-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mPWkUxBAJj4HLinm4gaecYABDWwnOZVuvnGgmng6ujfg2lCHnRtcwrYMWym9U2BP kxTiZkLc4e+2lghkMxsgeQ== 0000950123-95-001630.txt : 19950602 0000950123-95-001630.hdr.sgml : 19950602 ACCESSION NUMBER: 0000950123-95-001630 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19950601 SROS: NASD GROUP MEMBERS: COMPUTER ASSOCIATES INTERNATIONAL INC GROUP MEMBERS: VR126, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LEGENT CORP CENTRAL INDEX KEY: 0000845607 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 251589745 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-40253 FILM NUMBER: 95544166 BUSINESS ADDRESS: STREET 1: 575 HERNDON PKWY CITY: HERNDON STATE: VA ZIP: 22070-5226 BUSINESS PHONE: 7037083000 FORMER COMPANY: FORMER CONFORMED NAME: MD ACQUISITION CORP DATE OF NAME CHANGE: 19890328 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LEGENT CORP CENTRAL INDEX KEY: 0000845607 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 251589745 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-40253 FILM NUMBER: 95544167 BUSINESS ADDRESS: STREET 1: 575 HERNDON PKWY CITY: HERNDON STATE: VA ZIP: 22070-5226 BUSINESS PHONE: 7037083000 FORMER COMPANY: FORMER CONFORMED NAME: MD ACQUISITION CORP DATE OF NAME CHANGE: 19890328 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 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 LEGENT CORPORATION -------------------------------------------------------------- (Name of Subject Company) VR126, INC. COMPUTER ASSOCIATES INTERNATIONAL, INC. -------------------------------------------------------------- (Bidder) COMMON STOCK, $.01 PAR VALUE PER SHARE -------------------------------------------------------------- (Title of Class of Securities) 52465R109 -------------------------------------------------------------- (CUSIP Number of Class of Securities) SANJAY KUMAR VR126, INC. C/O COMPUTER ASSOCIATES INTERNATIONAL, INC. ONE COMPUTER ASSOCIATES PLAZA ISLANDIA, NEW YORK 11788-7000 (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 -------------------------------------------------------------- May 25, 1995 (DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D) -------------------------------------------------------------- 2 CALCULATION OF FILING FEE -------------------------------------------------------------- ============================================================================ TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ---------------------------------------------------------------------------- $1,718,560,606 $343,813 ============================================================================
* Estimated for purposes of calculating the amount of filing fee only. The amount assumes the purchase of 35,840,680 shares of common stock, $.01 par value per share (the "Shares"), at a price per Share of $47.95 in cash. Such number of Shares represents all of the Shares outstanding as of May 7, 1995 (other than 500,000 Shares owned by Computer Associates International, Inc.). ** Includes a Schedule 13D filing fee of $100. / / 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 9 Pages Exhibit Index begins on Page 9 3 14D-1 AND 13D CUSIP No. 52465R109 Page 2 of 9 Pages 1) Name of Reporting Persons: VR126, Inc. S.S. or I.R.S. Identification Nos. of Above Person: pending - ----------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions). / / (a) / / (b) - ----------------------------------------------------------------------------- 3) SEC Use Only. - ----------------------------------------------------------------------------- 4) Sources of Funds (See Instructions). AF, WC, BK - ----------------------------------------------------------------------------- 5) / / Check if Disclosure of Legal Proceedings is Required pursuant to Items 2(e) or 2(f). - ----------------------------------------------------------------------------- 6) Citizenship or Place of Organization. Delaware - ----------------------------------------------------------------------------- 7) Aggregate Amount Beneficially Owned by Each Reporting Person. 4,151,299* ** - ----------------------------------------------------------------------------- 8) / / Check if the Aggregate Amount in Row 7 Excludes Certain Shares. - ----------------------------------------------------------------------------- 9) Percent of Class Represented by Amount in Row 7. Approximately 11.4% as of May 7, 1995* ** - ----------------------------------------------------------------------------- 10) Type of Reporting Person (See Instructions). CO 4 14D-1 AND 13D CUSIP No. 52465R109 Page 3 of 9 Pages 1) Names of Reporting Persons: Computer Associates International, Inc. S.S. or I.R.S. Identification Nos. of Above Person: 13-2857434 - ----------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions). / / (a) / / (b) - ----------------------------------------------------------------------------- 3) SEC Use Only. - ----------------------------------------------------------------------------- 4) Sources of Funds (See Instructions). WC, BK - ----------------------------------------------------------------------------- 5) / / Check if Disclosure of Legal Proceedings is Required pursuant to Items 2(e) or 2(f). - ----------------------------------------------------------------------------- 6) Citizenship or Place of Organization. Delaware - ----------------------------------------------------------------------------- 7) Aggregate Amount Beneficially Owned by Each Reporting Person. 4,151,299* ** - ----------------------------------------------------------------------------- 8) / / Check if the Aggregate Amount in Row 7 Excludes Certain Shares. - ----------------------------------------------------------------------------- 9) Percent of Class Represented by Amount in Row 7. Approximately 11.4% as of May 7, 1995* ** - ----------------------------------------------------------------------------- 10) Type of Reporting Person (See Instructions). CO - ------------------ * On May 25, 1995, VR126, Inc. ("Merger Subsidiary"), a wholly-owned subsidiary of Computer Associates International, Inc. ("Computer Associates"), entered into a Stockholder Tender Agreement (the "Stockholder Agreement") with General Atlantic Group Limited ("General Atlantic"), pursuant to which General Atlantic agreed to tender pursuant to the tender offer described in this Statement (the "Offer") all shares of common stock, $.01 par value per share (the "Shares"), of Legent Corporation (the "Company") owned by it (representing an aggregate of 3,651,299 Shares, or approximately 10.0% of the Shares outstanding as of May 7, 1995) (the "Tendered Shares"). Such Tendered Shares are reflected in Rows 7 and 9 of each of the tables above. The Stockholder Agreement is described more fully in Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights; Stockholder Tender Agreement") of the Offer to Purchase dated June 1, 1995 (the "Offer to Purchase"). ** On April 17 and 18, 1995, Computer Associates purchased a total of 500,000 Shares in open market purchases for an aggregate purchase price of approximately $13.9 million (or an average purchase price per Share of approximately $27.76) in cash, including commissions. Such purchases are reflected in Rows 7 and 9 of each of the tables above. Such purchases are more fully described in Schedule II to the Offer to Purchase. 5 This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement on Schedule 13D with respect to the acquisition by Merger Subsidiary and Computer Associates of beneficial ownership of the Tendered Shares. The item numbers and responses thereto below are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Legent Corporation, a Delaware corporation (the "Company"), and the address of its principal executive offices is 575 Herndon Parkway, Herndon, Virginia 22070. (b) This Statement on Schedule 14D-1 relates to the offer by Merger Subsidiary (defined below), to purchase all outstanding shares of Common Stock, $.01 par value per share (the "Shares"), of the Company at $47.95 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 thereto 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. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement on Schedule 14D-1 is filed by VR126, 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. -4- 6 ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in (i) the Introduction and 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; Stockholder Tender Agreement") and Schedule I of the Offer to Purchase, (ii) the Agreement and Plan of Merger, dated as of May 25, 1995 (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 Stockholder Tender Agreement, dated as of May 25, 1995 (the "Stockholder Agreement"), between Merger Subsidiary and General Atlantic Group Limited, a copy of which is attached as Exhibit (c)(2) hereto, respectively, is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) and (b) The information set forth in (i) Section 9 ("Source and Amount of Funds") of the Offer to Purchase and (ii) the Commitment Letter dated May 24, 1995 from Credit Suisse to Computer Associates, a copy of which is attached as Exhibit (b)(1) hereto, respectively, is incorporated herein by reference. (c) Not applicable. ITEM 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; Stockholder Tender Agreement") 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. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b) 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"), Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights; Stockholder Tender Agreement"), Schedule I and Schedule II of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Agreement, respectively, is incorporated herein by reference. -5- 7 ITEM 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"), Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights; Stockholder Tender Agreement") and Schedule II of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Agreement, respectively, is incorporated herein by reference. ITEM 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. ITEM 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, 1995 are incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("Purpose of the Offer; Merger Agreement; Appraisal Rights; Stockholder Tender Agreement") 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 Stockholder Agreement, respectively, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated June 1, 1995. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. -6- 8 (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 May 25, 1995. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Form of summary advertisement dated June 1, 1995. (b)(1) Commitment Letter dated May 24, 1995 from Credit Suisse to Computer Associates. (c)(1) Agreement and Plan of Merger, dated as of May 25, 1995, among the Company, Computer Associates and Merger Subsidiary. (c)(2) Stockholder Tender Agreement, dated as of May 25, 1995, among Merger Subsidiary and General Atlantic Group Limited. (d) None. (e) Not applicable. (f) None. -7- 9 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: June 1, 1995 VR126, INC. By/s/ Belden A. Frease ----------------------------- Name: Belden A. Frease Title: Vice President and Secretary COMPUTER ASSOCIATES INTERNATIONAL, INC. By/s/ Belden A. Frease ------------------------------ Name: Belden A. Frease Title: Senior Vice President and Secretary -8- 10 EXHIBIT INDEX
Exhibit Number Exhibit Name ------- ------------ (a)(1) Offer to Purchase dated June 1, 1995. (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 May 25, 1995. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Form of summary advertisement dated June 1, 1995. (b)(1) Commitment Letter dated May 24, 1995 from Credit Suisse to Computer Associates. (c)(1) Agreement and Plan of Merger, dated as of May 25, 1995, among the Company, Computer Associates and Merger Subsidiary. (c)(2) Stockholder Tender Agreement, dated as of May 25, 1995, between Merger Subsidiary and General Atlantic Group Limited. (d) None. (e) Not applicable. (f) None.
-9- EX-99.A1 2 OFFER TO PURCHASE 1 Exhibit (a)(1) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LEGENT CORPORATION AT $47.95 NET PER SHARE BY VR126, 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 THURSDAY, JULY 6, 1995, 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, $.01 PAR VALUE PER SHARE (THE "SHARES"), OF LEGENT CORPORATION (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED BY VR126, 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 ANY APPLICABLE ANTITRUST WAITING PERIODS. 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. June 1, 1995 2 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 6. Price Range of Shares; Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 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 . . . . . . 17 11. Purpose of the Offer; Merger Agreement; Appraisal Rights; Stockholder Tender Agreement . . . . . 19 12. Effect of the Offer on the Market for the Shares; Stock Quotations; Registration under the Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 13. Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 14. Extension of Tender Period; Termination; Amendment . . . . . . . . . . . . . . . . . . . . . . . 33 15. Certain Conditions of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 16. Certain Legal Matters; Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 17. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 18. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Schedule I Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1 Schedule II Beneficial Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
3 To the Holders of Common Stock of Legent Corporation: INTRODUCTION VR126, 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, $.01 par value per share (the "Shares"), of Legent Corporation, a Delaware corporation (the "Company"), at $47.95 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 IBJ Schroder Bank & Trust Company (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 EACH OF LAZARD FRERES & CO., LLC ("LAZARD FRERES") AND GOLDMAN, SACHS & CO. ("GOLDMAN, SACHS"), THE COMPANY'S FINANCIAL ADVISORS, HAS DELIVERED TO THE COMPANY'S BOARD OF DIRECTORS ITS WRITTEN OPINION TO THE EFFECT THAT THE $47.95 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 OPINIONS OF LAZARD FRERES AND GOLDMAN, SACHS ARE 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 EACH 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 ANY APPLICABLE ANTITRUST WAITING PERIODS. SEE SECTION 15, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. The Company has represented to Computer Associates that, as of May 7, 1995, there were 36,340,680 Shares issued and outstanding, and 5,712,173 Shares reserved for issuance upon the exercise of stock options or rights to purchase outstanding under various employee and director stock -1- 4 option plans and under various employee and director stock purchase plans (including 50,000 Shares reserved for issuance upon the exercise of certain additional stock options granted by the Company on May 11, 1995). Based upon the foregoing, as of May 7, 1995, there were approximately 42,052,853 Shares outstanding on a fully diluted basis (including such additional 50,000 Shares). Computer Associates beneficially owns 4,151,299 Shares representing (based upon the foregoing) approximately 9.9% of the Fully Diluted Shares. Of such Shares, Computer Associates (i) owns of record 500,000 Shares and (ii) has entered into an agreement with General Atlantic Group Limited, a Stockholder of the Company ("General Atlantic"), pursuant to which General Atlantic has agreed to tender pursuant to the Offer 3,651,299 Shares, as more specifically described in Section 11. Accordingly, Computer Associates believes that the Minimum Condition would be satisfied (based on the foregoing assumptions) if approximately 16,875,128 Shares (in addition to the Shares referred to in clause (ii) of the immediately preceding sentence) are validly tendered pursuant to the Offer and not withdrawn. Merger Subsidiary and General Atlantic have entered into a Stockholder Tender Agreement, dated as of May 25, 1995, pursuant to which General Atlantic has agreed, subject to certain conditions, to tender pursuant to the Offer all Shares owned by it. Further, General Atlantic has agreed not to withdraw its Shares, subject to applicable law, unless the Board of Directors of the Company (or any special committee thereof) withdraws or materially modifies its approval of the Offer, the Merger or the Merger Agreement. General Atlantic owns 3,651,299 Shares, constituting, as of May 7, 1995, approximately 10.0% of the outstanding Shares and 8.7% of the Fully Diluted Shares. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of May 25, 1995 (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 6, 1995, 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 $47.95 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, 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. 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 -2- 5 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 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. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Thursday, July 6, 1995, 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (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 (described in Section 11 below), if (i) 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 or (ii) Computer Associates and the Company are litigating or contesting any administrative or judicial action or proceeding challenging any transaction contemplated by the Merger Agreement as violative of any antitrust law or any decree, judgment, injunction or order that is in effect and that prohibits, prevents or restricts consummation of the Merger or any such other transactions and any condition to the Offer described in paragraphs (a) or (b) of Section 15 hereof are not satisfied 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 consummation of the -3- 6 Offer and (y) March 29, 1996. 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. Pursuant to the Merger Agreement, Computer Associates and Merger Subsidiary expressly reserve the right to waive any of the conditions to the Offer (other than the Minimum Condition) 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, 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 period 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, -4- 7 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. 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 and pay for all Shares validly tendered, and not withdrawn, pursuant to the Offer as soon as practicable after the expiration of the Offer; provided, that Merger Subsidiary may extend the Offer for a period of time of not more than 20 business days to meet the objective (but not the condition) 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. -5- 8 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, Midwest Securities 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. 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. -6- 9 (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 five trading days on the NASDAQ National Market System 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. 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. -7- 10 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 May 7, 1995). 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 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. -8- 11 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 July 31, 1995 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. 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 -9- 12 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. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded in the over-the-counter market and are quoted on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") National Market System. The following table sets forth for the periods indicated the high and low sale prices per Share as reported by the NASDAQ National Market System and the Dow Jones News Retrieval Service.
