmless the present and former officers, directors, employees and agents of the Company (the "Indemnified Parties") in respect of acts or omissions occurring on or prior to the Effective Time to the extent provided under the Company's certificate of incorporation and bylaws in effect on the date hereof; provided that such indemnification shall be subject to any limitation imposed from time to time under applicable law. For four years after the Effective Time, Parent will cause the Surviving Corporation to provide officers' and directors' liability insurance in respect of acts or omissions occurring on or prior to the Effective Time covering each such person currently covered by the Company's officers' and directors' liability insurance policy on terms substantially similar to those of such policy in effect on the date hereof, provided that in satisfying its obligation under this Section, Parent shall not be obligated to cause the Surviving Corporation to pay premiums in excess of 105% of the amount per annum the Company paid in its last full fiscal year, which amount has been disclosed to Parent and if the Surviving Corporation is unable to obtain the insurance required by this Section 6.3, it shall obtain as much comparable insurance as possible for an annual premium equal to such maximum amount. Without limitation of the foregoing, in the event any such Indemnified Party is or becomes involved in any capacity in any action, proceeding or investigation in connection with any matter relating to the Merger, the Offer or this Agreement occurring on or prior to the Effective Time, Parent shall pay as incurred such Indemnified Party's reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. SECTION 6.4. Employees. (a) Parent agrees to honor in accordance with their terms all Benefit Plans (including employment agreements) previously delivered to Parent and all accrued benefits vested thereunder; it being understood and agreed that nothing in this Section 6.4(a) shall prevent Parent from terminating any such Benefit Plan in accordance with its terms. For purposes of this Section 6.4(a), any Benefit Plan that is a Company Filed SEC Document shall be deemed to have been delivered to Parent. (b) Parent agrees to provide employees of the Company and its subsidiaries retained by Parent with employee benefits in the aggregate no less favorable than those benefits provided to Parent's similarly situated employees; provided that Parent shall be under no obligation to retain any employee or group of employees of the Company or its subsidiaries. 22 ARTICLE VII ADDITIONAL AGREEMENTS SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification. (a) Each of Parent and the Company shall (i) promptly make or cause to be made the filings required of such party or any of its subsidiaries under the HSR Act with respect to the transactions contemplated by this Agreement, (ii) comply at the earliest practicable date with any request under the HSR Act for additional information, documents, or other material received by such party or any of its subsidiaries from the Federal Trade Commission or the Department of Justice or any other Governmental Entity in respect of such filings or such transactions, and (iii) cooperate with the other party in connection with any such filing and in connection with resolving any investigation or other inquiry of any such agency or other Governmental Entity under any Antitrust Laws (defined below) with respect to any such filing or any such transaction. Each party shall promptly inform the other party of any communication with, and any proposed understanding, undertaking, or agreement with, any Governmental Entity regarding any such filings or any such transaction. Neither party shall participate in any meeting with any Governmental Entity in respect of any such filings, investigation, or other inquiry without giving the other party notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend and participate. (b) Each of Parent and the Company shall use all reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental Entity with respect to the transactions contemplated by this Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other federal, state or foreign statutes, rules, regulations, orders or decrees that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, "Antitrust Laws"). In connection therewith, if any administrative or judicial action or proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as violative of any Antitrust Law, and, if by mutual agreement, Parent and the Company decide that litigation is in their best interests, each of Parent and the Company shall cooperate and use all reasonable efforts vigorously to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent (each an "Order"), that is in effect and that prohibits, prevents, or restricts consummation of any such transaction. Each of Parent and the Company shall use all reasonable efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of this Agreement. (c) Subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company, each of the parties agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Offer, the Merger and the other transactions contemplated by this Agreement, including (i) the obtaining of all other necessary actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all other necessary registrations and filings (including other filings with Governmental Entities, if any), (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the preparation of the Company Disclosure Documents and the Offer Documents, and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. 