-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JC43cUZiXEO6hKC8DhQ/TKWy5DH6Z+cJhEL2Oxa9JcEqHFaD2Pxsybi0Z6RYo7B8 60doh9Uzxg6ooBqqLUK6iw== 0001047469-99-004103.txt : 19990210 0001047469-99-004103.hdr.sgml : 19990210 ACCESSION NUMBER: 0001047469-99-004103 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19990209 GROUP MEMBERS: COMPUTER ASSOCIATES INTERNATIONAL INC GROUP MEMBERS: THEBETTERPLAN ("TBP"), INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER MANAGEMENT SCIENCES INC CENTRAL INDEX KEY: 0000949229 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 592264633 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-45755 FILM NUMBER: 99526462 BUSINESS ADDRESS: STREET 1: 8133 BAYMEADOWS WAY CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 9047378955 MAIL ADDRESS: STREET 1: 8133 BAY MEADOWS WAY CITY: JACKSONVILLE STATE: FL ZIP: 32256 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER MANAGEMENT SCIENCES INC CENTRAL INDEX KEY: 0000949229 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 592264633 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-45755 FILM NUMBER: 99526463 BUSINESS ADDRESS: STREET 1: 8133 BAYMEADOWS WAY CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 9047378955 MAIL ADDRESS: STREET 1: 8133 BAY MEADOWS WAY CITY: JACKSONVILLE STATE: FL ZIP: 32256 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 SC 14D1 AND 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- SCHEDULE 14D-l TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 COMPUTER MANAGEMENT SCIENCES, INC. ----------------------------------------------------------------------- (Name of Subject Company) TheBetterPlan ("TBP"), Inc. COMPUTER ASSOCIATES INTERNATIONAL, INC. ----------------------------------------------------------------------- (Bidder) COMMON STOCK, PAR VALUE $.01 PER SHARE ----------------------------------------------------------------------- (Title of Class of Securities) 205213101 ----------------------------------------------------------------------- (CUSIP Number of Class of Securities) SANJAY KUMAR TheBetterPlan ("TBP"), Inc. C/O COMPUTER ASSOCIATES INTERNATIONAL, INC. ONE COMPUTER ASSOCIATES PLAZA ISLANDIA, NEW YORK 11788-7000 TELEPHONE: (516) 342-5224 ----------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) COPIES TO: SCOTT F. SMITH, ESQ. HOWARD, SMITH & LEVIN LLP 1330 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 TELEPHONE: (212) 841-1000 ----------------------------------------------------------------------- February 5, 1999 ----------------------------------------------------------------------- (Date of Event Which Requires Filing Statement on Schedule 13D) CALCULATION OF FILING FEE - --------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE $410,033,512 $82,007
* Estimated for purposes of calculating the amount of filing fee only. The amount assumes the purchase of 14,644,054 shares of common stock, par value $.01 per share (the "Shares"), at a price per Share of $28 in cash. Such number of Shares represents all of the Shares outstanding as of February 5, 1999. / / 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 __ Pages Exhibit Index begins on Page __ 14D-1 and 13D CUSIP No. 205213101 Page 2 of __ Pages 1) Name of Reporting Persons: TheBetterPlan ("TBP"), 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. Florida - -------------------------------------------------------------------------------- 7) Aggregate Amount Beneficially Owned by Each Reporting Person. 5,036,622* - -------------------------------------------------------------------------------- 8) [X] Check if the Aggregate Amount in Row 7 Excludes Certain Shares. - -------------------------------------------------------------------------------- 9) Percent of Class Represented by Amount in Row 7. Approximately 34.4% as of February 5, 1999* - -------------------------------------------------------------------------------- 10) Type of Reporting Person (See Instructions). CO
14D-1 and 13D CUSIP No. 205213101 Page 3 of __ Pages 1) Name 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). 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. 5,036,622* - -------------------------------------------------------------------------------- 8) [X] Check if the Aggregate Amount in Row 7 Excludes Certain Shares. - -------------------------------------------------------------------------------- 9) Percent of Class Represented by Amount in Row 7. Approximately 34.4% as of February 5, 1999* - -------------------------------------------------------------------------------- 10) Type of Reporting Person (See Instructions). CO
- ------------------------- * On February 5, 1999, TheBetterPlan ("TBP"), Inc. ("Merger Subsidiary"), a wholly owned subsidiary of Computer Associates International, Inc. ("Computer Associates"), entered into a Stockholder Option Agreement, dated as of February 5, 1999 (the "Stockholder Option Agreement"), with certain stockholders of the Company (as hereinafter defined) (collectively, the "Principal Stockholders"), pursuant to which the Principal Stockholders each granted the Merger Subsidiary an irrevocable option, subject to certain conditions (the "Option"), to purchase for a price of $28 per share (subject to the adjustments specified therein), or to cause to be tendered pursuant to the tender offer described in this Statement (the "Offer"), all the shares of common stock, par value $0.01 per share (the "Shares"), of Computer Management Sciences, Inc. (the "Company") owned by them (representing an aggregate of 5,036,622, or approximately 34.4% of the Shares outstanding as of February 5, 1999) (the "Optioned Shares"), and an additional 576,792 shares issuable to certain of the Principal Stockholders upon exercise of employee stock options. Merger Subsidiary's option to purchase the Optioned Shares is reflected in Rows 7 and 9 of each of the tables above. Subject to certain conditions, including the consummation of the Offer, the Option is exercisable by the Merger Subsidiary at any time or from time to time, from February 5, 1999 until the 30th business day after the termination of the Merger Agreement in accordance with its terms. Pursuant to the Stockholder Option Agreement, each Principal Stockholder has granted a proxy to the Merger Subsidiary as such Principal Stockholder's attorney-in-fact and proxy, with full power of substitution, to vote or consent such Principal Stockholder's Optioned Shares in favor of the Merger. The Stockholder Option Agreement is described more fully in Section 11 ("Purpose of the Offer; Merger Agreement; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights") of the Offer to Purchase dated February 9, 1999 (the "Offer to Purchase"). This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement on Schedule 13D with respect to the acquisition by the Merger Subsidiary (defined below) and Computer Associates (defined below) of beneficial ownership of the Optioned 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 Computer Management Sciences, Inc., a Florida corporation (the "Company"), and the address of its principal executive offices is 8133 Baymeadows Way, Jacksonville, Florida 32256. (b) This Statement on Schedule 14D-1 relates to the offer by Merger Subsidiary (defined below) to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of the Company at $28 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2) (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). The information set forth in the Introduction to the Offer to Purchase (the "Introduction") is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement on Schedule 14D-1 is filed by TheBetterPlan ("TBP"), Inc. ("Merger Subsidiary"), a Florida corporation, and Computer Associates International, Inc. ("Computer Associates"), 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. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in (i) the Introduction, Section 10 ("Background of the Offer; Past Contacts, Transactions or Negotiations with the Company"), Section 11 ("Purpose of the Offer; Merger Agreement; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights") and Schedule I to the Offer to Purchase, (ii) the Agreement and Plan of Merger, dated as of February 5, 1999 (the "Merger Agreement"), among -2- the Company, Computer Associates and Merger Subsidiary, a copy of which is attached as Exhibit (c)(1) hereto, (iii) the Stockholder Option Agreement, dated as of February 5, 1999 (the "Stockholder Option Agreement"), among the Merger Subsidiary and the stockholders of the Company named therein, a copy of which is attached as Exhibit (c)(2) hereto, (iv) the Confidentiality Agreement, dated January 7, 1999 (the "Confidentiality Agreement"), between Computer Associates and the Company, a copy of which is attached as Exhibit (c)(3) hereto, (v) the Consulting and Non-Compete Agreement dated as of February 5, 1999 (the "Davis Consulting Agreement") between the Company and Jerry W. Davis, a copy of which is attached as Exhibit (c)(4) hereto, and (vi) the Consulting and Non-Compete Agreement dated as of February 5, 1999 (the "Weight Consulting Agreement") between the Company and Anthony V. Weight, a copy of which is attached hereto as Exhibit (c)(5), respectively, is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) and (b) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. 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; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. (f) and (g) The information set forth in Section 12 ("Effect of the Offer on the Market for the Shares; Stock Quotations, Registration Under the Exchange Act") of the Offer to Purchase is incorporated herein by reference. 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 the 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; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights"), Schedule I of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Option Agreement, respectively, is incorporated herein by reference. 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") and Section 11 ("Purpose of the Offer; Merger Agreement; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights") of the Offer to Purchase, (ii) the Merger Agreement, (iii) the Stockholder Option Agreement, (iv) the Confidentiality Agreement, (v) the Davis Consulting Agreement and (vi) the Weight Consulting Agreement, respectively, is incorporated herein by reference. -3- 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, 1998 and Quarterly Report for the nine months ended December 31, 1998, respectively, are incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("Purpose of the Offer; Merger Agreement; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights") of the Offer to Purchase is incorporated herein by reference. (b)-(d) The information set forth in Section 16 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in (i) the Offer to Purchase, (ii) the Letter of Transmittal, (iii) the Merger Agreement, (iv) the Stockholder Option Agreement, (v) the Confidentiality Agreement, (vi) the Davis Consulting Agreement and (vii) the Weight Consulting Agreement, respectively, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated February 9, 1999. (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 press release issued by Computer Associates dated February 8, 1999. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Form of summary advertisement dated February 9, 1999. (b)(1) $1,500,000,000 Amended and Restated Credit Agreement, dated as of June 30, 1997 (previously filed as an exhibit to Computer Associates' 10-Q for the three -4- months ended June 30, 1997 (File No. 001-09247) and incorporated herein by reference). (b)(2) $1,100,000,000 Credit Agreement, dated as of June 30, 1997 (previously filed as an exhibit to Computer Associates' 10-Q for the three months ended June 30, 1997 (File No. 001-09247) and incorporated herein by reference). (c)(1) Agreement and Plan of Merger, dated as of February 5, 1999, among the Company, Computer Associates and Merger Subsidiary. (c)(2) Stockholder Option Agreement, dated as of February 5, 1999, among Merger Subsidiary and the stockholders of the Company named therein. (c)(3) Confidentiality Agreement, dated January 7, 1999, between Computer Associates and the Company. (c)(4) Consulting and Non-Compete Agreement, dated as of February 5, 1999, between the Company and Jerry W. Davis. (c)(5) Consulting and Non-Compete Agreement, dated as of February 5, 1999, between the Company and Anthony V. Weight. (d) None. (e) Not applicable. (f) None. -5- 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: February 9, 1999 TheBetterPlan ("TBP"), Inc. By/S/ IRA H. ZAR --------------------------------------------------- Name: Ira H. Zar Title: President and Assistant Treasurer COMPUTER ASSOCIATES INTERNATIONAL, INC. By/S/ IRA H. ZAR --------------------------------------------------- Name: Ira H. Zar Title: Senior Vice President-Finance and Chief Financial Officer -6- EXHIBIT INDEX
Exhibit Number Exhibit Name - ------ ------------ (a)(1) Offer to Purchase dated February 9, 1999. (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 press release issued by Computer Associates dated February 8, 1999. (a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(8) Form of summary advertisement dated February 9, 1999. (b)(1) $1,500,000,000 Amended and Restated Credit Agreement, dated as of June 30, 1997 (previously filed as an exhibit to Computer Associates' 10-Q for the three months ended June 30, 1997 (File No. 001-09247) and incorporated herein by reference). (b)(2) $1,100,000,000 Credit Agreement, dated as of June 30, 1997 (previously filed as an exhibit to Computer Associates' 10-Q for the three months ended June 30, 1996 (File No. 001-09247) and incorporated herein by reference). (c)(1) Agreement and Plan of Merger, dated as of February 5, 1999 among the Company, Computer Associates and Merger Subsidiary. (c)(2) Stockholder Option Agreement, dated as of February 5, 1999, among Merger Subsidiary and the stockholders of the Company named therein. (c)(3) Confidentiality Agreement, dated January 7, 1999, between Computer Associates and the Company. (c)(4) Consulting and Non-Compete Agreement, dated as of February 5, 1999, between the Company and Jerry W. Davis. (c)(5) Consulting and Non-Compete Agreement, dated as of February 5, 1999, between the Company and Anthony V. Weight. (d) None. (e) Not applicable.