High Low ---- --- Fiscal 1993: Third quarter ended June 30, 1993 $41.00 $26.00 Fourth quarter ended September 30, 1993 $36.00 $15.50 Fiscal 1994: First quarter ended December 31, 1993 $25.75 $21.50 Second quarter ended March 31, 1994 $34.75 $22.50 Third quarter ended June 30, 1994 $33.25 $23.50 Fourth quarter ended September 30, 1994 $27.25 $19.00 Fiscal 1995: First quarter ended December 31, 1994 $33.50 $24.50 Second quarter ended March 31, 1995 $37.25 $28.25 Third quarter (through May 31, 1995) $47.00 $26.13
-10- 13 On May 24, 1995, 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 last reported sales price per Share on the NASDAQ National Market System was $31.25. On May 31, 1995, the last day of trading prior to the commencement of the Offer, the last reported sales price per Share on the NASDAQ National Market System was $43.63. 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 May 19, 1995, there were approximately 2,151 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 575 Herndon Parkway, Herndon, Virginia 22070. According to the Company's Annual Report on Form 10-K for its fiscal year ended September 30, 1994 (the "Company 10-K"), the Company is engaged in the design, development, marketing and support of a broad range of computer software products for the management of information systems. According to the Company 10-K, the Company markets software products which are used to manage mainframe, midrange, server, workstation and PC systems deployed throughout a business enterprise. The Company's products and services are designed, according to the Company 10-K, to improve the efficiency of computer resources by providing data integrity, managing applications, moving files among users, providing back-up and security capabilities, enhancing system utilization, monitoring processing performance and accounting for the usage of system resources. 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 and the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the six months ended March 31, 1995 (the "Company 10-Q"). More comprehensive financial information is included in the Company 10-K and the Company 10-Q 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. -11- 14 LEGENT CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (In thousands, except per share data)
INCOME STATEMENT FISCAL YEAR ENDED Six Months Ended DATA SEPTEMBER 30, March 31, ------------------------------------- ----------------- 1994 1993 1992 1995 1994 ---- ---- ---- ---- ---- (Unaudited) Total revenues $501,733 $442,193 $426,701 $243,368 $232,926 Total costs and expenses 420,549 359,309 346,095 196,621 190,961 Operating income 81,184 82,884 80,606 46,747 41,965 Net income 54,342 60,408 27,784 34,971 27,060 Income per share $1.53 $1.72 $0.81 $0.95 $0.78
BALANCE SHEET DATA AT SEPTEMBER 30, AT MARCH 31, 1995 ------------------------ ------------------- 1994 1993 (Unaudited) ---- ---- Working capital $163,283 $147,406 $168,298 Total assets 712,038 623,962 750,196 Total liabilities 280,362 264,146 272,056 Total stockholders' equity 431,676 359,816 478,140
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, -12- 15 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 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. 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 May 24, 1995. 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 for home use. 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, 1995. The information set forth below gives effect to the acquisition of The ASK Group, Inc. in fiscal 1995. More comprehensive financial information is included in such Annual 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. -13- 16 COMPUTER ASSOCIATES INTERNATIONAL, INC. SELECTED CONSOLIDATED FINANCIAL DATA (In thousands, except per Share data)
FISCAL YEAR ENDED INCOME STATEMENT DATA MARCH 31, -------------------------------------------------------------------- 1995 1994 1993 ------ ------ ------ Total revenue $2,622,922 $2,148,470 $1,841,008 Income before income taxes 696,619 626,972 383,663 Net Income 431,904 401,262 245,544 Net Income per common share $2.57 $2.34 $1.44 Dividends declared per common share $.20 $.14 $.10
BALANCE SHEET DATA AT MARCH 31, ------------------------------------- 1995 1994 ------ ------ Working capital $299,673 $450,599 Total assets 3,269,428 2,491,605 Long-term debt (less current maturities) 50,489 71,381 Stockholders' equity 1,578,125 1,243,133
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. Except as described in this Offer to Purchase (including in Schedule II), 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 -14- 17 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 to pay related fees and expenses is estimated to be approximately $1.8 billion. 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 the credit facility described below. As of May 23, 1995, Computer Associates had approximately $278 million in cash, cash equivalents and marketable securities. Merger Subsidiary has not conditioned the Offer on obtaining financing. Computer Associates has received a commitment letter (the "Commitment Letter") from Credit Suisse, pursuant to which Credit Suisse has committed to provide, on specified terms and subject to specified conditions, up to $2 billion in unsecured credit facilities (the "Credit Facility") to Computer Associates (i) to finance the purchase of the Shares pursuant to the Offer and the Merger and other related costs and (ii) to provide financing for other general corporate purposes. Although Credit Suisse has committed to provide all of the Credit Facility, Credit Suisse expects to act as agent for a syndicate of financial institutions, which, together with Credit Suisse, will provide the Credit Facility. The Commitment Letter contemplates that the Credit Facility will be a five year revolving, unsecured credit facility with annual reductions of the commitments thereunder of $250 million. The -15- 18 Commitment Letter provides for interest rates on outstanding loans under the Credit Facility (at Computer Associates' option) of (i) the London interbank offered rate plus a margin of .425% (as adjusted from time to time based upon a financial performance test to be mutually agreed upon), or (ii) the higher of (x) the Credit Suisse base lending rate and (y) the federal funds rate plus a margin of 0.5%. Credit Suisse's commitment to provide the Credit Facility is subject to satisfaction of certain customary conditions, including (a) satisfactory completion of a due diligence review, (b) absence of any material change in or material disruption of financial or capital market conditions that in the reasonable opinion of Credit Suisse materially and adversely affects the satisfactory syndication of the Credit Facility, (c) absence of a material adverse change in the consolidated financial position of Computer Associates and its subsidiaries (after giving effect to the Merger) or in the ability of Computer Associates to perform its obligations under the definitive documentation relating to the Credit Facility and (d) the negotiation, execution and delivery prior to August 15, 1995 of definitive documentation with respect to the Credit Facility in form and substance satisfactory to Credit Suisse and its counsel. In addition, the Commitment Letter provides that initial advances under the Credit Facility will be conditioned upon, among other things, (i) the consummation of the Offer pursuant to the terms of the Merger Agreement and this Offer to Purchase (as the same may be modified from time to time with the prior written consent of the majority lenders under the Credit Facility), and (ii) all governmental and other approvals necessary, and all material governmental and other approvals advisable, in connection with the Offer, the Merger and the Credit Facility having been obtained and being in full force and effect, with all waiting periods provided by applicable law having expired without there being taken or threatened by any competent authority any action which could reasonably be expected to restrain, prevent or otherwise impose material adverse conditions on the Merger or the financing thereof. The definitive documentation with respect to the Credit Facility also will contain representations, warranties, covenants, events of default and conditions customary for credit facilities of this size and type. Computer Associates has agreed to pay certain fees to Credit Suisse with respect to the Commitment Letter and to Credit Suisse and the other lenders with respect to the Credit Facility. Computer Associates also has agreed to reimburse certain expenses of, and provide customary indemnities to, Credit Suisse in connection with the Commitment Letter and Credit Suisse and (under certain circumstances) the other lenders in connection with the Credit Facility. The foregoing summary of the source and amount of funds is qualified in its entirety by reference to the text of the Commitment Letter, a copy of which is filed as an exhibit to the Schedule 14D-1 and 13D 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. If and when definitive agreements with respect to the Credit Facility are executed, copies will be filed as exhibits to amendments to the Schedule 14D-1. Although no definitive plan or arrangement for repayment of borrowings under the Credit Facility has been made, Computer Associates anticipates such borrowings will be repaid with -16- 19 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 Facility. 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. In August 1994, through the introduction of a large shareholder of the Company, Mr. Sanjay Kumar, President and Chief Operating Officer of Computer Associates, contacted Mr. Steven Denning, a director of the Company, expressing an interest in a possible transaction with the Company. The Company advised Mr. Kumar that it was not interested in pursuing the discussions. On April 26 and 30, 1995, Mr. Kumar and Mr. Jerre Stead, Chairman and President of the Company, met in Washington, D.C. at Mr. Kumar's request and discussed the possibility of a combination of the two companies and the range of valuations for the Company. Mr. Kumar also suggested the possibility of a stock for stock merger. On May 1, the Board of Directors of Computer Associates met by conference call to review the status of the discussions with the Company, consider price ranges for a possible stock or cash merger with the Company and consider other factors. The Board authorized Mr. Kumar to continue discussions with Mr. Stead. On May 2, Mr. Kumar sent the following letter to Mr. Stead: Mr. Jerre Stead President Legent Corporation 575 Herndon Parkway Herndon, VA 22070 Dear Jerre: We are writing to confirm our interest in acquiring Legent (the "Company") in a transaction in which your stockholders would receive shares of Computer Associates' common stock in exchange for their shares of the Company's common stock. We are considering a value which would represent a substantial premium over your Company's current stock price. We believe this would represent an extremely attractive opportunity for your shareholders. Computer Associates, as you are well aware, is an important participant in the client/server enterprise software industry, with annual revenues in excess of $2.62 billion. The combination of our two companies would create a unique organization that would help maximize shareholder value, serve our respective clients well, and -17- 20 provide tremendous opportunities for the combined employee base. As I have indicated to you in our earlier conversations, we are keenly interested in discussing with you opportunities for Computer Associates to assist the Company in maximizing value for its shareholders. I have discussed our interest with our Board members, all of whom share my enthusiasm for pursuing this acquisition. We hope that you and your Board of Directors will view our interest as we do - an excellent opportunity for the stockholders of the Company to realize full value for their shares and to continue to participate in, and earn the benefits of, our combined enterprise. We are prepared to enter into immediate discussions with you and your directors to answer any questions that you may have about our interest. We hope that you and your Board of Directors will give our interest prompt and serious consideration so that we may move forward, in our preferred course, to a negotiated transaction which can be presented to your stockholders as the joint effort of Computer Associates and the Company's Board of Directors and management. I am looking forward to your prompt reply. Sincerely, Sanjay Kumar President and Chief Operating Officer cc: Members of the Board of Directors of Legent By letter dated May 3, Mr. Stead acknowledged receipt of the letter and advised Mr. Kumar that the Company intended to consider Computer Associates' interest in the Company. At Mr. Stead's suggestion, Mr. Kumar discussed the transaction with Mr. Michael Price of Lazard Freres & Co., LLC, financial advisor to the Company. Following meetings of the Company's Board of Directors on May 6 and 7, Mr. Stead called Mr. Kumar to confirm that the Company was interested in discussing a possible merger and suggested a further meeting. Mr. Stead and Mr. Kumar met in Washington, D.C. on May 10 and discussed valuation and other issues. Mr. Stead also mentioned other parties that he believed might be interested in a merger with the Company. Mr. Kumar encouraged Mr. Stead to permit Mr. Kumar to meet with the Company's Board of Directors to describe the advantages of a merger between the Company and Computer Associates. On May 14, Mr. Stead and Mr. Kumar met in New York. Mr. Stead raised several issues that he and the Company's Board of Directors believed would be an important part of the terms of any merger, including treatment of the Company's employees. Mr. Kumar also discussed with Mr. -18- 21 Stead several issues involved in a stock for stock transaction and the risks and benefits of such a transaction. Discussions were terminated at the end of the meeting over valuation differences. Early in the week of May 14, a large shareholder of the Company, in a telephone conference on unrelated matters, asked Mr. Kumar about recent reports in the financial press of a possible transaction between Computer Associates and the Company. In the conference and in subsequent calls, the shareholder encouraged Mr. Kumar to continue pursue a transaction with the Company and offered his support depending on the valuation. At a regularly scheduled Computer Associates' Board Meeting on May 17, Mr. Kumar reported on the status of the discussions with the Company and discussed the relative merits of a potential stock or cash merger. The Board authorized Mr. Kumar to pursue discussions with the Company. On May 19, Mr. Kumar contacted Mr. Stead to express his interest in renewing discussions. On May 21, Mr. Stead and Mr. Kumar again met in New York and discussed valuation ranges and the merits of a cash tender offer. Following that meeting and a telephone conference on May 22, Mr. Stead agreed to permit Computer Associates to commence a due diligence review of the Company and to negotiate a definitive Merger Agreement and related documents. Representatives of the Company and Computer Associates, together with their legal advisors and representatives of Lazard Freres & Co., LLC and Goldman, Sachs & Co., financial advisors to the Company, met beginning May 23 to review and negotiate the terms of the Merger Agreement. Computer Associates also negotiated with representatives of General Atlantic the terms of the Stockholder Agreement (defined below in Section 11). Representatives of Computer Associates and its legal advisor also met with representatives of the Company in Herndon, Virginia to begin the due diligence review. On May 24, after the close of trading on the New York Stock Exchange, Computer Associates' Board of Directors unanimously approved the acquisition of the Company at a price of $47.95 per Share in cash and on the other principal terms set forth in the Merger Agreement, with the resolution of a few remaining issues left to be resolved by Mr. Kumar and other representatives of Computer Associates. The Board of Directors also approved a $2.0 billion credit facility to be provided by Credit Suisse. Final negotiations continued into the early morning of May 25. Prior to the open of the New York Stock Exchange on May 25, after the Company advised Computer Associates that its Board of Directors had unanimously approved the transaction, the Merger Agreement and the Stockholder Agreement were executed and the transaction was publicly announced. 11. PURPOSE OF THE OFFER; MERGER AGREEMENT; APPRAISAL RIGHTS; STOCKHOLDER TENDER AGREEMENT. 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. -19- 22 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 and is incorporated by reference in this Offer to Purchase. 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 any of the conditions to the Offer (other than the Minimum Condition) 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 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, if (i) 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 or (ii) Computer Associates and the Company are litigating or contesting any administrative or judicial action or proceeding challenging any transaction contemplated by the Merger Agreement as violative of any antitrust law or any decree, judgment, injunction or order that is in effect and that prohibits, prevents or restricts consummation of the Merger or any such other transactions and any of the condition to the Offer described in paragraphs (a) or (b) of Section 15 hereof are not satisfied 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 consummation of the Offer and (y) March 29, 1996. 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 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 (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 $47.95 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 6, 1995, 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 -20- 23 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. 