23 (d) Notwithstanding anything to the contrary in Section 7.1(a), (b) or (c), (i) neither Parent nor any of its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, (ii) neither Parent nor any of its subsidiaries shall be required to take or agree to take any other action or agree to any limitation that could reasonably be expected to have a material adverse effect on the business, assets, financial condition, results of operations or prospects of Parent and its subsidiaries taken as a whole or of Parent combined with the Surviving Corporation after the Effective Time, (iii) neither the Company nor its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, or to take or agree to take any other action or agree to any limitation that could reasonably be expected to have a Material Adverse Effect, and (iv) no party shall be required to agree to the imposition of or to comply with, any condition, obligation or restriction on Parent or any of its subsidiaries or on the Surviving Corporation or any of its subsidiaries of the type referred to in clause (a) or (b) of Annex I and (v) neither Parent nor Merger Subsidiary shall be required to waive any of the conditions to the Offer set forth in Annex I or any of the conditions to the Merger set forth in Section VIII. (e) Each party shall give prompt notice to the other parties upon learning of (i) any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it to comply with or satisfy in any respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. (f) The Company shall give prompt notice to Parent, and Parent or Merger Subsidiary shall give prompt notice to the Company, of: (i) any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement; (ii) any notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and (iii) any actions, suits, claims, investigations or proceedings commenced or, to the best of its knowledge threatened against, relating to or involving or otherwise affecting it or any of its subsidiaries (x) which, in the case of the Company, if pending on the date of this Agreement would have been required to have been disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l) or 4.1(s) or (y) in the case of any party, which relate to the consummation of the transactions contemplated by this Agreement. SECTION 7.2. Public Announcements. Parent and Merger Subsidiary, on the one hand, and the Company, on the other hand, will consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, including the Offer and the Merger, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement will be in the form previously agreed to by the parties. SECTION 7.3. Confidentiality. Parent and its subsidiaries will hold, and will cause their Representatives (defined in the Confidentiality Agreement, dated October 1, 1996 (the "Confidentiality 24 Agreement"), between Parent and the Company) to hold, any Evaluation Material (defined in the Confidentiality Agreement) (including any stockholder information provided pursuant to this Agreement) in confidence in accordance with the terms of the Confidentiality Agreement. ARTICLE VIII CONDITIONS TO THE MERGER SECTION 8.1. Conditions to the Obligations of Each Party. The obligations of the Company, Parent and Merger Subsidiary to consummate the Merger are subject to the satisfaction of the following conditions: (i) if required by Delaware Law, this Agreement shall have been adopted by the stockholders of the Company in accordance with such Law; (ii) any applicable waiting period under the HSR Act relating to the Merger shall have expired; (iii) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; (iv) Parent or Merger Subsidiary shall have purchased Shares in an amount equal to at least the Minimum Condition pursuant to the Offer; and (v) other than the filing of the certificate of merger in accordance with Delaware Law, all Consents required to permit the consummation of the Merger including those set forth in Sections 4.1(d) and 4.2(b) shall have been filed, occurred or been obtained (other than any such Consents the failure to file, occur or obtain in the aggregate, could not reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or materially delay the consummation of the Merger). ARTICLE IX TERMINATION SECTION 9.1. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the stockholders of the Company): (a) by mutual written consent of the Company and Parent; (b) by either the Company or Parent, if the Merger has not been consummated by April 7, 1997 (provided that the party seeking to terminate this Agreement shall not have breached its obligations under this Agreement in any material respect); (c) by either the Company or Parent, if there shall be any law or regulation that makes consummation of the Merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Parent or the Company from consummating the Merger is entered and such judgment, injunction, order or decree shall become final and nonappealable; (d) by either the Company or Parent, (x) if Parent shall have failed to commence the Offer within five business days following the date of this Agreement (provided that Parent shall not be entitled to terminate this Agreement pursuant to this sub-clause (x) as a result 25 of its breach of this Agreement), (y) if Parent or Merger Subsidiary shall not have purchased any Shares pursuant to the Offer prior to February 21, 1997 or (z) if the Offer shall have been terminated without Parent or Merger Subsidiary having purchased any Shares pursuant to the Offer; (e) by Parent, upon the occurrence of any Trigger Event described in clauses (i) through (iii) of Section 10.4(b); or (f) by the Company, upon the occurrence of any Trigger Event described in clause (i) of Section 10.4(b). SECTION 9.2. Effect of Termination. If this Agreement is terminated pursuant to Section 9.1, this Agreement shall become void and of no effect with no liability on the part of any party hereto or their respective officers and directors, except that the agreements contained in Sections 7.3, 10.4 and 10.6 shall survive the termination hereof. ARTICLE X GENERAL PROVISIONS SECTION 10.1. Nonsurvival of Representations and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 10.