-7- (f) None.
-8- EX-99.(A)(1) 2 OFFER TO PURCHASE Exhibit 99(a)(1) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER MANAGEMENT SCIENCES, INC. AT $28 NET PER SHARE BY THEBETTERPLAN ("TBP"), 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 TUESDAY, MARCH 9, 1999, UNLESS THE OFFER IS EXTENDED. - ------------------------------------------------------------------------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE (THE "SHARES"), OF COMPUTER MANAGEMENT SCIENCES, INC. (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED BY THEBETTERPLAN ("TBP"), INC. ("MERGER SUBSIDIARY") AND COMPUTER ASSOCIATES INTERNATIONAL, INC. ("COMPUTER ASSOCIATES"), WOULD REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS AND (2) THE EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS UNANIMOUSLY APPROVED THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES. -------------------------- Any stockholder desiring to tender Shares should either (i) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and deliver it with the certificate(s) representing such tendered Shares and all other required documents to the Depositary or follow the procedure for book-entry tender of Shares set forth in Section 3 or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if such stockholder desires to tender such Shares. Any stockholder who desires to tender Shares and whose certificate(s) representing such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3. Questions and requests for assistance or additional copies of this Offer to Purchase or the Letter of Transmittal may be directed to the Information Agent at its addresses and telephone numbers specified on the back cover of this Offer to Purchase. ------------------------- THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. FEBRUARY 9, 1999 TABLE OF CONTENTS
Page ---- INTRODUCTION ............................................................................................1 1. Terms of the Offer..................................................................................3 2. Acceptance for Payment and Payment..................................................................5 3. Procedure for Tendering Shares......................................................................6 4. Withdrawal Rights...................................................................................9 5. Certain Tax Consequences...........................................................................10 6. Price Range of Shares; Dividends...................................................................11 7. Certain Information Concerning the Company.........................................................11 8. Certain Information Concerning Merger Subsidiary and Computer Associates...........................14 9. Source and Amount of Funds.........................................................................16 10. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company........................................................................................17 11. Purpose of the Offer; Merger Agreement; Stockholder Option Agreement; Consulting and Non-Compete Agreements; Appraisal Rights............................................18 12. Effect of the Offer on the Market for the Shares; Stock Quotations; Registration under the Exchange Act.............................................................................33 13. Dividends and Distributions........................................................................34 14. Extension of Tender Period; Termination; Amendment.................................................34 15. Certain Conditions of the Offer....................................................................36 16. Certain Legal Matters; Regulatory Approvals........................................................39 17. Fees and Expenses..................................................................................42 18. Miscellaneous......................................................................................42 Schedule I Information Concerning the Directors and Executive Officers of Computer Associates and Merger Subsidiary................................................I-1
To the Holders of Common Stock of COMPUTER MANAGEMENT SCIENCES, INC. INTRODUCTION TheBetterPlan ("TBP"), Inc., a Florida corporation ("Merger Subsidiary") and a wholly owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), hereby offers to purchase all outstanding shares of Common Stock, par value $.01 per share (collectively, except where the context otherwise requires, the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"), at $28 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 SunTrust Bank, Atlanta (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, HAS UNANIMOUSLY APPROVED THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES. PURSUANT TO THE MERGER AGREEMENT, THE COMPANY HAS REPRESENTED TO COMPUTER ASSOCIATES THAT THE ROBINSON-HUMPHREY COMPANY LLC ("ROBINSON-HUMPHREY"), THE COMPANY'S FINANCIAL ADVISOR, HAS DELIVERED TO THE COMPANY'S BOARD OF DIRECTORS ITS WRITTEN OPINION TO THE EFFECT THAT THE $28 PER SHARE TO BE PAID IN THE OFFER AND THE MERGER IS FAIR TO THE HOLDERS OF THE SHARES FROM A FINANCIAL POINT OF VIEW. THE OPINION OF ROBINSON-HUMPHREY IS SET FORTH IN FULL IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH IS BEING MAILED TO STOCKHOLDERS WITH THIS OFFER TO PURCHASE. STOCKHOLDERS ARE URGED TO READ THIS OPINION IN ITS ENTIRETY. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION DATE (DEFINED BELOW) AND NOT WITHDRAWN A NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED BY COMPUTER ASSOCIATES AND MERGER SUBSIDIARY, WOULD REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES, ASSUMING THE EXERCISE OF ALL OUTSTANDING OPTIONS, RIGHTS AND CONVERTIBLE SECURITIES (IF ANY) AND THE ISSUANCE OF ALL SHARES THAT THE COMPANY IS OBLIGATED TO ISSUE (SUCH TOTAL NUMBER OF OUTSTANDING SHARES BEING HEREINAFTER REFERRED TO AS THE "FULLY DILUTED SHARES") (THE "MINIMUM CONDITION") AND (2) THE EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 (THE "HSR ACT"). SEE SECTION 15, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. The Company has represented to Computer Associates that, as of February 5, 1999, there were 14,644,054 Shares issued and outstanding, and 1,720,793 Shares reserved for issuance upon the exercise of stock options outstanding under various employee and director stock option plans. Based upon the foregoing, as of February 5, 1999, there were approximately 16,364,847 Fully Diluted Shares. Computer Associates beneficially owns 5,036,622 Shares representing (based upon the foregoing) approximately 30.8% of the Fully Diluted Shares. Computer Associates owns no shares of record, but rather Merger Subsidiary has the right to direct the tender of such 5,036,622 Shares pursuant to an agreement with certain Stockholders, 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 3,145,802 Shares (in addition to the Shares referred to in the immediately preceding sentence), or approximately 19.2% of the Fully Diluted Shares, are validly tendered pursuant to the Offer and not withdrawn. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of February 5, 1999 (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 after satisfaction or waiver of all conditions to the Merger, 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 Florida Act (defined below)) will be converted into the right to receive $28 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 80% or more of the Shares then outstanding, the "short-form" merger provisions of the Florida Business Corporation Act (the "Florida Act") would permit the Merger to occur without a meeting or a vote of the Stockholders. See Section 11. Merger Subsidiary and certain Stockholders have entered into an Agreement, dated as of February 5, 1999 (the "Stockholder Option Agreement"), pursuant to which such Stockholders granted to Merger Subsidiary an irrevocable option (the "Stock Option") to purchase, subject to certain conditions, for a price of $28 per Share, or to cause to be tendered pursuant to the Offer, an aggregate of 5,036,622 Shares (the "Stockholder Option Shares") and an additional 576,792 Shares issuable under outstanding employee stock options. The Stockholder Option Shares represent approximately 30.8% of the Fully Diluted Shares. Subject to satisfaction of certain conditions (including the commencement of the Offer), the Stockholder Option is exercisable by Merger Subsidiary at any time until the 30th business day following termination of the Merger Agreement. Under the Stockholder Option Agreement, each such Stockholder granted an irrevocable proxy to Merger Subsidiary to vote in favor of the Merger Agreement and certain related matters. At the Effective Time, all outstanding stock options under the Company's various employee and director stock option plans shall, by virtue of the Merger, be assumed by Computer -2- Associates. The Merger Agreement further provides that holders of vested and exercisable options (including options which become vested and exercisable in accordance with the relevant stock option plans and stock option agreements as a result of consummation of the Offer and the Merger) shall have the opportunity to elect to surrender the options and receive cash based on the Offer price. See Section 11. Upon acceptance for payment by Merger Subsidiary of such number of Shares which satisfies the Minimum Condition, Computer Associates is entitled, pursuant to the Merger Agreement, to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors and (ii) the percentage that the number of Shares owned by Computer Associates or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all necessary action to cause Computer Associates' designees to be elected or 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 Tuesday, March 9, 1999, unless Merger Subsidiary shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Merger Subsidiary, shall expire. The Offer is subject to certain conditions set forth in Section 15, including satisfaction of the Minimum Condition and expiration or termination of the waiting period applicable to Merger Subsidiary's acquisition of Shares pursuant to the Offer under the HSR Act. If any such condition is not satisfied, Merger Subsidiary may, except as otherwise described below, (i) terminate the Offer and return all tendered Shares to tendering Stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth in Section 4, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition (except the Minimum Condition) and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered by the Expiration Date and not withdrawn or (iv) delay acceptance for payment or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions to the -3- Offer. 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 and to make any change in the terms or conditions of the Offer; PROVIDED that, without the written consent of the Company, no change may be made which changes the form of consideration to be paid in the Offer, decreases the price per Share or the number of Shares being sought in the Offer, imposes conditions to the Offer in addition to those expressly set forth in the Merger Agreement, changes or waives the Minimum Condition, extends the Offer (except as set forth in the Merger Agreement) or makes any other change to any condition to the Offer set forth in the Merger Agreement which is materially adverse to the holders of Shares. Any extension, delay in payment, amendment or termination of the Offer will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Merger Subsidiary may choose to make any public announcement, subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes), Merger Subsidiary shall have no obligation (except as otherwise required by applicable law) to publicly advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. Subject to the Merger Agreement, if Merger Subsidiary makes any material change in the terms of the Offer or the information concerning the Offer, or waives any condition to the Offer that results in a material change to the circumstances of the Offer, Merger Subsidiary will disseminate additional tender offer materials and extend the Offer to the extent required to comply with Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The Securities and Exchange Commission (the "Commission") has interpreted such rules to prescribe that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information changed. With respect to a change in price or a change in the percentage of securities sought, a minimum period of ten business days may be required to allow for adequate dissemination to stockholders and investor response. As used in this Offer to Purchase, "business day" means any day other than a Saturday, Sunday or a federal holiday and shall consist of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The Company has provided Merger Subsidiary with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares -4- and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Subject to the terms of the Offer and the satisfaction (or waiver to the extent permitted by the Merger Agreement) of all the conditions to the Offer, Merger Subsidiary shall accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration of the Offer and shall pay for all such Shares promptly after acceptance; provided that Merger Subsidiary may extend the Offer if, at the scheduled expiration date of the Offer or any extension thereof, any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and Merger Subsidiary may extend the Offer for a further period of time of not more than 20 business days to meet the objective (which is not a condition to the Offer) that there shall be validly tendered prior to the Expiration Date (as so extended) and not withdrawn a number of Shares, which, together with Shares then owned by Computer Associates and Merger Subsidiary, represents at least 80% 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 the Book-Entry Transfer Facility (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 the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares which are the subject of -5- 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. 