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 -21- 24 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 Shares upon the exercise of outstanding company stock options); (iii) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents; (iv) mortgage or otherwise encumber or subject to any lien or, except in the ordinary course of business consistent with past practice and pursuant to existing contracts or commitments, sell, lease, license, transfer or otherwise dispose of any of the Company's intellectual property or any other material properties or assets; (v) make or agree to make any new capital expenditures in excess of $500,000, except pursuant to commitments outstanding on April 1, 1995; (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, 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 or (b) 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 any employment -22- 25 agreement, (b) enter into any customer sale or license agreement with non-standard terms or at discounts from list prices in excess of 20%; 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 on the basis of executed customer contracts with respect to products actually delivered to customers, (d) enter into any contracts or series of related contracts in excess of $250,000, (e) enter into any customer agreements providing for product replacements or (f) make any determination as to amounts payable under the Company's Incentive Compensation Plan; (x) authorize any of, or commit or agree to take any of, the foregoing actions; or (xi)(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 material respect at, or as of any time prior to, the Effective Time or (b) omit or agree or commit to omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any material respect at any such time. The Company has agreed to give Computer Associates and its representatives full 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 with such other information concerning its business, properties and personnel as Computer Associates 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) 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 -23- 26 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, 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, unless by mutual agreement Computer Associates and the Company decide that litigation is not in their respective best interests. Notwithstanding the foregoing, the Merger Agreement provides that Computer Associates shall have no obligation to litigate or contest any administrative or judicial action or proceeding or any Order beyond March 29, 1996. 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. 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, 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 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, (ii) 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), (iii) 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 (iv) 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 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 -24- 27 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. In addition, Computer Associates has agreed to provide severance benefits to any employee of the Company or its subsidiaries who suffers a qualifying termination of employment prior to July 1, 1996 in an amount equal to the greater of (i) two months of base salary and (ii) one month of base salary plus one additional month of base salary for each full year of service with the Company or its subsidiaries. Pursuant to the Merger Agreement, such severance benefits shall be offset by any amounts statutorily required to be paid in lieu of, or following, notice. In the case of any employee of the Company or its subsidiaries located outside the United States who suffers a qualifying termination of employment prior to July 1, 1996, Computer Associates has agreed to provide severance benefits in an amount equal to the greater of (i) the amount such employee would be entitled to as described in the immediately preceding sentence and (ii) the amount required to be paid pursuant to applicable law. Computer Associates has also agreed not to terminate certain officers of the Company prior to the closing of the Merger and to pay such executive officers compensation as provided in any employment agreement to which any such person is a party. Pursuant to the Merger Agreement, at or immediately prior to the Effective Time, each outstanding Company Option (defined below) shall be canceled, and each holder of any such option shall be paid by the Company promptly after the Effective Time for each such option an amount determined by multiplying (i) the excess, if any, of $47.95 per Share over the applicable exercise price of such option by (ii) the number of Shares such holder could have purchased had such holder exercised such option in full immediately prior to the Effective Time (as if such Company Option was exercisable in full). "Company Option" means any option granted, whether or not exercisable, 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 or any other contract or agreement entered into by the Company any of its subsidiaries. In addition, the Company has agreed that, prior to the Effective Time, the Company shall (i) terminate the Company's Employee Stock Purchase Plan and (ii) amend the Company's Retirement Security Plan to permit Employer Matching Contributions (defined therein) in cash. Other Offers. Pursuant to the Merger Agreement, the Company has agreed that the Company and its subsidiaries and the officers, directors, employees or other agents of the Company and its subsidiaries will not, 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 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 -25- 28 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 that it may be considering making, or that has made, an Acquisition Proposal and will keep Computer Associates fully informed of the status and details of any such Acquisition Proposal, notice or request. "Acquisition Proposal" means any offer or proposal for, or any 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. 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 cause the Surviving Corporation to 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 six years after the Effective Time, it will cause the Surviving Corporation to use its best efforts 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, Computer Associates will cause the Surviving Corporation to 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 made certain agreements regarding confidentiality, including its agreement to hold, and use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence (subject to certain exceptions), unless compelled to disclose by judicial or administrative process or by other requirements of law, certain confidential documents and information concerning the Company and its subsidiaries furnished to Computer Associates in connection with the transactions contemplated by the Merger Agreement. 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 -26- 29 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 November 30, 1995 (or, if the Offer shall have been extended by Merger Subsidiary in the circumstance described in the third sentence of the second paragraph of Section 1 of this Offer to Purchase, by the earlier of (a) the 90th day following the consummation of the Offer and (b) June 30, 1996) (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, however, 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 September 15, 1995 (or, if the Offer shall have been extended by Merger Subsidiary in the circumstance described in the third sentence of the second paragraph of Section 1 of this Offer to Purchase, on or prior to March 29, 1996) 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 -27- 30 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) $45,000,000, in the case of 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) any representation or warranty made by the Company in, or pursuant to, the Merger Agreement that is qualified as to materiality shall not have been true and correct when made or at any time prior to the consummation of the Offer as if made at and as of such time, or any representation or warranty made by the Company in, or pursuant to, the Merger Agreement that is not so qualified shall not have been true and correct in all material respects when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Company shall have failed to observe or perform in any material respect any of its obligations under the Merger Agreement, or (iii) the Board of Directors of the Company (or a 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 reasonable fees payable and expenses incurred by Computer Associates (including the fees and expenses of its counsel and the fees and expenses of institutions that are considering making or have made a commitment to provide financing for the transactions contemplated by the Merger Agreement) 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. -28- 31 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. Stockholder Tender Agreement. The following description of the Stockholder Tender Agreement, dated as of May 25, 1995 (the "Stockholder Agreement"), among Merger Subsidiary and General Atlantic 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, and is incorporated by reference in this Offer to Purchase. Pursuant to the Stockholder Agreement, General Atlantic has agreed, subject to the conditions described below, to tender pursuant to the Offer, all Shares owned by it. Specifically, General Atlantic has agreed that, within five business days after the commencement of the Offer, it will deliver to the Depositary (i) a Letter of Transmittal with respect to its Shares complying with the terms of the Offer together with instructions directing the Depositary to make payment for such Shares directly to General Atlantic, (ii) the certificates representing General Atlantic's Shares and (iii) all other documents or instruments required to be delivered pursuant to the terms of the Offer. General Atlantic has further agreed that it will not, unless and until 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, withdraw the tender of its Shares, subject to applicable law, and that any withdrawn Shares shall continue to be held by General Atlantic subject to the terms and conditions of the Stockholder Agreement. General Atlantic's obligations under the Stockholder Agreement terminate on the date the Merger Agreement terminates in accordance with its terms. Steven A. Denning, the Managing General Partner of General Atlantic Partners ("GAP") and President of General Atlantic Service Corporation ("GASC"), is a member of the Board of Directors of the Company. GAP and GASC are affiliates of General Atlantic. GAP acts as a general partner in limited partnerships in which General Atlantic, or one of its affiliates, is a limited partner. GASC advises and represents General Atlantic with respect to its investment in the Company. In the Stockholder Agreement, General Atlantic has represented to Merger Subsidiary that it beneficially owns an aggregate of 3,651,299 Shares. Based upon the 500,000 Shares held of record by Computer Associates and assuming that the Shares that are subject to the Stockholder Agreement are validly tendered and not withdrawn, approximately 16,875,128 additional Shares would be required to be tendered under the Offer in order to satisfy the Minimum Condition (assuming the number of Fully Diluted Shares set forth in the Introduction). Merger Subsidiary reserves the right to transfer or assign, in whole or from time to time in part, to any of its affiliates its rights under the Stockholder Agreement. 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 -29- 32 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 date on which such stockholder became an interested stockholder unless (i) prior to such date 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) on or subsequent to such date 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. 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 -30- 33 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. Computer Associates intends to conduct a detailed review of the Company and its assets, corporate structure, dividend policy, capitalization, operations, properties, policies, management and personnel 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, management, personnel 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 in the NASDAQ National Market System. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the standards for continued inclusion in the NASDAQ National Market System, the market for the Shares could be adversely affected. 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 -31- 34 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 NASDAQ reporting. 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 May 7, 1995, 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 May 7, 1995 of employee stock options or purchase rights outstanding prior to such date and other than 50,000 Shares issued pursuant to and in accordance with the terms in effect on May 11, 1995 of employee stock options granted on 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 May 7, 1995, the Company should (notwithstanding the fact that the following actions are prohibited under the Merger Agreement) declare or pay any dividend on the Shares 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 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 -32- 35 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 and regardless of whether or not any of the conditions specified in Section 15 shall have been satisfied (except to the extent otherwise provided in the Merger Agreement), (i) to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension or (ii) 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 (described in Section 11), if (i) 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 or (ii) Computer Associates and the Company are litigating or contesting any administrative or judicial action or proceeding challenging any transaction contemplated by the Merger Agreement as violative of any antitrust law or any decree, judgment, injunction or other order that is in effect and that prohibits, prevents or restricts consummation of the Merger or any such other transaction and any conditions to the Offer described in paragraphs (a) or (b) of Section 15 are not satisfied 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 consummation of the Offer and (y) March 29, 1996. 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 and pay for all Shares validly tendered, and not withdrawn, pursuant to the Offer as soon as practicable after the expiration of the Offer; provided, that Merger Subsidiary may extend the Offer for a period of time of not more than 20 business days to meet the objective (but not the condition) 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 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. -33- 36 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 May 25, 1995 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, (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 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 -34- 37 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; 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 or in the NASDAQ over-the-counter market in the United States, (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 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 -35- 38 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 a 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 (including any action or omission by Computer Associates or Merger Subsidiary) giving rise to any such condition or 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. -36- 39 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 purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or which have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. 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 information supplied by the Company, Computer Associates does not believe that any of these laws will, by their terms, apply to the Offer or the Merger. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana could, as a matter of corporate law, constitutionally disqualify a potential acquiror from voting shares of a target corporation without the prior approval of the remaining stockholders where, among other things, the corporation is incorporated in, and has a substantial number of stockholders in, the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they apply to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit. In December 1988, a Federal District Court in Florida held in Grand Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated Transactions Act and the Florida Control -37- 40 Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. 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 expects to file, and expects the Company to file, a Notification and Report Form with respect to the Offer with the Antitrust Division and the FTC on or about June 1, 1995. Assuming a filing date of June 1, 1995, 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 Friday, June 16, 1995. 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 (i) the consummation of the Offer and (ii) March 29, 1996. 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. -38- 41 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, Australia, France, Spain, Japan, Singapore, Italy, the Netherlands 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 Facility 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 IBJ Schroder Bank & Trust Company to act as the Depositary in connection with the Offer. The Information Agent may contact holders of 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 -39- 42 connection therewith, including certain liabilities under the federal securities laws. Edward C. Lord, III, a Senior Vice President of the Depositary, is a member of the Board of Directors of Computer Associates. 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). VR126, INC. -40- 43 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 Sanjay Kumar who is a citizen of Sri Lanka (and a permanent resident of the United States of America) and 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 48 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 44 Director of Computer Associates since 1991. President of Three Cities Research, Inc. Three Cities Research, Inc., a private investment 135 East 57th Street management firm in New York City, since 1981. From August New York, New York 1981 to August 1990, Mr. de Vogel served as a director of 10022 Computer Associates.
I-1 44 Irving Goldstein 57 Director of Computer Associates since 1990. Director INTELSAT General and Chief Executive Officer of INTELSAT, an 3400 International Drive, N.W. international satellite telecommunications company, since Washington, D.C. 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. He also is a director of Security Trust Co., N.A. Richard A. Grasso 48 Director of Computer Associates since January 1994. New York Stock Exchange 11 Chairman and Chief Executive Officer of the New York Stock Wall Street Exchange since 1994. He was Executive Vice Chairman of the New York, New York New York Stock Exchange from 1991 to 1994 and President and 10005 Chief Operating Officer of the New York Stock Exchange from 1989 to 1994. Shirley Strum Kenny 60 Director of Computer Associates since July 1994. President President's Office of State University of New York at Stony Brook since 1994. State University of She was President of Queens College of the City University New York at Stony Brook of New York from 1985 to 1994. She is also a director of Stony Brook, New York Toys "R" Us, Inc. 11794 Sanjay Kumar 33 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. Edward C. Lord, III 44 Director of Computer Associates since 1988. Senior Vice IBJ Schroder Bank & Trust President of IBJ Schroder Bank & Trust Company, a Company commercial banking institution in New York City, since 1987 1 State Street and Vice President since 1978. He has managed corporate New York, New York banking and personal lending activities for more than 10128 twelve years. Charles B. Wang 50 Director of Computer Associates since 1976. Chief Executive Officer since 1976 and Chairman of the Board since April 1980.