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. SECTION 10.2. Notices. All notices, requests and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) or by telecopy (with copies by overnight courier) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or Merger Subsidiary, to Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar President and Chief Operating Officer Fax: (516) 342-3300 with a copy to: Howard, Darby & Levin 1330 Avenue of the Americas New York, New York 10019 Attention: Scott F. Smith Fax: 212-841-1010 26 (b) if to the Company, to Cheyenne Software, Inc. 3 Expressway Plaza Roslyn Heights, New York 11577 Attention: ReiJane Huai Chairman and Chief Executive Officer Fax: (516) 465-5977 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Barry A. Bryer Fax: 212-403-2000 SECTION 10.3. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company, Parent and Merger Subsidiary or in the case of a waiver, by the party against whom the waiver is to be effective; provided that after the adoption of this Agreement by the stockholders of the Company, no such amendment or waiver shall, without the further approval of such stockholders, alter or change (i) the amount or kind of consideration to be received in exchange for any shares of capital stock of the Company, (ii) any term of the certificate of incorporation of the Surviving Corporation or (iii) any of the terms or conditions of this Agreement if such alteration or change would adversely affect the holders of any shares of capital stock of the Company. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 10.4. Fees and Expenses. (a) Except as otherwise provided in this Section, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. (b) The Company agrees to pay Parent a fee in immediately available funds, promptly, but in no event later than two business days, after the termination of this Agreement as a result of the occurrence of any of the events set forth below (a "Trigger Event") in an amount equal to (x) $37,500,000, in the case of the occurrence of a Trigger Event described in clause (i) or (iii) below and (y) $20,000,000, in the case of the occurrence of a Trigger Event described in clause (ii) below: (i) the Company shall have entered into, or shall have publicly announced its intention to enter into, an agreement or an agreement in principle with respect to any Acquisition Proposal; 27 (ii) the Company shall have breached or failed to perform in any respect any of its obligations, covenants or agreements under this Agreement or any representation or warranty of the Company set forth in this Agreement (other than any breaches or failures to perform or comply that, in the aggregate, do not have a Material Adverse Effect); or (iii) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified its approval or recommendation of the Offer, the Merger or this Agreement. (c) If this Agreement is terminated as a result of the occurrence of a Trigger Event, in addition to any amounts paid or payable by the Company to Parent pursuant to Section 10.4(b), the Company shall assume and pay, or reimburse Parent for, all fees payable and expenses incurred by Parent (including the fees and expenses of its counsel) in connection with this Agreement and the transactions contemplated hereby, up to a maximum of $5,000,000. SECTION 10.5. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto except that Merger Subsidiary may transfer or assign, in whole or from time to time in part, to one or more of Parent or any of its wholly-owned subsidiaries, the right to purchase Shares pursuant to the Offer, but any such transfer or assignment will not relieve Merger Subsidiary of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. SECTION 10.6. Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York, except that the consummation and effectiveness of the Merger shall be governed by, and construed in accordance with, Delaware Law. SECTION 10.7. Counterparts; Effectiveness; Interpretation. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". 28 The parties hereto have caused this Agreement to be signed by their respective authorized officers as of the date first written above. COMPUTER ASSOCIATES INTERNATIONAL, INC. By:______/s/ Sanjay Kumar________________ Name: Sanjay Kumar Title: President and Chief Operating Officer TSE-TSEHESE-STAESTSE, INC. By:______/s/ Sanjay Kumar________________ Name: Sanjay Kumar Title: President CHEYENNE SOFTWARE, INC. By:______/s/ ReiJane Huai________________ Name: ReiJane Huai Title: Chairman and Chief Executive Officer ANNEX I Notwithstanding any other provision of the Offer, Parent and Merger Subsidiary shall not be required to accept for payment or pay for any Shares, and may terminate the Offer, if (i) by the expiration of the Offer, the Minimum Condition shall not have been satisfied, (ii) by the expiration of the Offer, the applicable waiting period under the HSR Act shall not have expired or been terminated, or (iii) at any time on or after October 7, 