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 the Book-Entry Transfer Facility), 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 (the "Book-Entry Transfer Facility") 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 the Book-Entry Transfer Facility may make delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of the 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 -6- below must be complied with. Delivery of the Letter of Transmittal and any other required documents to the 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. (an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (i) if the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates representing Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made to, or certificates for unpurchased Shares are to be issued or returned to, a person other than the registered holder, then the tendered certificates must be endorsed or accompanied by appropriate stock powers, signed exactly as the name or names of the registered holder or holders appear on the certificates, with the signatures on the certificates or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. If the certificates representing Shares are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or facsimile thereof) must accompany each such delivery. If a Stockholder desires to tender Shares pursuant to the Offer and cannot deliver such Shares and all other required documents to the Depositary by the Expiration Date, or such Stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered if all of the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Merger Subsidiary, is received by the Depositary (as provided below) by the Expiration Date; and (iii) the certificates for all physically delivered Shares (or a Book-Entry Confirmation of all Shares delivered electronically), as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal, are received by the Depositary within three National Association of Securities Dealers Inc. trading days on the Nasdaq National Market System ("Nasdaq NMS") after the date of execution of the Notice of Guaranteed Delivery. -7- 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 THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of the certificates for such Shares, or a Book-Entry Confirmation of the delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain Stockholders pursuant to the Offer. In order to avoid such backup withholding, each tendering Stockholder must provide the Depositary with such Stockholder's correct taxpayer identification number and certify that such Stockholder is not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. By executing a Letter of Transmittal, a tendering Stockholder irrevocably appoints designees of Merger Subsidiary as such Stockholder's proxies in the manner set forth in the Letter of Transmittal to the full extent of such Stockholder's rights with respect to the Shares tendered by such Stockholder and accepted for payment by Merger Subsidiary (and any and all other Shares or other securities issued or issuable in respect of such Shares on or after February 5, 1999). 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). -8- 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. 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 April 9, 1999 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 the Book-Entry Transfer Facility 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. -9- 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 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. -10- 6. PRICE RANGE OF SHARES; DIVIDENDS. The shares are traded on the Nasdaq NMS under the symbol "CMSX". The following table sets forth, on a per share basis for the periods shown, the range of high and low bid and ask prices of the Shares as reported by IDD Information Services.
HIGH LOW ---------------- ---------------- YEAR ENDED DECEMBER 31, 1999: - -------------------------------------------------- First Quarter (through February 5, 1999) $23.625 $14.875 YEAR ENDED DECEMBER 31, 1998: - -------------------------------------------------- First Quarter $28.125 $18.250 Second Quarter $27.500 $21.000 Third Quarter $26.750 $13.250 Fourth Quarter $21.500 $ 7.125 YEAR ENDED DECEMBER 31, 1997: - -------------------------------------------------- First Quarter $25.000 $14.000 Second Quarter $21.250 $12.750 Third Quarter $23.250 $17.250 Fourth Quarter $23.500 $14.875
On February 5, 1999, the last day of trading prior to the issuance by Computer Associates of a press release announcing the execution of the Merger Agreement, the last sale price on the Nasdaq NMS was $23.50 per Share. On February 8, 1999, the last day of trading prior to the commencement of the Offer, the last sale price on the Nasdaq NMS was $27.563 per Share. 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 February 8, 1999, there were approximately 129 holders of record of outstanding Shares. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Florida corporation with its principal executive offices located at 8133 Baymeadows Way, Jacksonville, Florida 32256. According to the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1997 (the "Company 10-K"), the Company provides information technology consulting and custom software development services to a diverse group of clients, primarily Fortune 100 companies, other large organizations and state and local governments located -11- throughout the United States. According to the Company 10-K, the Company's services are generally an outside resource supplementing a client's internal information technology capabilities and include a broad range of technical services. 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 nine months ended September 30, 1998 (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. -12- COMPUTER MANAGEMENT SCIENCES, INC. SELECTED CONSOLIDATED FINANCIAL DATA(1) (In thousands, except per share data)
INCOME STATEMENT DATA FISCAL YEAR ENDED NINE MONTHS ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------- ----------------------- 1997 1996 1995 1998 1997 --------- --------- --------- --------- --------- Total revenue $77,163 $57,432 $41,536 $23,019 $18,160 Total costs and 57,879 48,736 37,327 18,303 14,745 expenses Operating income 13,283 8,696 4,208 4,716 3,416 Net income 9,269 5,926 2,824 3,203 2,421 Pro forma net income(2) 9,269 6,040 2,748 -- -- Pro forma net income per $ 0.69 $ 0.47 $ 0.30 -- -- share(2)(3) Net income per share -- -- -- $ 0.22 $ 0.18
BALANCE SHEET DATA AT SEPTEMBER 30, ----------------------- 1998 1997 --------- --------- Working capital $30,136 $32,018 Total assets 79,014 66,123 Total liabilities 7,614 5,161 Total stockholders' 71,401 60,963 equity
- -------------------------- (1) The Company's historical financial statements have been restated to reflect the acquisitions by the Company of Miaco Corporation in 1997, Summit Computer Services, Inc. in 1996 and MIS Software Development, Inc. in 1995, all of which business combinations were accounted for as pooling-of-interests. (2) Reflects adjustments in 1996 and 1995 to account for the termination of Summit Computer Services, Inc.'s S Corporation status. (3) Adjusted to reflect two separate three-for-two stock splits in 1996. 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 -13- by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but that are unknown to Computer Associates or Merger Subsidiary. The Company is subject to the informational requirements of the Exchange Act and files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and should also be available for inspection and copying at the regional offices of the Commission in New York (Seven World Trade Center, New York, New York 10048) and Chicago (500 West Madison Street (Suite 1400), Chicago, Illinois 60661). Copies of such material can also be obtained from the Public Reference Section of the Commission in Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site on the Internet that contains reports, proxy statements and other information (http://www.sec.gov). 8. CERTAIN INFORMATION CONCERNING MERGER SUBSIDIARY AND COMPUTER ASSOCIATES. Merger Subsidiary, a Florida 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 February 3, 1999. Computer Associates, a Delaware corporation, supplies an extensive array of enterprise management software products (which enable customers to use their total data processing resources more efficiently), information management software products (which are generally used in connection with database management systems and applications generators) and business application software products (which are used in financial, human resource, manufacturing, distribution and banking systems applications) for use on a variety of hardware platforms. The principal executive offices of Computer Associates and Merger Subsidiary are located at One Computer Associates Plaza, Islandia, New York 11788-7000. 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, 1998, and the unaudited financial statements contained in Computer Associates' Quarterly Report on Form 10-Q for the nine months ended December 31, 1998. The information set forth below gives effect to the acquisition of Legent Corporation in fiscal 1996. More comprehensive financial information is included in such Annual Report, such Quarterly Report and the other documents filed by Computer Associates with the Commission, and the financial data set forth below is qualified in its entirety by -14- 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. COMPUTER ASSOCIATES INTERNATIONAL, INC. SELECTED CONSOLIDATED FINANCIAL DATA (In millions, except per share data)
INCOME STATEMENT DATA FISCAL YEAR ENDED NINE MONTHS ENDED MARCH 31, DECEMBER 31, ------------------------------------------- -------------------------- (UNAUDITED) 1998 1997 1996 1998 1997 --------- --------- --------- --------- --------- Total revenue $4,719 $4,040 $3,505 $3,624 $3,252 Income (loss) before income taxes 1,874 932 (100) 277 1,228 Net income (loss) 1,169 366 (56) 168 767 Net income (loss) per common $2.06 $0.64 $(0.10) $0.30 $1.36 share-diluted(1) Dividends declared per common $0.07 $0.07 $0.06 $0.08 $0.07 share(1)
BALANCE SHEET DATA AT MARCH 31, AT DECEMBER 31, 1998 -------------------------- -------------------- 1998 1997 --------- --------- (UNAUDITED) Working capital $ 379 $ 53 $ 892 Total assets 6,706 6,084 7,278 Long-term debt (less current maturities) 1,027 1,663 2,030 Stockholders' equity 2,481 1,503 2,558
- ------------------------------------ (1) Adjusted to reflect three-for-two stock splits effective June 19, 1996 and November 5, 1997. Computer Associates is subject to the informational requirements of the Exchange Act and files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Computer Associates is required to disclose in such proxy statements certain information, as of particular dates, concerning its directors and officers, their remuneration, stock options granted to them, the principal holders of its securities and any material interests of such persons in transactions with Computer Associates. Such reports, proxy statements and other information should be available for inspection and copying at the offices of the Commission in the same manner as set forth with respect to the Company in Section 7. -15- 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 or any associate or majority-owned subsidiary of any of the foregoing, beneficially owns or has the right to acquire any equity securities of the Company, nor has Computer Associates, Merger Subsidiary or, to their knowledge, any of the persons or entities referred to above or any of the respective executive officers, directors or subsidiaries of any of the foregoing, effected any transaction in the equity securities of the Company during the past 60 days. Except as described in this Offer to Purchase, neither Computer Associates, Merger Subsidiary nor, to their knowledge, any of the persons listed in Schedule I, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as described in this Offer to Purchase, there have been no contacts, negotiations or transactions between Computer Associates, Merger Subsidiary or any other subsidiary of Computer Associates or, to their knowledge, any of the persons listed in Schedule I, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. Except as described in this Offer to Purchase, none of Computer Associates, Merger Subsidiary, any other subsidiary of Computer Associates, or, to their knowledge, any of the persons listed in Schedule I, has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that would require disclosure pursuant to the rules and regulations of the Commission. 