I-2 45 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 56 Senior Vice President since April 1985 and Secretary since May 1991. Charles P. McWade 40 Senior Vice President--Finance since April 1994. He was Senior Vice President and Treasurer from 1990 to April 1994. Peter A. Schwartz 51 Senior Vice President--Finance and Chief Financial Officer since April 1987. Ira H. Zar 33 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. For further information regarding such persons, see paragraph 1 above.
NAME POSITION WITH MERGER SUBSIDIARY - ---- ------------------------------- Belden A. Frease Director, Vice President and Secretary of Merger Subsidiary since its incorporation on May 24, 1995. Sanjay Kumar Director and President of Merger Subsidiary since its incorporation on May 24, 1995. Peter A. Schwartz Director, Vice President and Treasurer of Merger Subsidiary since its incorporation on May 24, 1995.
I-3 46 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. Except as described in this Offer to Purchase, 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. I-4 47 SCHEDULE II BENEFICIAL OWNERSHIP OF SHARES Computer Associates beneficially owns 4,151,299 Shares, representing approximately 9.9% of the Fully Diluted Shares. Of such Shares, Computer Associates holds of record 500,000 Shares and 3,651,299 Shares are required to be tendered in the Offer pursuant to the Stockholder Agreement. See Section 11. TRANSACTIONS IN SHARES IN THE PAST 60 DAYS During the past 60 days, Computer Associates engaged in the transactions in the Shares described below. 1. On April 17, 1995, Computer Associates purchased 325,000 Shares in open market transactions for an aggregate purchase price of $9,060,610 in cash (or an average purchase price of $27.88 per Share), including commissions. 2. On April 18, 1995, Computer Associates purchased 175,000 Shares in open market transactions for an aggregate purchase price of $4,817,820 in cash (or an average purchase price of $27.53 per Share), including commissions. II-1 48 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: IBJ SCHRODER BANK & TRUST COMPANY By Mail: By Facsimile Transmission (for By Hand or Overnight Delivery: P.O. Box 84 eligible financial One State Street Bowling Green Station institutions only): New York, New York 10004 New York, New York 10274-0084 (212) 858-2611 Attn: Securities Processing Window, Attn: Reorganization Department Sub-cellar One To Confirm Facsimile Transmissions Call: (212) 858-2103 (call collect)
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, NY 10005 (212) 269-5550 (Collect) (800) 290-6430 (Toll Free) EX-99.A2 3 FORM OF LETTER OF TRANSMITTAL 1 Exhibit (a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF LEGENT CORPORATION PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 1, 1995 BY VR126, 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 THURSDAY, JULY 6, 1995, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: IBJ SCHRODER BANK & TRUST COMPANY By Mail: By Facsimile Transmission (for By Hand or Overnight Delivery: P.O. Box 84 eligible financial One State Street Bowling Green Station institutions only): New York, New York 10004 New York, New York 10274-0084 (212) 858-2611 Attn: Securities Processing Window, Attn: Reorganization Department Sub-cellar One To Confirm Facsimile Transmissions Call: (212) 858-2103 (call collect)
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, Midwest Securities 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 blank, exactly as name(s) appear(s) Shares Tendered on certificate(s)) (Attach additional signed list if necessary) - -------------------------------------------------------------------------------------------------------------------- Certificate Total Number of Total Number(s) Shares Number (1) Represented of Shares by Tendered(2) Certificate(s) (1) - -------------------------------------------------------------------------------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- --------------------------------------------- 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 / / Midwest Securities 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: --------------------- -2- 3 If delivery is by book-entry transfer, Check box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number ---------------------------------------------------- Transaction Code Number ------------------------------------------- Ladies and Gentlemen: The undersigned hereby tenders to VR126, 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, $.01 par value per share (the "Shares"), of Legent Corporation, a Delaware corporation (the "Company"), pursuant to Merger Subsidiary's offer to purchase all outstanding Shares at a price of $47.95 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 1, 1995 (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 May 7, 1995) 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 May 7, 1995, 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 -3- 4 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 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. Belden A. Frease, 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 May 7, 1995), 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 May 7, 1995), 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. 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 -4- 5 agreement between the undersigned and Merger Subsidiary upon the terms and subject to the conditions of the Offer. The undersigned recognizes 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. -5- 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 for the purchase To be completed ONLY if the check for the purchase price of Shares purchased or certificates for price of Shares purchased or certificates for Shares not tendered or not purchased are to be Shares not tendered or not purchased are to be issued in the name of someone other than the mailed to someone other than the undersigned or to undersigned, or if Shares tendered by book-entry the undersigned at an address other than that transfer that are not purchased are to be returned shown above. by credit to an account at one of the Book-Entry Transfer Facilities other than that designated Mail check and/or certificates to: above. Name -------------------------------------------- Issue check and/or certificates to: (Please Print) Address ------------------------------------------- Name ---------------------------------------------- (Please Print) --------------------------------------------------- Address (Include Zip Code) -------------------------------------------
- --------------------------------------------------- (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 / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number --------------------------------- -6- 7 IMPORTANT SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW) - ----------------------------------------------------------------------------- Signature(s) of Holder(s) of Shares - ----------------------------------------------------------------------------- Dated: , 1995 (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: , 1995 -7- 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 five trading days on the NASDAQ National Market System 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 certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. -8- 9 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. -9- 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 Depository. 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 -10- 11 not in the name of the actual owner, consult 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. -11- 12 PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT Social Security Number or SUBSTITUTE AND CERTIFY BY SIGNING AND DATING BELOW. Employer Identification Number FORM W-9 ------------------------------------- PART 2--Certification--Under penalties of perjury, I certify that: Department of the Treasury (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting Internal Revenue Service 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 Payer's Request for backup withholding as a result of a failure to report all interest or dividends, or (c) the Taxpayer Identification IRS has notified me that I am no longer subject to backup withholding. Number ("TIN") 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 , 1995 -------------------------- ----------------------------- 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. 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 , 1995 --------------------------- -------------------------- -12- 13 The Depositary for the Offer is IBJ SCHRODER BANK & TRUST COMPANY By Mail: By Facsimile Transmission (for By Hand or Overnight Delivery: P.O. Box 84 eligible financial One State Street Bowling Green Station institutions only): New York, New York 10004 New York, New York 10274-0084 (212) 858-2611 Attn: Securities Processing Window, Attn: Reorganization Department Sub-cellar One To Confirm Facsimile Transmissions Call: (212) 858-2103 (call collect)
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) 290-6430 (Toll Free) -13- EX-99.A3 4 FORM OF NOTICE OF GUARANTEED DELIVERY 1 Exhibit (a)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF LEGENT CORPORATION 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, $.01 par value per share (the "Shares") of Legent Corporation, a Delaware corporation (the "Company"), 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 IBJ Schroder Bank & Trust Company (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: IBJ SCHRODER BANK & TRUST COMPANY By Mail: By Facsimile Transmission (for By Hand or Overnight Delivery: P.O. Box 84 eligible financial One State Street Bowling Green Station institutions only): New York, New York 10004 New York, New York 10274-0084 (212) 858-2611 Attn: Securities Processing Window, Attn: Reorganization Department Sub-cellar One To Confirm Facsimile Transmissions Call: (212) 858-2103 (call collect)
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. 2 Ladies and Gentlemen: The undersigned hereby tenders to VR126, 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 June 1, 1995 (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, $.01 par value per share (the "Shares"), of Legent Corporation, a Delaware corporation, 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) / / Midwest Securities Trust Company --------------------- / / Philadelphia Depository Trust Company Area Code and Tel. No.: ---------------------------- (Daytime telephone number) Account Number: Signature(s): ------------------------------------ -------------------------------------- Dated: , 1995 --------------------------------------- ---------------------------------------------------
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 five trading days on the NASDAQ National Market System after the date hereof. Name of Firm: -------------------------------------- --------------------------------------------------- (Authorized Signature) Address: ------------------------------------------- Name: ---------------------------------------------- (Please type or print) - --------------------------------------------------- (Zip Code) Title: --------------------------------------------- Area Code and Tel. No.: Date: , 1995 ---------------------------- ---------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A4 5 FORM OF BROKER-DEALER LETTER 1 Exhibit (a)(4) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LEGENT CORPORATION AT $47.95 NET PER SHARE BY VR126, 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 THURSDAY, JULY 6, 1995, UNLESS THE OFFER IS EXTENDED. June 1, 1995 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing the material listed below in connection with the offer by VR126, 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, $.01 par value per share (the "Shares"), of Legent Corporation, a Delaware corporation (the "Company"), at $47.95 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 June 1, 1995 (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 if the procedure for book-entry transfer cannot be completed by the Expiration Date; 2 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 IBJ Schroder Bank & Trust Company, 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 THURSDAY, JULY 6, 1995, 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, VR126, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF VR126, 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 WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. -2- EX-99.A5 6 FORM OF CLIENT LETTER 1 Exhibit (a)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LEGENT CORPORATION AT $47.95 NET PER SHARE BY VR126, 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 THURSDAY, JULY 6, 1995, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated June 1, 1995 (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 VR126, 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, $.01 par value per share (the "Shares"), of Legent Corporation, a Delaware corporation (the "Company"), at a purchase price of $47.95 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 in 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 FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. 2 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 $47.95 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 Thursday, July 6, 1995, 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 any applicable antitrust waiting periods. 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. 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. -2- 3 INSTRUCTIONS WITH RESPECT TO OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LEGENT CORPORATION The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated June 1, 1995, and the related Letter of Transmittal, relating to the offer by VR126, 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, $.01 par value per share (the "Shares"), of Legent Corporation. 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: _________________, 1995 ---------------------------------------- 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. -3- EX-99.A6 7 JOINT PRESS RELEASE 1 Exhibit (a)(6) Contact: Douglas Robinson - CA Investor Relations, (516) 342-2745 Bob Gordon - CA Public Relations, (516) 342-2391 Kathleen Janson - Legent, (703) 708-3890 COMPUTER ASSOCIATES TO ACQUIRE LEGENT CORPORATION IN LARGEST SOFTWARE DEAL IN HISTORY AGREEMENT BROADENS CA'S CLIENT/SERVER PORTFOLIO WHILE EXTENDING ENTERPRISE PRODUCT OFFERINGS ISLANDIA, NY, May 25, 1995--In the largest software company acquisition in history, Computer Associates International, Inc. (NYSE: CA) and Legent Corporation (NASDAQ: LGNT) have entered into a definitive agreement providing for CA's acquisition of Legent Corporation through a cash tender offer. A wholly-owned subsidiary of CA will offer to purchase all outstanding shares of Legent Corporation's common stock at $47.95 per share. The definitive agreement has been unanimously approved by the Boards of Directors of both Legent Corporation and CA. General Atlantic, the largest shareholder of Legent Corporation which holds approximately 10 percent of the outstanding shares, has pledged its support for the transaction. A portion of the funds for the acquisition will come from a $2.0 billion credit facility underwritten by Credit Suisse. Credit Suisse expects to act as agent for an expanded syndicate of financial institutions to provide on-going support for the transaction. "The acquisition of Legent will accelerate the momentum we've built in client/server computing over the past few years," said CA Chairman and CEO Charles B. Wang. "We can now offer clients a greater breadth of solutions to meet their distributed computing challenges. CA's strengths in client/server technology through such leading products as CA-Unicenter, CA-OpenIngres and CA-OpenRoad, our extensive distribution channels and Legent's large enterprise client base provide tremendous opportunities for further growth. We look forward to integrating Legent's products and resources into the CA family." "This is a win/win for our shareholders and clients," said Legent Chairman and CEO Jerre Stead. "We're delighted that our clients can take advantage of CA's substantial resources and unparalleled track record in delivering mission-critical solutions. CA's unique client/server product set and global organization offer outstanding synergistic benefits." The tender offer, which will commence shortly, will involve the offer to purchase an amount of shares such that, upon consummation, CA will own at least a majority of the outstanding shares. It will also be subject to the expiration or termination of any applicable antitrust waiting period and the receipt of all regulatory approvals. 2 Following completion of the tender offer, it is expected that the subsidiary of CA will be merged into the Legent Corporation and all of the Legent Corporation's shares not owned by CA will be converted into the right to receive $47.95 per share in cash. Computer Associates International, Inc. (NYSE: CA) leads the world in client/server software. Guided by CA90s open architecture, 7,600 dedicated employees in 33 countries develop, license and support more than 300 integrated products that include systems and database management, application development, financial and manufacturing applications and consumer solutions. The world's major industrial, government and research organizations depend on CA, whose fiscal year 1995 revenues exceeded $2.6 billion. Legent Corporation, headquartered in Herndon, Virginia, is a worldwide supplier of software and services for the management of distributed computing across the enterprise. ### All referenced product names are trademarks of their respective companies. EX-99.A7 8 TAX GUIDELINES 1 Exhibit (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.