1996 and prior to the acceptance for payment of Shares pursuant to the Offer, any of the following conditions exist: (a) there shall be instituted or pending any action or proceeding by any Governmental Entity or by any other person, domestic or foreign, before any Governmental Entity or arbitrator, (i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the making of the Offer, the acceptance for payment of or payment for some of or all the Shares by Parent or Merger Subsidiary or the consummation by Parent or Merger Subsidiary of the Merger, seeking to obtain material damages or otherwise directly or indirectly relating to the transactions contemplated by this Agreement, the Offer or the Merger, (ii) seeking to restrain or prohibit Parent's or Merger Subsidiary's ownership or operation (or that of their respective subsidiaries or affiliates) of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Parent and its subsidiaries, taken as a whole, or to compel Parent or any of its subsidiaries or affiliates to dispose of or hold separate all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Parent and its subsidiaries, taken as a whole, (iii) seeking to impose material limitations on the ability of Parent or any of its subsidiaries or affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Shares acquired or owned by Parent or any of its subsidiaries or affiliates on all matters properly presented to the Company's stockholders, (iv) seeking to require divestiture by Parent or any of its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the judgment of Parent, is likely to materially adversely affect the business, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a whole; provided that, in the case of any instituted or pending action or proceeding described in this subsection (a) above by a person other than a Governmental Entity, there is a substantial probability of a determination material and adverse to Parent or any of its subsidiaries or the Company or any of its subsidiaries in such action or proceeding; or (b) there shall be any action taken, or any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to this Agreement, the Offer or the Merger, by any Governmental Entity or arbitrator other than the application of the waiting period provisions of the HSR Act to this Agreement, the Offer or the Merger, that, in the judgment of Parent, is likely, directly or indirectly, to result in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; or (c) any change shall have occurred or been threatened (or any development shall have occurred or been threatened involving a prospective change) in the business, financial condition or results of operations of the Company or any of its subsidiaries that, in the reasonable judgment of Parent, is or is likely to have a Material Adverse Effect; or (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or the American Stock Exchange, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any Governmental Entity on the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which would reasonably be expected to have a Material Adverse Effect or prevent (or materially delay) the consummation of the Offer or (v) in the case of any of the foregoing existing at the time of commencement of the Offer, a material acceleration or worsening thereof; or (e) any Consent (other than the filing of a certificate of merger or approval by the stockholders of the Company of the Merger (if required by Delaware Law)) required to be filed, occurred or been obtained by the Company or any of its subsidiaries or Parent of any of its subsidiaries (including Merger Subsidiary) in connection with the execution and delivery of this Agreement, the Offer and the consummation of the transactions contemplated by this Agreement shall not have been filed, occurred or been obtained (other than any such Consents the failure to file, occur or obtain in the aggregate, could not reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or materially delay the consummation of the Offer or the Merger); or (f) the Company shall have breached or failed to perform in any material respect any of its covenants or agreements under this Agreement, or any of the representations and warranties of the Company set forth in this Agreement that is qualified as to materiality shall not be true when made or at any time prior to consummation of the Offer as if made at and as of such time, or any of the representations and warranties set forth in this Agreement that is not so qualified shall not be true in any material respect when made or at any time prior to the consummation of the Offer as if made at and as of such time; or (g) this Agreement shall have been terminated in accordance with its terms; or (h) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified its approval or recommendation of the Offer, the Merger or this Agreement; or (i) the Company shall have entered into, or shall have publicly announced its intention to enter into, an agreement or agreement in principle with respect to any Acquisition Proposal; which, in the sole judgment of Parent in any such case, and regardless of the circumstances (including any action or omission by Parent or Merger Subsidiary) giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of Parent and Merger Subsidiary and may be asserted by Parent in its sole discretion regardless of the circumstances (including any action or omission by Parent or Merger Subsidiary) giving rise to any such condition or (other than the Minimum Condition) may be waived by Parent and Merger Subsidiary in their sole discretion in whole