9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by Merger Subsidiary to purchase Shares pursuant to the Offer and the Merger and to pay related fees and expenses is estimated to be approximately $450 million. Merger Subsidiary has not conditioned the Offer on obtaining financing. Merger Subsidiary plans to obtain all funds needed for the Offer and the Merger from Computer Associates by means of a capital contribution, loan or a combination thereof. Computer Associates will obtain such funds (i) from its general corporate funds and (ii) by borrowing under its existing $1,500,000,000 Second Amended and Restated Credit Agreement, dated as of June 30, 1997 (the "$1.5 Billion Credit Agreement"), and $1,100,000,000 Amended and Restated Credit Agreement, dated as of June 30, 1997 (the "$1.1 Billion Credit Agreement") (together, the "Credit Agreements"), in each case among Computer Associates, as borrower, the banks and other financial institutions party thereto, as Banks (the "Banks"), and Credit Suisse First Boston, as Agent. The $1.5 Billion Credit Agreement provides for borrowings of up to an aggregate of $1.5 billion of loans, in each case on an unsecured basis and at interest rates (at Computer Associates' -16- option) of (i) the London InterBank Offered Rate plus a margin of 0.205% (as adjusted from time to time based upon the financial performance of Computer Associates) or (ii) the higher of (x) the base lending rate of Credit Suisse First Boston and (y) the federal funds rate plus a margin of 0.50%. The $1.1 Billion Credit Agreement provides for borrowings of up to an aggregate of $1.1 billion of loans, in each case on an unsecured basis and at interest rates (at Computer Associates' option) of (i) the London InterBank Offered Rate plus a margin of 0.245% (as adjusted from time to time based upon the financial performance of Computer Associates) or (ii) the higher of (x) the base lending rate of Credit Suisse First Boston and (y) the federal funds rate plus a margin of 0.50%. Loans under the Credit Agreements are repayable (with a right to reborrow) on the last day of each interest period applicable thereto, with full and final repayment due, in the case of the $1.5 Billion Credit Agreement, on June 29, 1999 (unless extended pursuant to annual evergreen provisions by mutual agreement between Computer Associates and the Banks) and, in the case of the $1.1 Billion Credit Agreement, on June 29, 2002. The Credit Agreements include customary covenants by Computer Associates, including financial covenants. As of February 2, 1999, Computer Associates had (i) approximately $328 million in cash, cash equivalents and marketable securities and (ii) availability to borrow up to an additional $2.6 billion of loans under the Credit Agreements. The foregoing summary of the source and amount of funds is qualified in its entirety by reference to the text of the Credit Agreements, copies of which are filed as exhibits to Computer Associates' Quarterly Report on Form 10-Q for the three months ended June 30, 1997 filed with the Commission and are incorporated in this Offer to Purchase by reference and may be inspected in the same manner as set forth with respect to the Company in Section 7. Although no definitive plan or arrangement for repayment of borrowings under the Credit Agreements have been made, Computer Associates anticipates such borrowings will be repaid with internally generated funds (including, if the Merger is accomplished, those of the Company) and from other sources which may include the proceeds of future bank refinancings or the public or private sale of debt or equity securities. No decision has been made concerning the method Computer Associates will use to repay the borrowings under the Credit Agreements. Such decision will be made based on Computer Associates' review from time to time of the advisability of particular actions, as well as prevailing interest rates, financial and other economic conditions and such other factors as Computer Associates may deem appropriate. 10. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE COMPANY. In the fall of 1998, Barry Goldsmith of Updata Capital contacted Charles P. McWade, Senior Vice President-Business Development of Computer Associates, to discuss Computer Associates' interest in acquiring the Company. Mr. Goldsmith subsequently arranged an introductory meeting on November 11, 1998 which included Mr. McWade and R. Halsey Wise, President and Chief Operating Officer, and Anthony Weight, Senior Vice President, of the Company. Preliminary discussions between representatives of Computer Associates and the Company continued through December and into early January. Mr. McWade met again in Jacksonville, Florida on January 15, 1999 with Mr. Wise and Mr. -17- Weight. The meeting also included Chris Wagner, head of Global Professional Services for Computer Associates and Larry Longhi, Senior Vice President, and Anthony Colaluca, Vice President and Chief Financial Officer, of the Company. At that meeting, the parties discussed valuation, but the parties were not able to reach agreement. At a meeting of Computer Associates' Board of Directors on January 19, Sanjay Kumar, President and Chief Operating Officer of Computer Associates, raised with the Board Computer Associates' possible interest in acquiring the Company. Mr. Kumar and Mr. Wagner met with Mr. Wise and Mr. Weight on January 22 to continue discussions of a possible merger. On January 26, Mr. McWade and Mr. Wagner called Mr. Wise and Mr. Weight to propose a merger in which Computer Associates would pay $25 per Share and would exchange Computer Associates stock for Shares held by certain benefit plans. Mr. McWade also said any merger would be conditional on Mr. Davis and Mr. Weight entering into five year non-compete agreements with the Company and agreeing to tender their shares in the tender offer. On January 27, 1999, Mr. Kumar reported to the Computer Associates Board the status of the discussions with the Company and presented Computer Associates management's views on valuation and benefits of a combination. The Board authorized management to continue the discussions. On January 28, 1999, Mr. Kumar, Mr. Wagner and Mr. McWade met with Mr. Wise in New York and Messrs. Weight and Colaluca by telephone. After Computer Associates proposed to increase its valuation range to $26.00 to $28.00, the parties agreed to commence due diligence and negotiations of definitive agreements. During the week of February 1, 1999, representatives of Computer Associates met with representatives of the Company to review the Company's financial, business and legal records and to negotiate the terms of a definitive merger and related agreements. In the evening of February 5, Computer Associates reached agreement to acquire the Company for $28.00 per Share and executed the Merger Agreement. 11. PURPOSE OF THE OFFER; MERGER AGREEMENT; STOCKHOLDER OPTION AGREEMENT; CONSULTING AND NON-COMPETE AGREEMENTS; APPRAISAL RIGHTS. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. Following the Offer, Computer Associates and Merger Subsidiary intend to acquire any remaining equity interest in the Company not acquired in the Offer by consummating the Merger. THE MERGER AGREEMENT. The following description of the Merger Agreement is qualified in its entirety by reference to the text of such agreement, a copy of which is attached as an exhibit to the Schedule 14D-1 and 13D of Merger Subsidiary and Computer Associates filed with the Commission in connection with the Offer (the "Schedule 14D-1 and 13D") 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. -18- THE OFFER. The Merger Agreement provides for the making of the Offer. The obligation of Merger Subsidiary to accept for payment or pay for Shares is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 15 hereof. Pursuant to the Merger Agreement, Computer Associates and Merger Subsidiary expressly reserve the right to waive the conditions to the Offer and to make any change in the terms or conditions of the Offer; PROVIDED that, without the written consent of the Company, no change may be made which changes the form of consideration to be paid, decreases the price per Share or the number of Shares being sought in the Offer, imposes conditions to the Offer in addition to those set forth in the Merger Agreement, changes or waives the Minimum Condition, extends the Offer (except as set forth in the Merger Agreement), or makes any other change to any condition to the Offer set forth in the Merger Agreement which is materially adverse to the holders of Shares. 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 (and other than Shares as to which appraisal rights have been exercised in accordance with the Florida Act ("Dissenting Shares")) will be converted into the right to receive $28 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 the Merger will be consummated as soon as practicable after satisfaction of or, to the extent permitted thereunder, waiver of the conditions to the Merger and shall become effective at such time as the articles of merger are duly filed with the Department of State of the State of Florida or, with the consent of the Independent Director referred to below, at such later time as is specified in the articles of merger (the "Effective Time"). BOARD REPRESENTATION. The Merger Agreement provides that, effective upon acceptance for payment by Merger Subsidiary of a majority of the Shares pursuant to the Offer, Computer Associates 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 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, after the acceptance for payment and 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. -19- 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 Articles 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 Articles 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 80% 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 the Florida Act. REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various representations and warranties of the parties thereto. These include representations and warranties of the Company with respect to corporate existence and power, corporate authorization, governmental authorization, non-contravention, capitalization, subsidiaries, Commission filings, financial statements, absence of certain changes, undisclosed liabilities, litigation, taxes, employee benefits, brokers, compliance with laws, contracts and debt instruments, environmental, 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 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 -20- 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 company stock options outstanding on the date of the Merger Agreement in accordance with their terms on such date); (iii) amend its articles of incorporation, by-laws or other comparable charter or organizational documents; (iv) acquire any business including through the acquisition of any interest in any corporation, partnership, joint venture, association or other business organization or division thereof; (v) (a) mortgage or otherwise encumber or subject to any lien any of the Company's intellectual property or any other material properties or assets, (b) except in the ordinary course of business consistent with past practice and pursuant to existing contracts or commitments, sell, lease, transfer or otherwise dispose of any of the Company's intellectual property or any other material properties or assets or (c) except in the ordinary course of business consistent with past practice or pursuant to existing contracts or commitments, license any of the Company's intellectual property; (vi) make or agree to make any new capital expenditures in excess of $100,000 except pursuant to certain existing commitments; (vii) make any material tax election (unless required by law) or settle or compromise any material income tax liability; (viii) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice and in accordance with their terms, of (a) liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the documents filed with the Commission or (b) liabilities incurred in the ordinary course of business consistent with past practice; or subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by counsel to the Company, waive the benefits of, or agree to modify in any manner, any confidentiality, standstill, non-competition or similar agreement to which the Company or any of its subsidiaries is a party; (ix) commence a lawsuit other than (a) for the routine collection of bills, (b) to enforce the Merger Agreement or (c) in such cases where the Company in good faith determines that the failure to commence suit would result in a material impairment of a valuable aspect of the Company's business, PROVIDED that the Company consults with Computer Associates prior to filing such suit; (x) (a) enter into or amend any employment agreement, (b) enter into any agreement pursuant to which the Company or any of its subsidiaries will provide services for a term of more than 30 days at a fixed or capped price or otherwise pursuant to terms that are not consistent with agreements entered into by the Company or any of its subsidiaries in the ordinary course of business, (c) enter into any customer sale or license agreement with non-standard terms or at discounts from list prices in excess of 10%, (d) pay commissions to sales employees except on the basis of executed customer contracts with respect to products actually delivered to customers, (e) enter into any contracts or series of related contracts in excess of $250,000, (f) enter into or amend any agreement or arrangement for professional services or advice, (g) enter into or amend any customer agreements providing for product replacements or (h) make any determination as to amounts payable under any plan, arrangement or agreement, providing for discretionary incentive compensation or bonus to any officer, director, employee or independent contractor of the Company or any of its subsidiaries; (xi) authorize any of, or commit or agree to take any of, the foregoing actions; or (xii) (a) take or agree or commit to take any action that would make any representation or warranty of the Company under the Merger Agreement inaccurate in any respect at, or -21- 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 respect at any such time. The Company has agreed to give Computer Associates and its representatives access (during normal business hours and upon reasonable notice) to the offices, properties, books and records, of the Company and its subsidiaries, and to furnish Computer Associates and its representatives with such other information concerning its business, properties and personnel as such persons may reasonably request. Pursuant to the Merger Agreement, each of Computer Associates