- ---------------------------------------------------------- ----------------------------------------------------------------- Give the SOCIAL SECURITY Give the EMPLOYER IDENTIFICATION For this type of account: number of -- For this type of account: number of -- - ---------------------------------------------------------- ----------------------------------------------------------------- 1. An individual's account The individual 6. A valid trust, estate, or The legal entity (Do not furnish pension trust the identifying number of the 2. Two or more individuals The actual owner of the personal representative or (joint account) account or, if combined trustee unless the legal entity funds, any one of the itself is not designated in the individuals(1) account title.)(4) 3. Custodian account of a The minor(2) minor (Uniform Gift to 7. Corporate account The corporation Minors Act) 8. Religious, charitable, The organization or educational 4. (a) The usual revocable The grantor-trustee(1) organization account savings trust account (grantor is also 9. Partnership The partnership trustee) The actual owner(1) 10. Association, club, or The organization (b) So-called trust other tax-exempt account that is not a organization legal or valid trust under State law 11. A broker or registered The broker or nominee The owner(3) nominee 5. Sole proprietorship account 12. Account with the The public entity Department 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 - ---------------------------------------------------------- -----------------------------------------------------------------
(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 . Payments of tax-exempt interest (including exempt-interest dividends under section If you don't have a taxpayer identification number 852). or you don't know your number, obtain Form SS-5, . Payments described in section 6049(b)(5) Application for a Social Security Number Card, or to non-resident aliens. Form SS-4, Application for Employer Identification . Payments on tax-free covenant bonds under Number, at the local office of the Social Security section 1451. Administration or the Internal Revenue Service and . Payments made by certain foreign apply for a number. organizations. PAYEES EXEMPT FROM BACKUP WITHHOLDING Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. Payees specifically exempted from backup FILE THIS FORM WITH THE PAYER, FURNISH YOUR withholding on ALL payments include the following: TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. . A corporation. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR . A financial institution. PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. . An organization exempt from tax under section 501(a), or an individual Certain payments other than interest, dividends, retirement plan. and patronage dividends, that are not subject to . The United States or any agency or information reporting, are also not subject to instrumentality thereof. backup withholding. For details, see the . A State, the District of Columbia, a regulations under sections 6041, 6041A(a), 6045, possession of the United States, or any and 6050A. subdivision or instrumentality thereof. . A foreign government, a political PRIVACY ACT NOTICE -- Section 6109 requires most subdivision of a foreign government, or recipients of dividend, interest, or other any agency or instrumentality thereof. payments to give taxpayer identification numbers . An international organization or any to payers who must report the payments to IRS. agency, or instrumentality thereof. IRS uses the numbers for identification purposes. . A registered dealer in securities or Payers must be given the numbers whether or not commodities registered in the U.S. or a recipients are required to file tax returns. possession of the U.S. Payers must generally withhold 31% of taxable . A real estate investment trust. interest, dividend, and certain other payments to . A common trust fund operated by a bank a payee who does not furnish a taxpayer under section 584(a). identification number to a payer. Certain . An exempt charitable remainder trust, or a penalties may also apply. non-exempt trust described in section 4947(a)(1). PENALTIES . An entity registered at all times under the Investment Company Act of 1940. (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER . A foreign central bank of issue. IDENTIFICATION NUMBER -- If you fail to furnish your taxpayer identification number to a payer, Payments of dividends and patronage dividends not you are subject to a penalty of $50 for each such generally subject to backup withholding include failure unless your failure is due to reasonable the following: cause and not to willful neglect. . Payments to nonresident aliens subject to (2) CIVIL PENALTY FOR FALSE INFORMATION WITH withholding under section 1441. RESPECT TO WITHHOLDING -- If you make a false . Payments to partnerships not engaged in a statement with no reasonable basis which results trade or business in the U.S. and which in no imposition of backup withholding, you are have at least one nonresident partner. subject to a penalty of $500. . Payments of patronage dividends where the amount received is not paid in money. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION . Payments made by certain foreign -- Falsifying certifications or affirmations may organizations. subject you to criminal penalties including fines and/or imprisonment. Payments of interest not generally subject to backup withholding include the following: FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer.
-2- EX-99.A8 9 FORM OF SUMMARY ADVERTISEMENT 1 Exhibit (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 June 1, 1995 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 OF LEGENT CORPORATION AT $47.95 NET PER SHARE BY VR126, INC. A WHOLLY-OWNED SUBSIDIARY OF COMPUTER ASSOCIATES INTERNATIONAL, INC. VR126, 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, $.01 par value per share (the "Shares"), of Legent Corporation, a Delaware corporation (the "Company"), at $47.95 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 1, 1995 (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 -2- 2 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 THURSDAY, JULY 6, 1995, 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 (THE "MINIMUM CONDITION") AND (2) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE ANTITRUST WAITING PERIODS. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of May 25, 1995 (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 6, 1995, 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 $47.95 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 and General Atlantic Group Limited ("General Atlantic") have entered into a Stockholder Tender Agreement, dated as of May 25, 1995, pursuant to which General Atlantic has agreed, subject to certain conditions, to tender pursuant to the Offer all Shares owned by it. Further, General Atlantic has agreed not to withdraw its Shares, subject to applicable law, unless the Board of Directors of the Company (or any special committee thereof) withdraws or materially modifies its approval of the Offer, the Merger or the Merger Agreement. General Atlantic owns 3,651,299 Shares, constituting, as of May 7, 1995, approximately 10.0% of the outstanding Shares and 8.7% of the outstanding Shares on a fully diluted basis. Merger Subsidiary reserves the right, at any time or from time to time, in its sole discretion and regardless of whether or not any of the conditions to the Offer have been satisfied (except to the extent otherwise provided in the Merger Agreement), to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the -2- 3 Depositary (defined below). Any such extension 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 IBJ Schroder Bank & Trust Company (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 July 31, 1995 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 -3- 4 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) 1-800-290-6430 (Toll Free) June 1, 1995 -4- EX-99.B1 10 COMMITMENT LETTER 1 Exhibit (b)(1) May 24, 1995 Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788 Attention: Mr. Peter Schwartz Senior Vice President and Chief Financial Officer Re: $2 Billion Credit Facility Commitment Letter Ladies and Gentlemen: Computer Associates International, Inc. (the "Borrower") has advised Credit Suisse ("Credit Suisse") that it intends, directly or indirectly, to acquire all of the issued and outstanding capital stock of Legent Corporation (the "Target") pursuant to a merger agreement which has not yet been reviewed by us, for aggregate consideration of approximately $1.8 billion. We understand that such acquisition will take the form of a tender offer (the "Tender Offer") by the Borrower or a wholly-owned subsidiary thereof ("AcquisitionCo") for all of the issued and outstanding shares of the common stock of the Target (all of such common stock collectively, the "Shares") and the purchase of the portion of the Shares tendered pursuant to the Tender Offer (the "Tendered Shares"), which purchase shall be subject to the condition that not less than a majority of the Shares (on a fully diluted basis) be tendered pursuant to the Tender Offer. You have informed us that the Board of Directors of the Target is prepared to recommend to shareholders of the Target that they tender their Shares pursuant to the Tender Offer. We further understand that, following the consummation of the Tender Offer and the acquisition of the Tendered Shares, AcquisitionCo (if it is not itself the Borrower) will be merged with and into the Target, with the Target surviving as a wholly owned direct subsidiary of the Borrower (the "Merger"; collectively with the Tender Offer, the "Acquisition"). You have asked that Credit Suisse provide up to $2 billion in senior, unsecured credit facilities (the "Credit Facility") to the Borrower to finance the Acquisition and to provide financing for other general corporate purposes. Credit Suisse is pleased to advise you that it commits to provide the Credit Facility. Although Credit Suisse is committing to provide all of the Credit Facility on the terms set forth in the Term Sheet described below, Credit Suisse expects to act as agent for a 2 syndicate of financial institutions (together with Credit Suisse, the "Lenders") to provide all or a portion of the Credit Facility. Attached as Exhibit A to this letter is a Statement of Terms and Conditions (the "Term Sheet") setting forth the principal terms and conditions on and subject to which Credit Suisse is willing to make the Credit Facility available. It is agreed that Credit Suisse will act as the sole administrative agent for, and sole arranger and syndication manager of, the Credit Facility and that no additional agents or co-agents or arrangers will be appointed without the prior written consent of Credit Suisse. Credit Suisse does, however, anticipate that a limited number of co-agents will be designated by Credit Suisse. In addition, Credit Suisse reserves the right to employ the services of CS First Boston Corporation ("CSFB") in providing the services contemplated by this letter. You agree to assist Credit Suisse in forming any such syndicate and to provide Credit Suisse and the other Lenders, promptly upon request, with all information reasonably requested by them to complete successfully the syndication, including, but not limited to, (a) an information package for delivery to potential syndicate members and participants and (b) all information and projections prepared by you or your advisers relating to the transactions described herein. You agree to coordinate any other financings by the Borrower or any of its affiliates (other than up to $50 million of working capital lines of credit) with the Lenders' syndication effort and to refrain from any such financings during such syndication process unless otherwise agreed to by Credit Suisse. You also agree to use your best efforts to ensure that Credit Suisse's syndication efforts benefit from your existing lending relationships. You further agree to make appropriate senior officers and representatives of the Borrower and its subsidiaries available to participate in information meetings for potential syndicate members and participants at such times and places as Credit Suisse may reasonably request. You further agree that Credit Suisse shall have a reasonable period of time to syndicate the Credit Facility and, in any event, shall not be obligated to make any advances under the Credit Facility until the date which is at least 25 business days following the effectiveness of a definitive merger agreement with respect to the Acquisition (or, in the event that the information package described above is not distributed to prospective Lenders within seven days following such effectiveness, the date which is 20 business days following such distribution). You represent and warrant and covenant that: (1) all information which has been or is hereafter made available to Credit Suisse by you or any of your representatives in connection with the transactions contemplated hereby is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made; and - 2 - 3 (2) all financial projections that have been or are hereafter prepared by you and made available to Credit Suisse or any other participants in the Credit Facility have been or will be prepared in good faith based upon reasonable assumptions. You agree to supplement the information and projections referred to in clauses (1) and (2) above from time to time until completion of the syndication so that the representations and warranties in the preceding sentence remain correct. In arranging and syndicating the Credit Facility, Credit Suisse will use and rely on such information and projections without independent verification thereof. In connection with the syndication of the Credit Facility, Credit Suisse may, in its discretion, allocate to other Lenders portions of any fees payable to Credit Suisse in connection with the Credit Facility. You agree that no Lender will receive any compensation of any kind for its participation in the Credit Facility, except as expressly provided for in this letter or in the Fee Letter referred to below. We have reviewed certain historical and pro forma financial statements of the Borrower and the Target. We and our counsel have not had the opportunity to complete our review of the assets and liabilities (including contingent liabilities) of the Target and its subsidiaries, their business and operations and the proposed organization and capital structure of the Borrower and its subsidiaries after giving effect to Acquisition. Our willingness to provide the financing described in this letter is subject to our satisfactory completion of such review and our continuing satisfaction therewith. Our willingness to provide such financing is further subject to review of the merger agreement, tender offer documents and other documents relating to the Acquisition and to our reasonable satisfaction with the terms and conditions thereof. If our continuing review of materials about the Borrower and its subsidiaries or the Target and its Subsidiaries discloses information, or we otherwise discover information not previously disclosed to us, which has had or could reasonably be expected to have a material adverse effect on the consolidated financial position of the Borrower and its subsidiaries (after giving effect to the Merger) or the ability of the Borrower to perform its obligations under the definitive documentation with respect to the Credit Facility, we may (in our sole discretion) suggest alternative financing amounts or structures or decline to participate in the proposed financing. In any such event, Credit Suisse shall not be responsible or liable for any damages which may be alleged as a result of its failure, in accordance with the terms of this letter, to provide the Credit Facility. Credit Suisse's commitment hereunder is subject to the condition, among others, that after the date hereof there shall not have occurred any material change in or material disruption of financial or capital market conditions that in the reasonable opinion of Credit Suisse materially and adversely affects the satisfactory syndication of the Credit Facility. In addition, Credit Suisse's commitment is subject to the negotiation, execution and delivery prior to August 15, 1995 of definitive documentation with respect to the Credit Facility satisfactory in form and substance to Credit Suisse and its counsel. Such documentation shall contain the terms and conditions set forth in the Term Sheet and such other indemnities, covenants, representations and warranties, events of default, conditions - 3 - 4 precedent and other terms and conditions as shall be satisfactory in all respects to Credit Suisse. Except to the extent mutually agreed upon or otherwise set forth herein or in the Term Sheet, the material terms and conditions of Credit Suisse's commitment hereunder and of the Credit Facility will be consistent with those contained in the existing Credit Agreement, dated as of June 21, 1994, of the Borrower. The reasonable costs and expenses (including, without limitation, the reasonable fees and expenses of counsel to Credit Suisse and Credit Suisse's syndication and other reasonable out-of-pocket expenses) arising in connection with the preparation, execution and delivery of this letter and the definitive financing agreements shall be for your account. You further agree to indemnify and hold harmless each Lender (including Credit Suisse) and each director, officer, employee, affiliate (including, without limitation, CSFB) and agent thereof (each, an "indemnified person") against, and to reimburse each indemnified person, upon its demand, for, any losses, claims, damages, liabilities or other expenses ("Losses") to which such indemnified person may become subject insofar as such Losses arise out of or in any way relate to or result from the Acquisition, this letter or the financing contemplated hereby, including, without limitation, Losses consisting of legal or other expenses incurred in connection with investigating, defending or participating in any legal proceeding relating to any of the foregoing (whether or not such indemnified person is a party thereto); provided that the foregoing will not apply to any Losses to the extent they result are found by a final decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such indemnified person. Your obligations under this paragraph shall remain effective whether or not definitive financing documentation is executed and notwithstanding any termination of this letter. Neither Credit Suisse nor any other indemnified person shall be responsible or liable to any other person for consequential damages which may be alleged as a result of this letter or the financing contemplated hereby. You acknowledge that Credit Suisse may share with CSFB and such other affiliates as to which the Borrower may from time to time consent (such consent not to be unreasonably withheld) any confidential or other information relating to the Borrower, the Target and their respective subsidiaries and affiliates. You further acknowledge that any such affiliate of Credit Suisse may share with Credit Suisse any such information. In either such case, any confidential information shall remain subject to the customary treatment of confidential information by Credit Suisse. You should be aware that Credit Suisse or its affiliates may from time to time provide financing or other services to parties whose interests may conflict with yours; however, in accordance with its long-standing policies to hold in confidence the affairs of our customers, Credit Suisse and its affiliates will not furnish information obtained from you to any of our other customers. The provisions of this letter are supplemented as set forth in a separate fee letter dated the date hereof from us to you (the "Fee Letter") and are subject to the terms of such Fee Letter. By executing this letter, you acknowledge that this letter and the Fee Letter - 4 - 5 are the only agreements between you and Credit Suisse with respect to the Credit Facility and set forth the entire understanding of the parties with respect thereto. Neither this letter nor the Fee Letter may be changed except pursuant to a writing signed by each of the parties hereto. This letter shall be governed by, and construed in accordance with, the laws of the State of New York. By your acceptance hereof, you agree that neither this letter, the Fee Letter, nor any of their terms or substance, shall be disclosed, directly or indirectly, to any other person except to your employees, agents and advisers who are directly involved in the consideration of this matter or as disclosure may be compelled to be disclosed in a judicial or administrative proceeding or as otherwise required by law; provided that you may freely disclose this letter (but not the Fee Letter), and its terms and substance, at any time following your acceptance hereof and payment of the any fees specified in the Fee Letter to be due and payable upon such acceptance. If you are in agreement with the foregoing, please sign and return to Credit Suisse the enclosed copies of this letter and the Fee Letter, together with the acceptance fee referred to therein, no later than 5:00 p.m., New York time, on May 26, 1995. This offer shall terminate at such time unless prior thereto we shall have received signed copies of such letters and payment of such fee. We look forward to working with you on this transaction. Very truly yours, CREDIT SUISSE By: /s/ Peter R. Nardin ----------------------------------- Title: Member of Senior Management By: /s/ Kristina Catlin ----------------------------------- Title: Associate Accepted and agreed to as of the date first above written: COMPUTER ASSOCIATES INTERNATIONAL, INC. By: /s/ Peter A. Schwartz ---------------------------- Title: Senior Vice President - 5 - 6 Exhibit A $2,000,000,000 CREDIT FACILITIES Statement of Terms and Conditions May 24, 1995 I. AMOUNT AND TERMS OF THE FACILITY. Type of Facility: Unsecured, reducing, revolving credit facility (the "Credit Facility"). Amount: Up to $2 billion at any one time outstanding. Borrower: Computer Associates International, Inc. (the "Borrower"). Administrative Agent: Credit Suisse (in such capacity, the "Administrative Agent"). Availability: Loans (the "Loans") may be made under the Credit Facility at any time during the period between the date upon which the definitive documents with respect to the Credit Facility are executed (the "Closing Date") and the fifth anniversary thereof (the "Termination Date"). The availability of Loans shall be subject to a minimum drawing amount of $25 million and to a maximum of 8 Eurodollar tranches at any one time outstanding. Maturity: The Termination Date, with annual reductions of the commitments to provide the Credit Facility by $250 million on each anniversary of the Closing Date. Purpose: To finance (a) the acquisition by the Borrower or a wholly-owned subsidiary thereof ("AcquisitionCo") of the common stock (the "Shares") of Legent Corporation (the "Target") which has been validly tendered pursuant to the tender offer by AcquisitionCo for all of the Shares for aggregate consideration of approximately $1.8 billion (the "Tender Offer") and the merger of AcquisitionCo with and into the Target (the "Merger"; collectively with the Tender Offer, the " Acquisition") and (b) for other general corporate purposes. 