at any time or in part from time to time. The failure by Parent or Merger Subsidiary at any time to exercise its rights under any of the foregoing conditions shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right which may be asserted at any time or from time to time. Any determination by Parent concerning the events described in this Section will be final and binding upon all parties. EX-99.C2 11 EXHIBIT 99(c)(2) CHEYENNE SOFTWARE, INC. 3 Expressway Plaza Roslyn Heights, New York 11577 October 1, 1996 Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar Gentlemen: In connection with your consideration of a possible business combination transaction (a Transaction ) with Cheyenne Software, Inc. (the Company ), the Company and you expect to make available to one another from time to time certain nonpublic information concerning each other s respective business, financial condition, operations, assets and liabilities. As a condition to such information being furnished to each party and such party s directors, officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) (collectively, Representatives ), each party agrees to treat any nonpublic information concerning the other party (whether prepared by the disclosing party, its Representatives or otherwise and irrespective of the form of communication) which is furnished hereunder to a party or to its Representatives now or in the future by or on behalf of the disclosing party (collectively referred to in this Agreement as the Evaluation Material ) in accordance with the provisions of this Agreement, and to take or abstain from taking certain other actions hereinafter set forth. The parties acknowledge and agree that any existing confidentiality agreements between them related to technological issues shall not be affected by this Agreement and shall remain in full force and effect, but in the case of a conflict between this Agreement and any such agreement with respect to information provided under this Agreement, this Agreement shall govern, but only to the extent that it is more restrictive than such other agreement. (1) Evaluation Material. The term Evaluation Material also shall be deemed to include all notes, analyses, compilations, studies, interpretations or other documents prepared by each party or its Representatives which contain, reflect or are based upon, in whole or in part, the Evaluation Material furnished to such party or its Representatives pursuant to this Agreement. The term Evaluation Material does not include information which (i) is or becomes generally available to the public other than as a result of a breach of this Agreement by the receiving party or its Representatives, (ii) was within the receiving party s possession prior to its being furnished to the receiving party by or on behalf of the disclosing party; provided that the source of such information was not known by the receiving party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the disclosing party or any other party, (iii) is or becomes available to the receiving party on a non-confidential basis from a source other than the disclosing party or any of its Representatives; provided that such source was not known by the receiving party to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the disclosing party or any other 2 party with respect to such information, (iv) is disclosed by the disclosing party to a third party without a duty of confidentiality with respect to such information, or (v) is independently developed by the receiving party without use of Evaluation Material. (2) Use of Evaluation Material. Each party agrees that it and its Representatives shall use the other party s Evaluation Material solely for the purpose of evaluating a possible Transaction between the parties, and that the disclosing party s Evaluation Material will be kept confidential and each party and its Representatives will not disclose or use for purposes other than the evaluation of a possible Transaction any of the other party s Evaluation Material in any manner whatsoever; provided that any of such information may be disclosed to the receiving party s Representatives who need to know such information for the sole purpose of evaluating a possible Transaction between the parties (it being understood that such Representatives shall be informed by the receiving party of the confidential nature of such information and that by receiving such information they are agreeing to be bound by this Agreement). Each party agrees to be responsible for any breach of this Agreement by any of its Representatives. (3) Non-Disclosure of Discussions. In addition, each party agrees that, without the prior written consent of the other party, it and its Representatives will not disclose to any other person the fact that any Evaluation Material has been made available hereunder, that discussions or negotiations are taking place concerning a possible Transaction involving the parties or any of the terms, conditions or other facts with respect thereto (including the status thereof); provided that a party may make such disclosure if in the opinion of such party s outside counsel, such disclosure is necessary to avoid committing a violation of law or of any rule or regulation of any securities association, stock exchange or national securities quotation system on which such party s securities are listed or trade. In such event, the disclosing party shall use its best efforts to give advance notice to the other party. (4) Required Disclosure. In the event that a party or its Representatives are requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any