and the Company has agreed to (i) promptly make or cause to be made the filings required of such party or any of its subsidiaries under the HSR Act with respect to the transactions contemplated by the Merger Agreement, (ii) comply at the earliest practicable date with any request under the HSR Act for additional information, documents, or other material received by such party or any of its subsidiaries from any Governmental Entity (defined below in this Section) in respect of such filings or such transactions, and (iii) cooperate with the other party in connection with any such filing and in connection with resolving any investigation or other inquiry of any such agency or other Governmental Entity under any Antitrust Laws (defined below in this Section) with respect to any such filing or any such transaction. Each of Computer Associates and the Company has agreed, pursuant to the Merger Agreement, to promptly inform the other of any communication with, and any proposed understanding, undertaking, or agreement with, any Governmental Entity regarding any such filings or any such transaction. The Merger Agreement prohibits both Computer Associates and the Company from participating in any meeting with any Governmental Entity in respect of any such filings, investigation, or other inquiry without giving the other notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend and participate. Each of Computer Associates and the Company has agreed, pursuant to the Merger Agreement, to use all reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental Entity with respect to the transactions contemplated by the Merger Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other Federal, state or foreign statutes, rules, regulations, orders or decrees that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, "Antitrust Laws"). In connection therewith, if any administrative or judicial action or proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by the Merger Agreement as violative of any Antitrust Law, and, if by mutual agreement, Computer Associates and the Company decide that litigation is in their best interests, each of Computer Associates and the Company have agreed, pursuant to the Merger Agreement, to cooperate and use all reasonable efforts vigorously to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent (each an "Order"), that is in effect and that prohibits, prevents, or restricts consummation of the Merger or any such other transactions. Pursuant to the Merger Agreement, each of Computer Associates and the Company have agreed to use all reasonable efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of the Merger Agreement. -22- Subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by counsel to the Company, each of Computer Associates and the Company has agreed, pursuant to the Merger Agreement, to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Offer, the Merger, and the other transactions contemplated by the Merger Agreement. Notwithstanding the foregoing, the Merger Agreement provides that (i) neither Computer Associates nor any of its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, (ii) neither Computer Associates nor any of its subsidiaries shall be required to take or agree to take any other action or agree to any limitation that could reasonably be expected to have an adverse effect on the business, assets, condition (financial or otherwise), results of operations or prospects of Computer Associates and its subsidiaries taken as a whole or of Computer Associates combined with the Surviving Corporation after the Effective Time, (iii) neither the Company nor its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, or to take or agree to take any other action or agree to any limitation that could reasonably be expected to have a Material Adverse Effect (defined below in Section 15), (iv) no party shall be required to agree to the imposition of, or to comply with, any condition, obligation or restriction on Computer Associates or any of its subsidiaries or on the Surviving Corporation or any of its subsidiaries of the type described in clause (a) or (b) of Section 15 and (v) neither Computer Associates nor Merger Subsidiary shall be required to waive any of the conditions to the Offer described in Section 15 or any of the conditions to the Merger described in this Section 11. AGREEMENTS WITH RESPECT TO EMPLOYEE MATTERS. The Merger Agreement provides that the Company shall amend the Company's Stock Plans (defined below) to provide that, at the Effective Time, each of the then outstanding Company Options (defined below) whether vested or unvested in accordance with the relevant Stock Plans and stock option agreements shall by virtue of the Merger, and without any further action on the part of any holder thereof, be assumed by Computer Associates and converted into an option to purchase that number of shares of common stock, par value $.10 per share ("Computer Associates Common Stock"), of Computer Associates determined by multiplying the number of Shares subject to such Company Option at the Effective Time by the quotient obtained by dividing (x) $28.00 by (y) the average closing price of Computer Associates Common Stock on the New York Stock Exchange Composite Tape for the 30 consecutive trading days immediately prior to the Effective Time (such quotient, the "Conversion Number"), at an exercise price per share of Computer Associates Common Stock equal to the quotient obtained by dividing (x) the exercise price per Share of such Company Option immediately prior to the Effective Time by (y) the Conversion Number. If the foregoing calculation results in an assumed Company Option being exercisable for a fraction of a share of Computer Associates Common Stock, then the number of shares of Computer Associates Common Stock subject to such option shall be rounded down to the nearest whole number of shares. The term, exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of the Code, if applicable, and all other terms and conditions of Company Options will, to the extent permitted by law and otherwise reasonably practicable, be unchanged. Continuous employment with the Company or any of its subsidiaries shall be credited to the optionee for purposes of determining the vesting of the number of shares of Computer Associates Common Stock subject to exercise under the optionee's assumed Company Option after the Effective Time. "Company Options" means any option granted, and not -23- exercised or expired, to a current or former employee, director or independent contractor of the Company or any of its subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock option, stock bonus, stock award, or stock purchase plan, program, or arrangement of the Company or any of its subsidiaries or any predecessor thereof (collectively, the "Stock Plans") or any other contract or agreement entered into by the Company or any of its subsidiaries. Pursuant to the Merger Agreement, Computer Associates agreed to take all corporate action necessary to reserve for issuance a sufficient number of shares of Computer Associates Common Stock for delivery pursuant to the terms described in the immediately preceding paragraph. Pursuant to the Merger Agreement, Computer Associates agreed to cause the shares of Computer Associates Common Stock issuable upon exercise of the assumed Company Options to be registered, or to be issued pursuant to a then effective registration statement, no later than 90 days after the Effective Time on Form S-8 promulgated by the Commission, and to use its best efforts to maintain the effectiveness of such registration statement or registration statements for so long as such assumed Company Options remain outstanding. The Merger Agreement provides that, with respect to those individuals who subsequent to the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act, Computer Associates shall administer the Company Options assumed pursuant to the Merger Agreement in a manner that complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but shall have no responsibility for such compliance by the Company or its predecessors. The Merger Agreement further provides that the Company shall amend the Stock Plans to provide holders of the Company Options, which Company Options are then vested and exercisable (including Company Options which became vested and exercisable in accordance with the relevant Stock Plans and stock option agreements as a result of the consummation of the Offer or the Merger), the opportunity to elect to receive cash in an amount set forth below in exchange for each vested and exercisable Company Option. Pursuant to such amendment, Computer Associates and the Company shall take all actions necessary to provide that, as to those holders who so elect, at or immediately prior to the Effective Time, (i) each vested and exercisable Company Option, so surrendered for cash, shall be cancelled and (ii) in consideration of such cancellation, and except to the extent that Computer Associates and the holder of any such Company Option otherwise agree, the Company shall pay to each such holder of Company Options an amount in cash in respect thereof equal to the product of (1) the excess of the Merger consideration over the exercise price thereof and (2) the number of Shares subject thereto. OTHER OFFERS. Pursuant to the Merger Agreement, the Company has agreed that, until the termination of the Merger Agreement, the Company and its subsidiaries will not, and will not authorize or permit the officers, directors, employees or other agents of the Company and its subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal (defined below) or (ii) subject to the fiduciary duties of the Board of Directors under applicable law, as advised in writing by counsel to the Company, and in response to an unsolicited request therefor by a person who a majority of the Board believes intends to submit a Superior Acquisition Proposal (defined below), engage in negotiations with, or disclose any nonpublic information relating to the Company or any of its subsidiaries or afford access to the properties, books or records of the Company or any of its subsidiaries to, any person that has advised the Company or otherwise publicized the fact that it may be considering making, or that has made, an Acquisition Proposal; PROVIDED, nothing herein shall prohibit -24- the Company's Board of Directors from taking and disclosing to the Company's stockholders a position with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. The Company has agreed to promptly notify Computer Associates after receipt of any Acquisition Proposal or any notice that any person is considering making an Acquisition Proposal or any request for nonpublic information relating to the Company or any of its subsidiaries or for access to the properties, books or records of the Company or any of its subsidiaries by any person that has advised the Company or otherwise publicized the fact that it may be considering making, or that has made, an Acquisition Proposal and will keep Computer Associates fully informed of the status and details of any such Acquisition Proposal, indication or request. "Acquisition Proposal" means any offer or proposal for, or any written indication of interest in, a merger or other business combination involving the Company or any of its subsidiaries or the acquisition of any significant equity interest in, or a significant portion of the assets of, the Company or any of its subsidiaries, other than the transactions contemplated by the Merger Agreement; and "Superior Acquisition Proposal" means an Acquisition Proposal which a majority of the disinterested directors determines in its good faith judgment (based on advice of the Company's independent financial advisor) to be more favorable to the Company's stockholders than the Offer or the Merger, and for which financing, to the extent required, is then committed. AGREEMENT WITH RESPECT TO DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE. Pursuant to the Merger Agreement, Computer Associates has agreed, that, for a period of six years after the Effective Time, it will, and will cause the Surviving Corporation to, indemnify and hold harmless the current and former directors and officers of the Company in respect of acts or omissions occurring prior to the Effective Time to the same extent such persons are indemnified or are entitled to indemnification by the Company pursuant to the Company's articles of incorporation, by-laws or the Florida Act in effect on the date of the Merger Agreement, subject to any limitations imposed from time to time by applicable law. Computer Associates has further agreed that it will cause to be maintained for a period of not less than two years from the Effective Time the Company's current directors' and officers' insurance and indemnification policy to the extent that it provides coverage for events occurring prior to the Effective Time (the "D&O Insurance") for all persons who are directors or officers of the Company on the date of the Merger Agreement, so long as the annual premium therefor would not be in excess of 115% of the amount per annum the Company paid in its last full fiscal year, which amount has been disclosed to Computer Associates. Computer Associates also agreed that if the existing D&O Insurance cannot be maintained, expires or is terminated or canceled during such two-year period, Computer Associates will use all reasonable efforts to cause to be obtained as much D&O Insurance as can be obtained for the remainder of such period for an annualized premium not in excess of 115% of the amount per annum the Company paid in its last full fiscal year, which amount has been disclosed to Computer Associates, on terms and conditions substantially similar to the existing D&O Insurance. 