7 2 II. GENERAL PROVISIONS. Interest Rate Options: The Borrower may elect that all or a portion of the Loans bear interest at a rate per annum equal to: (a) The higher of (1) the rate of interest publicly announced by Credit Suisse as its base lending rate for commercial loans in US Dollars in the United States and (2) the federal funds rate from time to time plus 0.5% (such highest rate, the "Base Rate"; the base lending rate is not intended to be the lowest rate charged by Credit Suisse to its borrowers); or (b) The rate (grossed-up for reserve requirements as described herein) at which eurodollar deposits for one, two, three, six, nine or twelve months (as selected by the Borrower) are offered by certain reference banks (to be mutually agreed upon) to prime banks in the interbank eurodollar market in the approximate amount of such reference bank's share of the relevant loan (the " Eurodollar Rate") plus the Applicable Margin. For purposes hereof, the term "Applicable Margin" initially shall be 42.5 b.p. and, thereafter, shall be adjusted from time to time to a margin to be mutually agreed upon based upon a financial performance test to be mutually agreed upon. Interest Payment Dates: In the case of Loans bearing interest based upon the Base Rate, quarterly in arrears and on each date principal is due. In the case of Loans bearing interest based upon the Eurodollar Rate, on the last day of each relevant interest period and, in the case of any interest period longer than three months on each successive date three months after the first day of such interest period. Default Rate: During the continuance of an Event of Default, outstanding Loans will bear interest at the rate which is 2% over the rate otherwise applicable thereto. Reserve Requirements; Yield Protection: The rate quoted as the Eurodollar Rate will be grossed-up for the maximum reserve requirements prescribed for eurocurrency liabilities. In addition, the financing agreements will contain customary provisions relating to 8 3 increased costs, capital adequacy protection, withholding and other taxes and illegality. Facility Fees: Fees: Initially, 20 b.p. per annum on the average daily amount of the Credit Facility (whether or not utilized), subject to adjustment from time to time to a rate to be mutually agreed upon based upon a financial performance test to be mutually agreed upon. Such facility fees shall be payable quarterly in arrears. Rate and Fee Basis: 360 days for actual days elapsed, in the case of calculation of the Eurodollar Rate and any rate based upon the Federal Funds Rate; otherwise, 365/6 days for actual days elapsed. Optional Prepayments: Without premium or penalty (but subject to Eurodollar breakage indemnities), in minimum amounts of $10,000,000. Reduction of Commitments: The Borrower will be permitted to reduce permanently the unutilized portion of the Credit Facility from time to time in minimum amounts of $50,000,000. Additionally, the Borrower shall reduce permanently the unutilized portion of the Credit Facility to the extent described above opposite the title "Maturity". III. CERTAIN CONDITIONS Conditions Precedent to Initial Advances: The availability of the Credit Facilities will be conditioned upon, among other things, satisfaction of the following conditions precedent: A. The Borrower and its subsidiaries shall have executed and delivered definitive financing agreements and related documentation (including, without limitation, secretary's certificates, incumbency certificates and compliance certificates) with respect to the Credit Facilities satisfactory in form and substance to the Lenders. B. The Tender Offer shall have been consummated pursuant to a merger agreement (which shall be in full force and effect) and an offer to purchase and related documentation satisfactory in form and substance to the Administrative Agent, and no provision 9 4 thereof shall have been amended, supplemented, waived or otherwise modified without the prior written consent of the Majority Lenders. C. Not less than a majority (or such higher number as shall be necessary to permit the consummation of the Merger without the affirmative vote of any other shareholder) of the issued and outstanding Shares (on a fully diluted basis) shall have been validly tendered pursuant to the Tender Offer and accepted for payment by AcquisitionCo. D. The aggregate price for the Shares and the fees and expenses of the Borrower in connection with the transactions contemplated hereby shall not exceed approximately $1.8 billion. E. The Lenders shall have received a satisfactory pro forma balance sheet of the Borrower and its subsidiaries as at the Closing Date and after giving effect to the Acquisition and the financings contemplated hereby, which pro forma balance sheet shall be substantially in conformity with that delivered to the Lenders during syndication. F. The Lenders shall have received projected cash flows and income statements for the period of five years following the Closing Date, which projections shall be (i) based upon reasonable assumptions made in good faith, (ii) reasonably satisfactory to the Lenders and (iii) substantially in conformity with those projections delivered to the Lenders during syndication. G. The Lenders shall not have become aware of any materially adverse information (except to the extent previously disclosed to the Lenders in writing and consented to thereby) with respect to (i) the Acquisition, (ii) the consolidated financial position of the Borrower and its subsidiaries (after giving effect to the Merger), or (iii) the ability of the Borrower to perform its obligations under the definitive documentation with respect to the Credit Facility. H. All governmental and other approvals necessary, and all material governmental and other approvals advisable, in connection with the Acquisition and the Credit Facility (including, without limitation, any 10 5 Hart-Scott-Rodino Act procedures) shall have been obtained and be in full force and effect, with all waiting periods provided by law having expired without there being taken or threatened by any competent authority any action which could reasonably be expected to restrain, prevent or otherwise impose material adverse conditions on the Merger or the financing thereof. I. There shall be no litigation, inquiry, injunction or restraining order pending, entered or threatened with respect to the Acquisition or the financing thereof which could reasonably be expected to have a material adverse effect on the consolidated financial position of the Borrower and its subsidiaries (after giving effect to the Merger) or the ability of the Borrower to perform its obligations under the credit documents with respect to the Credit Facility. J. The Lenders shall have received satisfactory legal opinions from counsel to the Borrower. K. The Lenders shall have received all fees and expenses required to be paid or delivered on or before the Closing Date. Conditions Precedent to Subsequent Advances: The making of each extension of credit (including, without limitation, the initial advances) will be conditioned upon satisfaction of the following conditions precedent: A. All representations and warranties in the credit documentation shall be true and correct in all material respects; B. There shall be no default or event of default in existence at the time of, or after giving effect to the making of, such advance; C. The making of such advance shall not cause the aggregate amount of Loans to exceed the aggregate amount of the Credit Facility then in effect. D. The Administrative Agent shall have received such other approvals, opinions or documents as the Administrative Agent or the Majority Lenders reasonably may request. 11 6 IV. CERTAIN REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT. The documentation relating to the Credit Facilities will include, representations and warranties, affirmative and negative covenants and events of default customary for financings of this type and other terms deemed appropriate by the Lenders, including, without limitation: Representations and Warranties: Due organization and existence; due authorization of credit documents; governmental approvals, no conflicts; enforceability of credit documents; title to property; compliance with law; no litigation; no events of default; disclosure of subsidiaries; accuracy of financial statements; absence of material adverse change; compliance with margin and similar regulations; ERISA plans; not an investment company; payment of taxes. Affirmative Covenants: Payment of Taxes and other charges; maintenance of insurance; preservation of corporate existence; compliance with laws; inspection rights; maintenance of books and records; maintenance of properties; delivery of quarterly, unaudited financial statements and annual audited financial statements; delivery of certain notices and other information; use of proceeds; consummation of Merger within 180 days following consummation of Tender Offer upon the terms of the merger agreement approved by the Administrative Agent. Financial Covenants: Minimum net worth and maximum leverage, with ratios to be mutually agreed upon. Negative Covenants: Limitation on liens, guarantees, mergers, consolidations, sales of assets, capital leases, indebtedness which is senior to the Credit Facility; limitation on material changes in business, fiscal year and Acquisition documents; limitation on certain ERISA events; limitation on dividends. The negative covenants described above shall be subject to exceptions and "baskets" to be mutually agreed upon, including, among other things, to permit receivables financings (with the proceeds therefrom being applied to reduce the commitments to provide the Credit Facility) and to ensure compliance with Regulation U. Events of Default: Nonpayment of principal, interest, fees or other amounts; inaccuracy of representations and warranties; violation of 12 7 covenants; cross-default; material judgments; bankruptcy; appropriation; suspension of business; invalidity of credit documents; change of control. V. CERTAIN OTHER TERMS Transfer Provisions: The Lenders may at any time with the consent of the Borrower (which consent shall not be unreasonably withheld) sell, assign or otherwise transfer all or any part of, their Loans, commitments and other rights and duties to one or more other financial institutions, subject to a minimum hold and (other than in the case of an assignment to an existing Lender) a minimum assignment amount of $10 million. Participations shall be permitted without restrictions (other than customary limitations on voting rights of participants), and participants will have the same benefits as the Lenders with respect to yield protection and increased cost provisions. Governing Law: The State of New York (including submission to New York jurisdiction and waiver of jury trial). Indemnity: The Borrower will indemnify, pay and hold harmless the Administrative Agent and the Lenders (and their respective directors, officers, employees and agents) against any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof. Confidentiality: No Lender shall disclose non-public information provided to it pursuant to the credit documents which has been marked "confidential." Documentation: To be prepared by Simpson Thacher & Bartlett, as counsel to the Administrative Agent. Commitment Termination Date: Definitive financing agreements and related documentation must have been entered into by August 15, 1995. EX-99.C1 11 AGREEMENT AND PLAN OF MERGER 1 Exhibit (c)(1) ================================================================================ AGREEMENT AND PLAN OF MERGER dated as of May 25, 1995 among COMPUTER ASSOCIATES INTERNATIONAL, INC., VR126, INC. and LEGENT CORPORATION ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I THE OFFER SECTION 1.1. The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.3. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE III THE SURVIVING CORPORATION SECTION 3.1. Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.2. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.3. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (e) SEC Documents; Financial Statements; No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (f) Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (g) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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Page ---- (i) Absence of Changes in Stock or Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (j) Participation and Coverage in Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (k) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (l) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (m) State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (n) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (o) Permits; Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (p) Contracts; Debt Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (q) Interests of Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (r) Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (s) Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 4.2. Representations and Warranties of Parent and Merger Subsidiary . . . . . . . . . . . . . . . . . . . . . . 18 (a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 (b) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 (c) Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (d) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (e) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (f) Delaware Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 5.2. Stockholder Meeting; Proxy Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 5.3. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 5.4. Other Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 5.5. Fair Price Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE VI COVENANTS OF PARENT SECTION 6.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 6.2. Obligations of Merger Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 6.3. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 6.4. Director and Officer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 6.5. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Page ---- ARTICLE VII COVENANTS OF PARENT AND THE COMPANY SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 7.2. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE VIII CONDITIONS TO THE MERGER SECTION 8.1. Conditions to the Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE IX TERMINATION SECTION 9.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 9.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 ARTICLE X MISCELLANEOUS SECTION 10.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 10.2. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 10.3. Amendments; No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 10.4. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 10.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 10.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 10.7. Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-iii- 5 AGREEMENT AND PLAN OF MERGER dated as of May 25, 1995 among Legent Corporation, a Delaware corporation (the "Company"), Computer Associates International, Inc., a Delaware corporation ("Parent"), and VR126, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Subsidiary"). The parties hereto 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, $.01 par value per share (the "Shares"), of the Company at a price of $47.95 per Share, 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 (other than the Minimum Condition) 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, or makes any other change to any condition to the Offer set forth in Annex I which is adverse to the holders of Shares. The initial expiration date of the Offer shall be July 6, 1995. Subject to the terms of the Offer in this Agreement and the satisfaction (or waiver to the extent permitted by this Agreement) of all the conditions of the Offer set forth in Annex I hereto as of any expiration date, Merger Subsidiary shall accept for payment and pay for all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after such expiration of the Offer, provided that Merger Subsidiary may extend the Offer for a period of time of not more than 20 business days to meet the objective (but not the condition) 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 (x) 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 or (y) Parent and the Company are litigating or contesting any 6 administrative or judicial action or proceeding or any Order (defined below in Section 7.1(b)) pursuant to Section 7.1(b) and any conditions set forth in paragraph (a) or (b) of Annex I are not satisfied as of the date the Offer would otherwise have expired, Merger Subsidiary shall extend the Offer from time to time until the earlier of (i) the consummation of the Offer and (ii) March 29, 1996. (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 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 an 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. and Goldman, Sachs & Co. have delivered to the Company's Board of Directors their opinions 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 -2- 7 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 an 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 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 Delaware Law, whereupon -3- 8 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 (i) November 6, 1995, provided that as of which date the conditions set forth in Article VIII hereof shall be fulfilled or waived in accordance with this Agreement and (ii) 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 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 $47.95 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 -4- 9 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, 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. (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 -5- 10 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) Subject to Section 2.5(c), at or immediately prior to the Effective Time, each outstanding Company Option (defined below) shall be canceled, and each holder of any such option shall be paid by the Company promptly after the Effective Time for each such option an amount determined by multiplying (i) the excess, if any, of $47.95 per Share over the applicable exercise price of such option by (ii) the number of Shares such holder could have purchased had such holder exercised such option in full immediately prior to the Effective Time (as if such Company Option was exercisable in full). "Company Option" means any option granted, whether or not exercisable, 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) Prior to the Effective Time, the Company shall use its best efforts to (i) obtain any consents from holders of Company Options and (ii) make any amendments to the terms of such stock option or compensation plans or arrangements that, in the case of either clauses (i) or (ii), are necessary to give effect to the transactions contemplated by Section 2.5(a). Notwithstanding any other provision of this Section 2.5, payment may be withheld in respect of any Company Option until necessary consents are obtained. (c) Prior to the Effective Time, the Company shall terminate the Company's Employee Stock Purchase Plan. Prior to the Effective Time, the Company shall amend the Company's Retirement Security Plan to permit Employer Matching Contributions (defined therein) in cash. 