of the other party s Evaluation Material or any of the facts disclosure of which is prohibited under paragraph (3) of this Agreement, the party requested or required to make the disclosure shall provide the other party with prompt notice of any such request or requirement so that the other party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by such other party, the party requested or required to make the disclosure or any of its Representative should nonetheless, in the opinion of such party s or (in the case of disclosure requested or required of a Representative) such Representative s outside counsel, disclose the other party s Evaluation Material, the party requested or required to make the disclosure or its Representative may, without liability hereunder, disclose only that portion of the other party s Evaluation Material which such counsel advises is legally required to be disclosed; provided that the party requested or required to make the disclosure exercises its reasonable efforts to preserve the confidentiality of the other party s Evaluation Material, including, without limitation, by cooperating with the other party to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the other party s Evaluation Material. (5) Termination of Discussions. If either party decides that it does not wish to proceed with negotiating a Transaction with the other 3 party, the party so deciding will promptly inform the other party of that decision. In that case, or at any time upon the request of either disclosing party for any reason, each receiving party will promptly deliver to the disclosing party or, at the option of the receiving party, destroy all written (and electronic) Evaluation Material (and all copies thereof and extracts therefrom) furnished to the receiving party or its Representatives by or on behalf of the disclosing party pursuant hereto. In the event of such a decision or request, all other Evaluation Material prepared by the requesting party shall be destroyed and no copy thereof shall be retained, and in no event shall either party be obligated to disclose or provide the Evaluation Material prepared by it or its Representatives to the other party. Notwithstanding the return or destruction of the Evaluation Material, each party and its Representatives will continue to be bound by their obligations of confidentiality and other obligations hereunder. (6) No Representation of Accuracy. Each party understands and acknowledges that neither party nor any of its Representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material made available by it or to it. Each party agrees that neither party nor any of its Representatives shall have any liability to the other party or to any of its Representatives relating to or resulting from the use of or reliance upon such other party s Evaluation Material or any errors therein or omissions therefrom. Only those representations or warranties which are made in a final definitive agreement regarding the Transaction, when, as and if executed, and subject to such limitations and restrictions as may be specified therein, will have any legal effect. (7) Definitive Agreements. Each party understands and agrees that no contract or agreement providing for any Transaction involving the parties shall be deemed to exist between the parties unless and until a final definitive agreement has been executed and delivered. Each party also agrees that unless and until a final definitive agreement regarding a Transaction between the parties has been executed and delivered, neither party will be under any legal obligation of any kind whatsoever with respect to such a Transaction by virtue of this Agreement except for the matters specifically agreed to herein. For purposes of this paragraph, the term definitive agreement does not include an executed letter of intent or any other preliminary written agreement. Both parties further acknowledge and agree that each party reserves the right, in its sole discretion, to provide or not provide Evaluation Material to the receiving party under this Agreement, to reject any and all proposals made by the other party or any of its Representatives with regard to a Transaction between the parties, and to terminate discussions and negotiations at any time. (8) Injunctive Relief. It is further understood and agreed that money damages would not be a sufficient remedy for any breach of this Agreement by either party or any of its Representatives and that the non-breaching party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach. Such remedies shall not be deemed to be the exclusive remedies for a breach of this Agreement but shall be in addition to all other remedies available at law or equity. (9) Waiver; Invalidity. It is understood and agreed that no failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or future exercise thereof or the exercise of any other right, power or privilege hereunder. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 4 Please confirm your agreement with the foregoing by signing and returning one copy of this letter to the undersigned, whereupon it shall become our binding agreement to be governed by New York law. Very truly yours, CHEYENNE SOFTWARE, INC. By:/s/ ReiJane Huai -------------------- Name: ReiJane Huai Title: Chairman and Chief Executive Officer Accepted and Agreed as of the date first written above: COMPUTER ASSOCIATES INTERNATIONAL, INC. By: /s/ Sanjay Kumar -------------------------- Name: Sanjay Kumar Title: President and Chief Operating Officer -----END PRIVACY-ENHANCED MESSAGE-----