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 (including ensuring that Merger Subsidiary has sufficient funds to consummate the Offer and the Merger). Computer Associates also agreed, pursuant to the Merger Agreement, to hold in confidence all confidential information concerning the Company and its subsidiaries in accordance with the terms of the Confidentiality Agreement, dated January 7, 1999, between Computer Associates and the Company, a copy of which is -25- filed as an exhibit to the Schedule 14D-1 and 13D and is incorporated in this Offer to Purchase by reference. CONDITIONS TO THE MERGER. Pursuant to the Merger Agreement, the respective obligations of each party to consummate the Merger are subject to the satisfaction or waiver, where permissible, at or before the Effective Time of the following conditions: (i) Computer Associates or Merger Subsidiary shall have purchased Shares in an amount equal to at least the Minimum Condition pursuant to the Offer, (ii) the adoption and approval of the Merger Agreement by the affirmative vote of the Stockholders by requisite vote in accordance with the Florida Act, if such vote is required by the Florida Act, (iii) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger and no proceeding challenging the Merger Agreement or the transactions contemplated thereby or seeking to prohibit, alter, prevent or materially delay the Merger shall have been instituted by any person before any court, arbitrator or governmental body, agency or official and be pending; (iv) any applicable waiting period under the HSR Act relating to the Merger shall have expired, and (v) other than filing the articles of merger in accordance with the Florida Act, all consents, approvals, orders or authorizations or registrations, declarations or filings or exemptions (collectively, "Consents") required to consummate the Merger shall have been filed, occurred or been obtained. 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 September 30, 1999 (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 or Merger Subsidiary shall have failed to commence the Offer within five business days following the date of the Merger Agreement (provided that Computer Associates shall not be entitled to terminate the Merger Agreement in the circumstance described in this sub-clause (a) as a result of its breach of the Merger Agreement), (b) if Computer Associates or Merger Subsidiary shall not have purchased any Shares pursuant to the Offer prior to July 31, 1999 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 prior to the purchase of any Shares in the Offer, the Company shall have received any Acquisition Proposal which the Company's Board of Directors has determined is more favorable to the Stockholders than the transactions contemplated by the Merger Agreement, whether or not such determination is required by the fiduciary duties of the Company's Board of Directors. 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 -26- funds equal to $20,000,000 promptly, but in no event later than one business day, after the termination of the Merger Agreement as a result of the occurrence of any of the events set forth below (a "Trigger Event"): (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 person or group (as defined in Section 13(d)(3) of the 1934 Act) (other than Computer Associates or any of its affiliates) shall have become the beneficial owner (as defined in Rule 13d-3 promulgated under the 1934 Act) of at least 25% of the outstanding Shares or shall have acquired, directly or indirectly, at least 25% of the assets of the Company; (iii) 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; (iv) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified in a manner adverse to Computer Associates or Merger Subsidiary its approval or recommendation of the Offer, the Merger or the Merger Agreement or its approval of the entry by Computer Associates and Merger Subsidiary into the Stockholder Option Agreement, in any such case whether or not such withdrawal or modification is required by the fiduciary duties of the Company's Board of Directors (or any special committee thereof); or (v) prior to the purchase of any Shares under the Offer, the Company shall have received any Acquisition Proposal which the Company's Board of Directors has determined is more favorable to the Stockholders than the transactions contemplated by the Merger Agreement, whether or not such determination is required by the fiduciary duties of the Company's Board of Directors. The Merger Agreement further provides that, if (x) the only Trigger Event having occurred is an event pursuant to clause (iii) above and (y) the breaches of representation or warranty, or failures to observe or perform any obligation under clause (iii) above (A) individually or in the aggregate would not have or result in a Material Adverse Effect (defined in the Merger Agreement and in Section 15 hereof) or prevent or materially delay the consummation of the transactions contemplated by the Merger Agreement or (B) were unintentional, then the amount of the fee payable by the Company to Computer Associates shall be $5,000,000. The Company has also agreed that, if the Merger Agreement is terminated as a result of the occurrence of a Trigger Event, it shall promptly assume and pay, or reimburse Computer Associates for, all fees payable and expenses incurred by Computer Associates (including the fees and expenses of its counsel) in connection with the Merger Agreement. APPRAISAL RIGHTS. Stockholders do not have dissenters' rights as a result of the Offer. In addition, if the Merger is consummated with a vote of the Stockholders, and if on the record date fixed to determine the stockholders entitled to vote, the Shares are listed on Nasdaq or on a national securities exchange or are held of record by 2,000 or more of such Stockholders, then holders of Shares will not have dissenters' rights under the Florida Act. If, however, the Merger is consummated with or without the vote of the Stockholders but the Shares are not so listed or designated or are not held of record by at least 2,000 Stockholders, then holders of Shares will have certain rights pursuant to the provisions of -27- Sections 607.1301, 607.1302 and 607.1320 of the Florida Act to dissent and demand determination of, and to receive payment in cash of the fair value of, their Shares. If the statutory procedures were complied with, such rights could lead to a judicial determination of the fair value required to be paid in cash to such dissenting holders for their Shares. Any such judicial determination of the fair value of Shares or the market value of the Shares could be more or less than the price to be paid pursuant to the Offer or the price provided for in the Merger Agreement. Section 607.1301(2) of the Florida Act defines "fair value" as the value of the shares excluding any appreciation or depreciation in anticipation of the transaction unless such exclusion would be inequitable. If any holder of Shares who asserts dissenters' rights under the Florida Act fails to perfect, or effectively withdraws or loses his dissenters' rights, as provided in the Florida Act, the Shares of such Stockholder will be converted into the right to receive the price provided for in the Merger in accordance with the Merger Agreement. A Stockholder may withdraw his notice of election to dissent by delivery to Computer Associates of a written withdrawal of his notice of election to dissent and acceptance of 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. FAILURE TO FOLLOW THE STEPS REQUIRED BY THE FLORIDA ACT FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF THOSE RIGHTS. STOCKHOLDER OPTION AGREEMENT. The following description of the Stockholder Option Agreement (the "Stockholder Option Agreement") dated as of February 5, 1999 among Merger Subsidiary and the Stockholders named therein (each a "Principal Stockholder") is qualified in its entirety by reference to the text of such agreement, a copy of which is attached as an exhibit to Merger Subsidiary's and Computer Associates' Schedule 14D-1 and 13D with respect to the transaction contemplated hereby filed with the Commission pursuant to the Exchange Act. Under the Stockholder Option Agreement, each Principal Stockholder has granted Merger Subsidiary the option (the "Stock Option") to purchase, subject to the terms and conditions set forth in the Stockholder Option Agreement, for a price of $28 per Share in cash, or to cause to be tendered pursuant to the Offer, such Principal Stockholder's Shares (excluding Shares held pursuant to the Company's Employee Stock Ownership Plan and Trust ("ESOP") and the Company's Profit Sharing 401(k) Plan ("401(k) Plan"). In addition, if the price to be paid by Merger Subsidiary pursuant to the Offer is increased, the purchase price payable upon exercise of the Stock Option shall similarly be increased. The Stockholder Option Agreement also provides that the number and kind of Shares subject to the Stock Option and the purchase price therefor shall be appropriately and equitably adjusted in the event of changes in the Company's capital stock. Subject to the terms of the Stockholder Option Agreement, Merger Subsidiary has the right to exercise the Stock Option, in whole or in part, at any time up to 30 business days after the termination of the Merger Agreement. Each Principal Stockholder has agreed, in the Stockholder Option Agreement, upon receipt of instructions from Merger Subsidiary, to deliver to the Depositary (i) a Letter of Transmittal with respect -28- to such Principal 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 Principal Stockholder (but if such Shares are not accepted for payment or are withdrawn and are to be returned pursuant to the Offer, to return such Shares to such Principal Stockholder whereupon they shall continue to be held by such Principal Stockholder subject to the terms and conditions of the Stockholder Option Agreement), (ii) the certificates evidencing such Principal Stockholder's Shares and (iii) all other documents or instruments required to be delivered pursuant to the terms of the Offer. The Principal Stockholders' obligations to sell their Shares (other than by tendering pursuant to the Offer) under the Stockholder Option Agreement are subject to the satisfaction of the following conditions: (i) the representations and warranties of Merger Subsidiary set forth in the Stockholder Option Agreement shall be true and correct in all material respects on the date of sale, (ii) the applicable waiting period under the HSR Act to the exercise of the Stock Option shall have expired or been terminated, (iii) there shall be no preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, nor any statute, rule, regulation or order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining such exercise of the Stock Option, and (iv) Merger Subsidiary shall have commenced the Offer. Each Principal Stockholder has further agreed to not, directly or indirectly, solicit, initiate or encourage (or authorize any person to solicit) any inquiry, proposal or offer from any person to acquire the business, property or capital stock of the Company or any direct or indirect subsidiary thereof, or any acquisition of a substantial equity interest in, or a substantial amount of assets of, the Company or any direct or indirect subsidiary thereof, whether by merger, purchase of assets, tender offer or other transaction (a "Business Combination Proposal") or, subject to a Principal Stockholder's fiduciary duty as a director of the Company or a trustee of the ESOP or 401(k) Plan (in each case, if applicable), participate in any discussion or negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or participate in, facilitate or encourage any effort or attempt by any other person to make or seek any Business Combination Proposal. Each Principal Stockholder agreed to promptly advise Merger Subsidiary of the terms of any communication it may receive relating to a Business Combination Proposal. In entering into the Stockholder Option Agreement, each Principal Stockholder granted Merger Subsidiary a proxy to vote or consent (i) in favor of the adoption of the Merger Agreement and the Stockholder Option Agreement and approval of the Merger and the other transactions contemplated by the Merger Agreement and Stockholder Option Agreement, (ii) against any proposal for any recapitalization, merger, sale of assets or other business combination between the Company and any person or entity (other than the Merger) or any other action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement not being fulfilled, and (iii) in favor of any other matter relating to consummation of the transactions contemplated by the Merger Agreement and the Stockholder Option Agreement. Each Principal Stockholder also agreed to cause such Principal Stockholder's Shares that are outstanding and owned by it beneficially to be voted in accordance with the foregoing. The proxy will be automatically revoked upon termination of the Stockholder Option Agreement. -29- Stockholders holding an aggregate of 5,036,622 Shares are parties to the Stockholder Option Agreement. Assuming that the Shares that are subject to the Stockholder Option Agreement are validly tendered and not withdrawn pursuant to a directive from Merger Subsidiary, approximately 3,145,802 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 hereto). 