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. -6- 11 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 "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 Significant 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, -7- 12 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). Except for the capital stock of its subsidiaries, the Company does not own, directly or indirectly, over $500,000 of capital stock or other ownership interest in any person except as disclosed in Section 4.1(b) of the Disclosure Schedule. (c) Capital Structure. The authorized capital stock of the Company consists of 100,000,000 Shares and 10,000,000 shares of Preferred Stock, $.01 par value per share. As of May 7, 1995, (i) 36,340,680 Shares were issued and outstanding, (ii) no Shares were held by the Company in its treasury or by any of the Company's subsidiaries, and (iii) 5,662,173 Shares were reserved for issuance pursuant to the 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, except for Shares issued pursuant to outstanding Company Options and a grant of 50,000 Company Options on May 11, 1995. 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. 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. (d) Authority; Noncontravention. The Company has the requisite corporate power and authority to enter into this Agreement 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 -8- 13 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 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, (ii) the filing of a premerger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (iii) compliance with any applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act"), (iv) such notices, filings and consents as may be required under relevant state property transfer or environmental 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 October 1, 1991 (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 (the "Securities Act"), or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder 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 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 the consolidated financial position of the Company and its consolidated subsidiaries as of the dates -9- 14 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 or on the Disclosure Schedule, 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, at the time such stockholders vote on adoption of this Agreement and at the Effective Time, 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") or in Section 4.1(g) of the Disclosure Schedule, since December 31, 1994, 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 -10- 15 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 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 material increase in compensation or benefits, except in the ordinary course of business consistent with past practice or as was required under employment agreements in effect as of December 31, 1994, (B) any granting by the Company or any of its subsidiaries to any such director, officer or employee of any increase in severance or termination pay (including the acceleration in the exercisability of Company Options or in the vesting of Shares (or other property) or the provision of any tax gross-up), except as was required under employment, severance or termination agreements or plans in effect as of December 31, 1994 which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, or (C) 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 material indebtedness for borrowed money, (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 $1,000,000 for any one transaction or $5,000,000 in the aggregate, (x) any making of any loan, advance or capital contributions to or investment in any person other than made in the ordinary course of business consistent with past practice, but in no event in the amount of more than $1,000,000 for any one transaction or $5,000,000 in the aggregate and other than investments in cash equivalents 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 the Agreement, but in no event representing commitments on behalf of the Company or any of its subsidiaries of more than $1,000,000 for any transaction or $5,000,000 for any series of transactions, (xii) any material labor dispute, other than routine individual grievances, or any material 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 September 30, 1994, 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). -11- 16 (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, 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 could reasonably be expected to exceed $2,000,000, the forum, the parties thereto, the subject matter thereof and the amount of damages claimed. (i) Absence of Changes in Stock or Benefit Plans. Except as disclosed in Section 4.1(i) of the Disclosure Schedule or in the Company Filed SEC Documents, since December 31, 1994, there has not been (i) 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 or 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, worker's compensation, disability, supplementary unemployment benefits, or other plan, arrangement or understanding (whether or not legally binding) or any employment agreement providing compensation or benefits to any current or former employee, officer, director or independent contractor of the Company or any of its subsidiaries or any beneficiary thereof or entered into, maintained or contributed to, as the case may be, by the Company or any of its subsidiaries (collectively, "Benefit Plans") which individually or in the aggregate would have a Material Adverse Effect. (j) Participation and Coverage in Benefit Plans. Except as disclosed in writing to Parent prior to the date hereof, there has been no adoption of, or amendment to, or change in employee participation or coverage under, any Benefit Plans which would increase materially the expense of maintaining such Benefit Plans above the level of the expense incurred in respect thereof for the fiscal year ended on September 30, 1994 in a manner that would have a Material Adverse Effect. (k) ERISA Compliance. (i) Section 4.1(k) of the Disclosure Schedule or the Company Filed SEC Documents contains a list of 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 -12- 17 any of its subsidiaries or ERISA affiliates or under which the Company or any of its subsidiaries or ERISA affiliates has any liability except where a failure to list such Benefit Plans would not have a Material Adverse Effect. 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 Internal Revenue Code of 1986, as amended (the "Code"). The only Benefit Plans which individually or collectively would 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 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 deficit or unfunded actuarial liability, except where failure to be so fully funded would not have a Material Adverse Effect. 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 nothing has occurred to cause the loss of such qualified status. (iii) Except as disclosed in the Company Filed SEC Documents, 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 or any liability or penalty under Section 4975 or 4980B of the Code or Section 502(i) of ERISA which in either case would have a Material Adverse Effect. (iv) There are no pending or anticipated claims against or otherwise involving any of the Benefit Plans and no suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Benefit Plan activities) has been brought against or with respect to any Benefit Plan, in each case, which could reasonably be expected to have a Material Adverse Effect. (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. (vi) Except as disclosed in the Company Filed SEC Documents or as required by law and except for benefits payable to certain former officers which do not exceed in the aggregate for all such persons $500,000 per year, neither the Company nor any of its subsidiaries has any obligations for post-retirement or post-termination health and life benefits under any 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 Section 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 (collectively, "Returns") required to be filed with any tax authority and in accordance with all applicable laws, except where failure to file such Returns, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. All such Returns are correct and complete except where a failure to be so could not reasonably be expected to have -13- 18 a Material Adverse Effect. All taxes owed by the Company and any of its subsidiaries (whether or not shown on any tax return) have been paid, except where failure to pay any such taxes, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 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 except where a failure to do so could not reasonably be expected to have a Material Adverse Effect. (iii) Except as disclosed in the Company's Form 10-Q for the quarter ended March 31, 1995, neither the Company nor any of its subsidiaries expects any authority to assess any additional material 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 which would have a Material Adverse Effect 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, except where any such waivers, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (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 which could reasonably be expected to have a Material Adverse Effect. 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 its subsidiaries that is currently a member of the Company's affiliated group filing a consolidated federal income tax return) under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (vi) 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, except for any such adjustments or changes which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Except as disclosed in Section 4.1(l)(vi) of the Disclosure Schedule or in the Company Filed SEC Documents, 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 amount (whether in cash or property, including Company Stock) that would not be deductible pursuant to the terms of Sections 162(a)(1), 162(m), 162(n) or 280G of the Code and could reasonably be expected to have a Material Adverse Effect. -14- 19 (m) State Takeover Statutes. 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 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 transactions contemplated hereby. (n) Brokers. No broker, investment banker, financial advisor or other person, other than Lazard Freres & Co. and Goldman, Sachs & Co., the fees and expenses of which will be paid by the Company (and copies 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. No such engagement letters obligate 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 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 respects with all applicable statutes, laws, 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, any applicable statutes, laws, ordinances, regulations, rules, judgments, decrees or orders, except for noncompliances and violations, which individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (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 $300,000 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 $300,000 or $600,000, 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; -15- 20 (B) any joint venture contract or arrangement or any other agreement which has involved or is expected to involve a sharing of revenues of $2,000,000 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 $2,000,000; (D) 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 transactions contemplated hereby; (E) any agreement, contract, policy, license, Permit, document, instrument, arrangement or commitment that materially limits 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 materially limit 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 $1,000,000 or more per annum or any other material license or distribution agreement or arrangement. To the knowledge of the Company, none of the parties to any of the contracts identified pursuant to the immediately proceeding sentence, in Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule or otherwise 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 $2,500,000 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), -16- 21 (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) 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. (r) Technology. (i) The Company exclusively owns, or is licensed to use, without restriction, the rights to all material 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 to be used in the business of the Company and any of its subsidiaries as currently conducted or proposed to be conducted (the "Company Intellectual Property Rights"). Section 4.1(r)(i) of the Disclosure Schedule lists: (A) all material patents, trademarks, trade names, service marks, registered and unregistered copyrights, and any applications therefor included in the Company Intellectual Property Rights, together with a list of all of 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 (B) all licenses and other agreements to which the Company or any of its subsidiaries is a party and pursuant to which the Company or any of its subsidiaries is authorized to use any Company Intellectual Property Right, including the identities of the parties thereto. 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 violation of, or lose any rights pursuant to, any license or agreement described in Section 4.1(r)(i) of the Disclosure Schedule. (ii) Except as disclosed in the Company Filed SEC Documents or in Section 4(r)(ii) of the Disclosure Schedule, no material 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 (A) to the effect that the manufacture, sale or use of any product or process as now used or offered or proposed for use or sale by the Company or any subsidiary of the Company infringes on any copyright, trade secret, patent, tradename or other intellectual property right of any person, (B) against the use by the Company or any subsidiary of the Company of any Company Intellectual Property Rights, or (C) challenging the ownership, validity or effectiveness of any of the Company Intellectual Property Rights. To the Company's knowledge, all granted and issued patents -17- 22 and all registered trademarks and service marks listed in Section 4.1(r)(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, 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 material 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 standard infringement indemnities agreed to in the ordinary course of business 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. The Company and its subsidiaries have the exclusive right to file, prosecute and maintain all applications and registrations with respect to material Company Intellectual Property Rights. (s) Change of Control. Except as disclosed in the Company Filed SEC Documents or in Section 4.1(s) of the Disclosure Schedule, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and thereby will not (i) result in any payment (including severance, unemployment compensation, tax gross-up, bonus or otherwise) becoming due to any current or former director, employee or independent contractor of the Company or any of its subsidiaries, from the Company or any of its subsidiaries under any Stock Plan, Benefit Plan, agreement or otherwise, (ii) materially increase any benefits otherwise payable under any Stock Plan, Benefit Plan, agreement or otherwise or (iii) result in the acceleration of the time of payment, exercise or vesting of any such benefits, in each case, that could reasonably be expected to have a Material Adverse Effect. 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 party in accordance with its terms. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this -18- 23 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 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, (ii) the filing of a premerger notification and report form under the HSR Act, (iii) compliance with any applicable requirements of the Exchange Act, (iv) such notices, filings and consents as may be required under relevant state property transfer or environmental laws and (v) such other consents, approvals, orders, authorizations, registrations, declarations and filings as 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. (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, at the time the stockholders vote on adoption of this Agreement and at the Effective Time, 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 -19- 24 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 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) 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. (f) Delaware Law. As of the date of this Agreement, neither Parent nor any of its subsidiaries is an "interested stockholder", as such term is defined in Section 203 of Delaware Law. ARTICLE V COVENANTS OF THE COMPANY The Company agrees that: 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); -20- 25 (c) amend its certificate of incorporation, by-laws or other comparable charter or organizational documents; (d) mortgage or otherwise encumber or subject to any Lien or, except in the ordinary course of business consistent with past practice and pursuant to existing contracts or commitments, sell, lease, license, transfer or otherwise dispose of any of the Company Intellectual Property Rights or any other material properties or assets; (e) make or agree to make any new capital expenditures in excess of $500,000, except pursuant to commitments outstanding on April 1, 1995; (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, 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) 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 any employment agreement, (ii) enter into any customer sale or license agreement with non-standard terms or at discounts from list prices in excess of 20%; 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 on the basis of executed customer contracts with respect to products actually delivered to customers, (iv) enter into any contracts or series of related contracts in excess of $250,000, (v) enter into any customer agreements providing for product replacements or (vi) make any determination as to amounts payable under the Company's Incentive Compensation Plan; (j) authorize any of, or commit or agree to take any of, the foregoing actions; or (k) (i) take or agree or commit to take any action that would make any representation or warranty of the Company hereunder inaccurate in any material 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 material respect at any such time. -21- 26 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 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 its best 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 full 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 and the officers, directors, employees or other agents of the Company and its subsidiaries will not, 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 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 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 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 that it may be considering making, or that has made, an Acquisition Proposal and will keep Parent fully informed of the status and details of any such Acquisition Proposal, notice or request. For purposes of this Agreement, "Acquisition Proposal" means any offer or proposal for, or any 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 -22- 27 of the assets of, the Company or any of its subsidiaries, other than the transactions contemplated by this Agreement. SECTION 5.5. Fair Price Structure. If any "fair price", "control share acquisition" or "moratorium" statute or other similar statute or regulation or any state "blue sky" statute shall become applicable to the transactions contemplated hereby, the Company and the members of the Board of Directors of the Company shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby and thereby may be consummated as promptly as practicable on the terms contemplated hereby and thereby and otherwise act to minimize the effects of such statute or regulation on the transactions contemplated hereby or thereby. ARTICLE VI COVENANTS OF PARENT Parent agrees that: SECTION 6.1. Confidentiality. Prior to the Effective Time and after any termination of this Agreement Parent will hold, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Company and its subsidiaries furnished to Parent in connection with the transactions contemplated by this Agreement, including, without limitation, the stockholder lists furnished by the Company pursuant to Section 1.2, except to the extent that such information can be shown to have been (i) previously known on a nonconfidential basis by Parent, (ii) in the public domain through no fault of Parent or (iii) later lawfully acquired by Parent from sources other than the Company; provided that Parent may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement and to its lenders in connection with obtaining the financing for the transactions contemplated by this Agreement so long as such persons are informed by Parent of the confidential nature of such information and are directed by Parent to treat such information confidentially. Parent's obligation to hold any such information in confidence shall be satisfied if it exercises the same care with respect to such information as it would take to preserve the confidentiality of its own similar information. If this Agreement is terminated, Parent will, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to the Company, upon request, all documents and other materials, and all copies thereof, obtained by Parent or on its behalf from the Company in connection with this Agreement that are subject to such confidence. SECTION 6.2. 