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 Option Agreement. CONSULTING AND NON-COMPETE AGREEMENT. The following description of the Consulting and Non-Compete 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 13D and is incorporated into this Offer to Purchase by reference and may be inspected in the same manner as set forth in Section 7. The Company and each of Jerry W. Davis and Anthony V. Weight (each, the "Consultant") have entered into Consulting and Non-Compete Agreements (each, a "Consulting Agreement" and together the "Consulting Agreements") pursuant to which each Consultant has agreed to provide consulting services to the Company for a two year period commencing on the consummation of the Merger (the "Consulting Period"). As compensation for the Consultant's services, the Company has agreed to pay consulting fees to each Consultant at the rate of $250,000 per annum. The Consulting Agreements only becomes effective upon consummation of the Merger. Each of the Consulting Agreements provides that if the Company terminates the Consulting Period without Cause (as defined below) or the Consultant dies or becomes Disabled (as such term is defined in the Consulting Agreement), the Consultant shall be entitled to the continued payment of all consulting fees. If either (i) the Company terminates the Consulting Period for Cause or (ii) the Consultant terminates the Consulting Period, the Consultant shall be entitled to receive consulting fees paid through date of termination. "Cause" is defined in the Consulting Agreements to mean (i) the Consultant's breach of any material term of the Consulting Agreement, (ii) the Consultant's continued willful failure or refusal, after written notice, to perform his duties hereunder, (iii) the Consultant's conviction of a felony or of any crime involving moral turpitude, fraud or misrepresentation, or (iv) any gross negligence or willful misconduct by the Consultant resulting in substantial loss to the Company, substantial damage to the Company's reputation or theft or defalcation from the Company. The Consulting Agreements also contain non-competition provisions which prohibit each Consultant, for a period beginning on the Effective Date and ending on the fifth anniversary of the Effective Date, from participating or engaging in any activities or business involving, or relating to, the provision of information technology consulting and custom software development services, any other business or activity engaged in by the Company on the date of the Consulting Agreement, or any other business or activity engaged in by the Company in the future and in which the Consultant actively participated or any business or activity of any affiliate of the Company in which the Consultant actively participated within the United States of America. The Consulting Agreements also prohibit each Consultant from soliciting, recruiting or hiring any employees of the Company (or any of its affiliates) or persons who have worked for the Company (or any of its affiliates) at any time since January 1, 1998 and soliciting or encouraging any employee of the Company (or any of its affiliates) to leave the -30- employment of the Company. As compensation for each Consultant entering into a non-compete agreement, the Company has agreed to pay to Mr. Davis and Mr. Weight a non-compete payment of $9,500,000 and $4,500,000, respectively. In addition, the Consulting Agreement provides that each Consultant shall not disclose to any other person or use any confidential information relating to or used by the Company or any of its affiliates, whether in written, oral or other form, except in connection with the performance of the Consultant's duties under the Consulting Agreement. FLORIDA LAW. The Merger would have to comply with applicable procedural and substantive requirements of the Florida Act. The Company is incorporated under the laws of the State of Florida. The Florida Act contains certain provisions relating to "affiliated transactions" which purport to regulate, among other things, certain business combinations, including mergers and consolidations, involving a Florida corporation with any person who is the beneficial owner of more than 10% of the outstanding voting shares of such corporation (an "Interested Stockholder"). Under Section 607.0901 of the Florida Act (the "Affiliated Transactions Statute"), with certain exceptions, a Florida corporation shall not engage in such a transaction with an Interested Stockholder unless the transaction is approved by the holders of two-thirds of the voting shares other than the shares owned by the Interested Stockholder. Such exceptions include transactions approved by a majority of the corporation's directors who are not affiliated or associated with the Interested Stockholder. At a special meeting held on February 5, 1999, the Company's Board of Directors, none of whom are affiliated or associated with Merger Subsidiary or Computer Associates, unanimously approved the Merger Agreement and the Stockholder Option Agreement and the transactions contemplated thereby, including the Merger, and determined that each of the Offer and Merger are fair to and in the best interests of the holders of the Company's Shares. Accordingly, the Affiliated Transaction Statute has been satisfied and is therefore inapplicable with respect to Computer Associates and Merger Subsidiary in connection with the Merger Agreement and the Stockholder Option Agreement and the transactions contemplated thereby, including the Offer and the Merger. The Florida Act also contains provisions relating to acquisitions of "control shares," which is defined as shares that entitle a person to exercise more than specified proportions of the voting power of a Florida public corporation (commencing with the acquisition of 20% or more of the voting shares of such corporation). Section 607.0902 of the Florida Act (the "Control Share Acquisitions Statute") purports to limit the voting rights of control shares acquired in certain types of acquisitions (a "control-share acquisition") unless the acquisition of the control shares has been approved by the board of directors of such corporation or certain other statutory conditions have been met. At a special meeting held on February 5, 1999, the Company's Board of Directors has unanimously approved the acquisition of the Shares pursuant to the Merger Agreement (including the Offer and the Merger) and the Stockholder Option Agreement and, accordingly, the Control Share Acquisitions Statute is inapplicable with respect to any such acquisition by Computer Associates and Merger Subsidiary. 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 -31- 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 on terms and at prices then determined by Computer Associates or Merger Subsidiary, which may vary from the price to be paid for Shares in the Offer. In the press release issued by Computer Associates in connection with the execution of the Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1 and 13D and is incorporated herein by reference, Computer Associates stated, among other things, that it intended to retain all of the Company's employees and to expand the Company's network of Systems Outsourcing Centers. Computer Associates intends to conduct a review of the Company and its assets, corporate structure, dividend policy, capitalization, operations, properties and policies and to consider, subject to the terms of the Merger Agreement, what, if any, changes would be desirable in light of the circumstances then existing, and reserves the right to take such actions or effect such changes as it deems desirable. Such changes could include changes in the Company's business, operations, corporate structure, capitalization, Board of Directors, policies or dividend policy. Except as otherwise described in this Offer to Purchase, Computer Associates and Merger Subsidiary have no current plans or proposals that would relate to, or result in, any extraordinary corporate transaction involving the Company, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries, a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, any material change in the Company's capitalization or dividend policy or any other material change in the Company's business, corporate structure, Board of Directors or management. -32- 12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATIONS; REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by Stockholders other than Computer Associates or Merger Subsidiary. Computer Associates cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future market prices to be greater or less than the Offer price. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the standards for continued inclusion on the Nasdaq NMS. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the standards for continued inclusion on the Nasdaq NMS, 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 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 -33- 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 February 5, 1999, 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 February 5, 1999 of employee stock options outstanding prior to such date), shares of any other class or series of capital stock, other voting securities or any securities convertible into, or options, rights, or warrants, conditional or otherwise, to acquire, any of the foregoing, then, without prejudice to Merger Subsidiary's rights under Section 15, Merger Subsidiary may, in its sole discretion, make such adjustments in the purchase price and other terms of the Offer as it deems appropriate including the number or type of securities to be purchased. If, on or after February 5, 1999, 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 cash dividend or distribution and (ii) the whole of any such non-cash dividend or distribution to be received by the tendering Stockholders will (a) be received and held by the tendering Stockholders for the account of Merger Subsidiary and will be required to be promptly remitted and transferred by each tendering Stockholder to the Depositary for the account of Merger Subsidiary, accompanied by appropriate documentation of transfer, or (b) at the direction of Merger Subsidiary, be exercised for the benefit of Merger Subsidiary, in which case the proceeds of such exercise will promptly be remitted to Merger Subsidiary. Pending such remittance and subject to applicable law, Merger Subsidiary will be entitled to all rights and privileges as owner of any such non-cash dividend or distribution or proceeds thereof and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Merger Subsidiary in its sole discretion. 14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. Merger Subsidiary reserves the right, at any time or from time to time, in its sole discretion, (i) to extend the period of time during which the Offer is open if, at the scheduled expiration date of the Offer or any extension thereof, any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and for a further period of time as described below in this paragraph, in any case by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension or (ii) -34- except to the extent otherwise provided in the Merger Agreement, to amend the Offer in any respect by making a public announcement of such amendment. There can be no assurance that Merger Subsidiary will exercise its right to extend or amend the Offer. Subject to the terms of the Offer and the satisfaction (or waiver to the extent permitted by the Merger Agreement) of the conditions to the Offer, Merger Subsidiary shall accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration of the Offer and shall pay for all such Shares promptly after acceptance; PROVIDED, that Merger Subsidiary may extend the Offer for a period of time of not more than 20 business days to meet the objective (which is not a condition to the Offer) that there shall be validly tendered prior to the Expiration Date (as so extended) and not withdrawn a number of Shares, which, together with Shares then owned by Computer Associates and Merger Subsidiary, represents at least 80% 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. 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, -35- 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 (subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to Merger Subsidiary's obligation to pay for or return tendered shares after the termination or withdrawal of the Offer)) 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 February 5, 1999 and prior to the acceptance for payment of Shares, any of the following conditions exist: (a) there shall be instituted or pending any action or proceeding by any Governmental Entity or by any other person, domestic or foreign, before any Governmental Entity or arbitrator, (i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the acquisition by Merger Subsidiary or any of its affiliates of Shares pursuant to the Stockholder Option Agreement, 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 Stockholder Option Agreement, the Merger Agreement, the Offer or the Merger, (ii) seeking to restrain or prohibit Computer Associates' or Merger Subsidiary's ownership or operation (or that of their respective subsidiaries or affiliates) of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Computer Associates and its subsidiaries, taken as a whole, or to compel Computer Associates or any of its subsidiaries or affiliates to dispose of or hold separate all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Computer Associates and its subsidiaries, taken as a whole, (iii) seeking to impose material limitations on the ability of Computer Associates or any of its subsidiaries or affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Shares acquired or owned by Computer Associates or any of its subsidiaries or affiliates on all matters properly presented to the Company's stockholders, (iv) seeking to require divestiture by Computer Associates or any of its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the judgment of Computer Associates, is likely to materially adversely affect the 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 -36- other than the application of the waiting period provisions of the HSR Act to the Stockholder Option Agreement, the Merger Agreement, the Offer or the Merger, that, in the judgment of Computer Associates, is substantially 