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. -23- 28 SECTION 6.3. 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 6.4. Director and Officer Liability. For six years after the Effective Time, Parent will cause the Surviving Corporation to 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 six years after the Effective Time, Parent will cause the Surviving Corporation to use its best efforts 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 6.4, 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 cause the Surviving Corporation to 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 6.5. Employees. (a) Parent agrees to honor in accordance with their terms all Benefit Plans previously delivered to Parent and all accrued benefits vested thereunder; it being understood and agreed that nothing in this Section 6.5(a) shall prevent Parent from terminating any such Benefit Plan in accordance with its terms. For purposes of this Section 6.5(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. (c) Parent agrees to provide severance benefits to any employee of the Company or its subsidiaries who suffers a qualifying termination of employment prior to July 1, 1996 in an amount equal to the greater of (i) two months of base salary and (ii) one month of base salary plus one additional month of base salary for each full year of service with the Company or its subsidiaries. Such severance benefits shall be offset by any amounts statutorily required to be paid in lieu of, or following, notice. In the case of any employee of the Company or its subsidiaries located outside the United States who suffers a qualifying termination of employment prior to July 1, 1996, Parent agrees to provide severance benefits in an amount equal to the greater of (i) the -24- 29 amount such employee would be entitled to pursuant to the immediately preceding sentence and (ii) the amount required to be paid pursuant to applicable law. (d) Parent agrees not to terminate the employees of the Company listed on Section 6.5 of the Disclosure Schedule hereto prior to the Closing and pay such employees compensation as provided in any employment agreement to which they are a party. To the extent that any such employee would be entitled to receive severance benefits in accordance with Section 6.5(c), the amount of such severance benefits shall be reduced by the total salary received by such employee during the period from the date a notice of termination is given to the employee to the date following the Effective Time on which the employee's employment is terminated. (e) The provisions of this Section 6.5 (other than Section 6.5(b)) are intended to be for the benefit of the individuals or classes of individuals named therein and shall be enforceable by them. ARTICLE VII COVENANTS OF PARENT AND THE COMPANY The parties hereto agree that: 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 -25- 30 of any Antitrust Law, 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 the Merger or any such other transactions, unless by mutual agreement Parent and the Company decide that litigation is not in their respective best interests. Notwithstanding the provisions of the immediately preceding sentence, it is expressly understood and agreed that Parent shall have no obligation to litigate or contest any administrative or judicial action or proceeding or any Order beyond March 29, 1996. 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. (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, 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 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, (ii) 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, (iii) 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 (iv) 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) The Company shall give prompt notice to Parent 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 -26- 31 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 which, 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(k) or 4.1(l) or 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 and the Stockholder Tender Agreement dated as of May 25, 1995 (the "Stockholder Agreement") among certain stockholders of the Company and Merger Subsidiary, 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 or with the NASD. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement and the Stockholder Agreement will be in the form previously agreed to by the parties. 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; -27- 32 (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): (i) by mutual written consent of the Company and Parent; (ii) by either the Company or Parent, if the Merger has not been consummated by November 30, 1995 (or, if the Offer shall have been extended by Merger Subsidiary pursuant to the last sentence of Section 1.1(a), by the earlier of (i) the 90th day following the consummation of the Offer and (ii) June 30, 1996) (provided that the party seeking to terminate the Agreement shall not have breached its obligations under this Agreement in any material respect); (iii) 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; (iv) 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, however, that Parent shall not be entitled to terminate this Agreement pursuant to this sub-clause (x) as a result of its breach of this Agreement), (y) if Parent or Merger Subsidiary shall not have purchased any Shares pursuant to the Offer prior to September 15, 1995 (or, if the Offer shall have been extended by Merger Subsidiary pursuant to the last sentence of Section 1.1(a), on or prior to March 29, 1996) or (z) if the Offer shall have been terminated without Parent or Merger Subsidiary having purchased any Shares pursuant to the Offer; -28- 33 (v) by Parent, upon the occurrence of any Trigger Event described in clauses (i) through (iii) of Section 10.4(b); or (vi) 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 6.1, 10.4 and 10.6 shall survive the termination hereof. ARTICLE X MISCELLANEOUS SECTION 10.1. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given, if to Parent or Merger Subsidiary, to: Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Telecopy: (516) 342-3300 Attention: Sanjay Kumar President and Chief Operating Officer with a copy to: Scott F. Smith Howard, Darby & Levin 1330 Avenue of the Americas New York, New York 10019 Telecopy: (212) 841-1010 if to the Company, to: Legent Corporation 575 Herndon Parkway Herndon, Virginia 22070-5226 Telecopy: (703) 708-3900 Attention: Jerre Stead -29- 34 with a copy to: Barry A. Bryer Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Telecopy: (212) 403-2000 or such other address or telecopy number as such party may hereafter specify for the purpose by notice to the other parties hereto. Each such notice, request or other communication shall be effective when delivered at the address specified in this Section. SECTION 10.2. Survival of Representations and Warranties. The representations and warranties and agreements contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement except for the representations, warranties and agreements set forth in Sections 6.1, 10.4 and 10.6. 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 the 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) $45,000,000, 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: -30- 35 (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) any representation or warranty made by the Company in, or pursuant to, this Agreement that is qualified as to materiality shall not have been true and correct when made or at any time prior to the consummation of the Offer as if made at and as of such time, or any representation or warranty made by the Company in, or pursuant to, this Agreement that is not so qualified shall not have been true and correct in all material respects when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Company shall have failed to observe or perform in any material respect any of its obligations under this Agreement; or (iii) the Board of Directors of the Company (or a 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, the Company shall assume and pay, or reimburse Parent for, all reasonable fees payable and expenses incurred by Parent (including the fees and expenses of its counsel and the fees and expenses of institutions that are considering making or have made a commitment to provide financing for the transactions contemplated hereby) 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 -31- 36 "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". -32- 37 The parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. LEGENT CORPORATION By /s/ Jerre Stead ------------------------------------- Title: COMPUTER ASSOCIATES INTERNATIONAL, INC. By /s/ Sanjay Kumar ------------------------------------- Title: VR126, INC. By /s/ Sanjay Kumar ------------------------------------- Title: -33- 38 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 May 25, 1995 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, (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; 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 39 (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 in the NASDAQ over-the-counter market in the United States, (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 or 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 a 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; -2- 40 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 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. -3- EX-99.C2 12 STOCKHOLDER TENDER AGREEMENT 1 Exhibit (c)(2) STOCKHOLDER TENDER AGREEMENT AGREEMENT dated as of May 25, 1995 among VR126, INC., a Delaware corporation ("Buyer"), and the holders (the "Stockholders") of the shares of Common Stock, par value $.01 per share (the "Shares"), of LEGENT CORPORATION, a Delaware corporation (the "Company"), listed on the signature pages hereof. In order to induce Buyer and Computer Associates International, Inc., a Delaware corporation ("Parent") and the owner of 100% of the outstanding capital stock of Buyer, to enter into an Agreement and Plan of Merger with the Company (the "Merger Agreement"), Buyer has requested the Stockholders, and the Stockholders have agreed, to enter into this Agreement. The parties hereto agree as follows: ARTICLE I TENDER OFFER SECTION 1.1. Tender of Shares. (a) Each Stockholder hereby agrees, pursuant to the terms and subject to the conditions set forth herein, to tender in the Offer (defined in the Merger Agreement) all Shares currently owned by such Stockholder as set forth on the signature pages hereto and any additional Shares acquired by such Stockholder (whether by purchase or otherwise) after the date of this Agreement (such "Stockholder's Shares" and, collectively, the "Stockholder Shares"). (b) Within five business days of the commencement of the Offer and within one business day of any acquisition by each Stockholder of any additional Shares, each Stockholder shall deliver to the depositary (the "Depositary") designated in the Offer (i) a letter of transmittal with respect to such Stockholder's Shares complying with the terms of the Offer together with instructions directing the Depositary to make payment for such Shares directly to the Stockholder, (ii) a certificate or certificates representing such Stockholder's Shares and (iii) all other documents or instruments required to be delivered pursuant to the terms of the Offer (such documents in clauses (i) through (iii) collectively being hereinafter referred to as the "Tender Documents"). (c) Unless and until 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 (defined in the Merger Agreement) or the Merger Agreement, no Stockholder shall, subject to applicable law, withdraw any tender effected in accordance with Section 1.1(b). Any Stockholder desiring to withdraw such Stockholder's Shares shall give prior written notice thereof to the Buyer and any withdrawn Shares shall continue to be held by such Stockholder subject to the terms and conditions of this Agreement. 2 ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each of the Stockholders severally represents and warrants to Buyer that: SECTION 2.1. Valid Title. Such Stockholder is the sole, true, lawful and beneficial owner of such Stockholder's Shares with no restrictions on such Stockholder's rights of disposition pertaining thereto. SECTION 2.2. Authority; Noncontravention. Such Stockholder has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated by this Agreement have been duly authorized by all necessary action (including any consultation, approval or other action by or with any other person). This Agreement has been duly executed and delivered by such Stockholder and constitutes a valid and binding obligation of such Stockholder, enforceable against such Stockholder 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 such Stockholder under, any provision of applicable law or regulation or of any agreement, judgment, injunction, order, decree, or other instrument binding on such Stockholder or result in the imposition of any lien on any asset of such Stockholder. No consent, approval, order or authorization of, or registration, declaration or filing with or exemption by any Federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign, is required by or with respect to such Stockholder in connection with the execution and delivery of this Agreement by such Stockholder or the consummation by such Stockholder of the transactions contemplated by this Agreement, except for applicable requirements, if any, of Sections 13 and 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. If this Agreement is being executed in a representative or fiduciary capacity, the person signing this Agreement has full power and authority to enter into and perform such Agreement. SECTION 2.3. Total Shares. The number of Shares set forth on the signature pages hereto are the only Shares beneficially owned by such Stockholder and, except as set forth on such signature pages, the beneficial owner or owners of such Stockholder's Shares owns or own no options to purchase or rights to subscribe for or otherwise acquire any securities of the Company and has or have no other interest in or voting rights with respect to any securities of the Company. -2- 3 SECTION 2.4. Finder's Fees. No investment banker, broker or finder is entitled to a commission or fee from Buyer or the Company in respect of this Agreement based upon any arrangement or agreement made by or on behalf of such Stockholder. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to each of the Stockholders that: SECTION 3.1. Corporate Power and Authority. Buyer has 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 Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes a valid and binding obligation of Buyer, enforceable against it in accordance with its terms. ARTICLE IV MISCELLANEOUS SECTION 4.1. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. SECTION 4.2. Conduct of Stockholders. Such Stockholder will not (a) take, agree or commit to take any action that would make any representation and warranty of such Stockholder hereunder inaccurate in any respect as of any time prior to the termination of this Agreement or (b) 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. SECTION 4.3. Specific Performance. The parties hereto agree that Buyer may be irreparably damaged if for any reason any Stockholder failed to tender in the Offer, and to not withdraw, such Stockholder's Shares in accordance with the terms of this Agreement or to perform any of its other obligations under this Agreement, and that Buyer would not have an adequate remedy at law for money damages in such event. Accordingly, Buyer shall be entitled to specific performance and injunctive and other equitable relief to enforce the performance of this Agreement by each Stockholder. This provision is without prejudice to any other rights that Buyer may have against any Stockholder for any failure to perform its obligations under this Agreement. -3- 4 SECTION 4.4. Notices. All notices, requests, claims, demands and other communications hereunder 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 such party at its address set forth on the signature page hereto or to such other address as such party may have furnished to the other parties in writing in accordance herewith. SECTION 4.5. Amendments; Termination. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. This Agreement may be terminated by any of the parties hereto upon written notice to the other parties hereto on or after the earlier of (a) the date that Shares are accepted for payment in the Offer and (b) the date that the Merger Agreement terminates in accordance with its terms. SECTION 4.6. 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 Buyer may assign its rights and obligations to any affiliate of Buyer and provided, further, that no Stockholder may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of Buyer. SECTION 4.7. Governing Law. This Agreement shall be construed in accordance with and governed by the law of New York without giving effect to the principles of conflicts of laws thereof. SECTION 4.8. Counterparts; Effectiveness. 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. -4- 5 The parties hereto have caused this Agreement to be duly executed as of the day and year first above written. VR126, INC. By: /s/ Sanjay Kumar --------------------- Title: President c/o Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar 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 GENERAL ATLANTIC GROUP LIMITED Class of Shares Stock Owned ------- ------ common 3,651,299 By: /s/ Craig R. Mayor ----------------------- Title: Treasurer Washington Mall II Church Street Hamilton 5, Bermuda Attention: Fax: -5- -----END PRIVACY-ENHANCED MESSAGE-----