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, assets, condition (financial or otherwise), capitalization, operations 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) a tender or exchange offer for some or all of the Shares shall have been made by another person, or it shall have been publicly disclosed or Computer Associates shall have otherwise learned that (i) any person or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired beneficial ownership of more than 25% of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 25% of any class or series of capital stock of the Company (including the Shares) other than acquisitions for bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on file with the Commission on February 5, 1999, (ii) any such person or group which, prior to February 5, 1999, had filed such a Schedule with the Commission shall have acquired beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, which, together with such ownership as is reflected on such Schedule, shall constitute 25% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares) which, together with such ownership as is reflected on such Schedule, shall constitute 25% or more of any such class or series or (iii) any person shall have filed a Notification and Report Form under the HSR Act reflecting an intent to acquire the Company or any material portion of assets of the Company or securities of the Company which, together with such ownership as is reflected on any such Schedule, shall constitute 25% or more of any such class of securities; or (e) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. or on the American Stock Exchange, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any Governmental Entity on the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which would reasonably be expected to have a Material Adverse Effect or prevent (or materially delay) the consummation of the Offer or (v) in the case of any of the foregoing existing at the time of commencement of the Offer, a material acceleration or worsening thereof; or -37- (f) any Consent (other than the filing of articles of merger or approval by the stockholders of the Company of the Merger (if required by the Florida Act)) required to be filed, occurred or been obtained by the Company or any of its subsidiaries or Computer Associates or any of its subsidiaries (including Merger Subsidiary) in connection with the execution and delivery of the Merger Agreement, the Offer and the consummation of the transactions contemplated by the Merger Agreement shall not have been filed, occurred or been obtained (other than any such Consents the failure to file, occur or obtain in the aggregate, could not reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or materially delay the consummation of the Offer or the Merger); or (g) 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 (h) any party to the Stockholder Option Agreement other than Merger Subsidiary or Computer Associates shall have breached or failed to perform in any material respect any of its agreements under the Stockholder Option Agreement or any of the representations and warranties of any such party set forth in the Stockholder Option Agreement shall not be true in any material respect, in each case, when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Stockholder Option Agreement shall have been invalidated or terminated with respect to any Shares subject thereto; or (i) the Merger Agreement or the Stockholder Option Agreement shall have been terminated in accordance with its terms; or (j) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified in a manner adverse to Computer Associates or Merger Subsidiary its approval or recommendation of the Offer, the Merger or the Merger Agreement or its approval of the entry by Computer Associates and Merger Subsidiary into the Stockholder Option Agreement; or (k) 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 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 condition -38- (financial or otherwise), business, assets, results of operations or prospects of 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 discretion regardless of the circumstances (including any action or omission by Computer Associates or Merger Subsidiary) giving rise to any such condition or (other than the Minimum Condition) may, subject to the terms of the Merger Agreement, 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. 16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. GENERAL. Except as set forth in this Section 16, based on its examination of publicly available information filed by the Company with the Commission and other publicly available information concerning the Company, Merger Subsidiary is not aware of any license or regulatory permit that appears to be material to the Company's business that might be adversely affected by Merger Subsidiary's acquisition of Shares as contemplated herein or of any approval or other action by any government or governmental authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by Merger Subsidiary or Computer Associates as contemplated herein. Should any such approval or other action be required, it is currently contemplated that, except as described below under "State Takeover Statutes", such approval or other action will be sought. Except as described under "Antitrust", however, there is no current intent to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to the Company's business or certain parts of the Company's business might not have to be disposed of, any of which could cause Merger Subsidiary to elect to terminate the Offer without the purchase of Shares thereunder. Merger Subsidiary's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 15. STATE TAKEOVER STATUTES. A number of states have adopted laws which, to varying degrees, seek to regulate attempts to acquire corporations that are incorporated in, or have substantial connections with, the state. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. Based on publicly available information concerning the Company, Computer Associates does not believe that any of these laws will, by their terms, apply to the Offer or the Merger. In addition, the constitutional validity of state statutes regulating acquisition attempts has been the subject of considerable litigation. In its 1982 decision in EDGAR V. MITE CORP., the -39- Supreme Court of the United States invalidated an Illinois law that, among other things, gave Illinois officials authority to block a tender offer for any corporation having certain defined connections with the state. In 1987, however, the Supreme Court upheld an Indiana law that prevented acquirors of a controlling stake in certain Indiana corporations from voting the acquired shares until the other stockholders had approved the acquisition. The Court distinguished between state statutes that affect acquisitions of entities incorporated outside the state and those that address the internal governance, including the scope and exercise of stockholder voting rights, of in-state corporations. While the lower federal courts have relied on a similar distinction in subsequent cases, the precise extent to which an individual state may regulate acquisitions of out-of-state corporations remains unclear. If any government official or third party should seek to apply any state takeover law to the Offer or the Merger, Computer Associates will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, Computer Associates or Merger Subsidiary might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and Merger Subsidiary might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. In such case, Merger Subsidiary may not be obligated to accept for payment or pay for any tendered Shares. See Section 15. ANTITRUST. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The purchase of Shares pursuant to the Offer is subject to such requirements. Computer Associates expects to file, and the Company expects to file, a Notification and Report Form with respect to the Offer with the Antitrust Division and the FTC on or about February 9, 1999. Assuming a filing date of February 9, 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 Wednesday, February 24, 1999. 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 -40- extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. The provisions of the HSR Act would similarly apply to any purchase of Shares pursuant to the Stockholder Option Agreement (other than purchases effected through a tender pursuant to the Offer), except that the initial waiting period would expire 30 days following the filing of HSR Act Notification Forms by Computer Associates and the Company and a request for additional information or material from Computer Associates or the Company during the initial 30-day waiting period would extend the waiting period until 11:59 p.m. New York City time on the 20th day after the date of substantial compliance by the Buyer and the Company with such request. Computer Associates and the Company expect to file HSR Notification Forms with respect to the Stockholder Option Agreement on or about February 9, 1999. If, as is expected, the purchase of Shares permitted by the Stockholder Option Agreement is effected through a tender of such Shares pursuant to the Offer, the HSR requirements applicable to the Offer described in the prior paragraph would apply rather than the requirements described in this paragraph. The Merger would not require an additional filing under the HSR Act if Computer Associates owns 50% or more of the outstanding Shares at the time of the Merger or if the Merger occurs within one year after the HSR Act waiting period applicable to the Offer expires or is terminated. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the acquisition of Shares by Merger Subsidiary pursuant to the Offer. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of the Shares so acquired or divestiture of substantial assets of Computer Associates or the Company. Private parties (including individual States) may also bring legal actions under the antitrust laws. Computer Associates does not believe that the consummation of the Offer will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See Section 15 for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. FOREIGN APPROVALS. According to the Company 10-K, the Company does not own property outside the United States and conducts its business in the United States. To the extent the Company conducts business in foreign countries and jurisdictions, 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 in connection with the acquisition of 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. -41- MARGIN CREDIT REGULATIONS. Federal Reserve Board Regulations T, U and X (the "Margin Credit Regulations") restrict the extension or maintenance of credit for the purpose of buying or maintaining margin stock, if the credit is secured directly or indirectly thereby. The borrowings under the Credit Agreements will not be directly secured by a pledge of the Shares. In addition, Computer Associates and Merger Subsidiary believe that such borrowings will not be "indirectly secured" within the meaning of the Margin Credit Regulations, as interpreted. Accordingly, Computer Associates and Merger Subsidiary believe that the Margin Credit Regulations are not applicable to the borrowings under the Credit Facility. 17. FEES AND EXPENSES. Merger Subsidiary has retained D.F. King & Co., Inc. to act as the Information Agent and SunTrust Bank, Atlanta 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 connection therewith, including certain liabilities under the federal securities laws. Computer Associates was introduced to the Company by Updata Capital. Computer Associates is obligated to pay Updata Capital a finder's fee of $3,000,000 upon completion of the Merger. 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. -42- 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). TheBetterPlan ("TBP"), Inc. -43- SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF COMPUTER ASSOCIATES AND MERGER SUBSIDIARY 1. DIRECTORS AND EXECUTIVE OFFICERS OF COMPUTER ASSOCIATES. The following table sets forth the name, age, business address and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years of each director and executive officer of Computer Associates. Each such person is a citizen of the United States of America, except for Willem F.P. de Vogel who is a citizen of The Netherlands. Unless otherwise indicated below, the business address of each person is c/o Computer Associates, 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....................... 52 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................... 48 Director of Computer Associates since 1991. Three Cities Research, Inc. President of Three Cities Research, Inc., a private 135 East 57th Street investment management firm in New York City, New York, New York 10022 since 1981. From August 1981 to August 1990, Mr. de Vogel served as a director of Computer Associates. He is also a director of Morton Industrial Group.
II-1 Irving Goldstein....................... 60 Director of Computer Associates since 1990. INTELSAT Former Director General and Chief Executive 3400 International Drive, N.W. Officer of INTELSAT, an international satellite Washington, D.C. 20008 telecommunications company from February 1992 to October 1998. He was Chairman and Chief Executive Officer of COMSAT (formerly known as Communications Satellite Corporation) from October 1985 to February 1992 and President from May 1983 to October 1985, and was a director from May 1983 to February 1992. Richard A. Grasso...................... 52 Director of Computer Associates since January New York Stock Exchange 1994. Chairman and Chief Executive Officer of 11 Wall Street the New York Stock Exchange since June 1995. New York, New York 10005 He was Executive Vice Chairman of the New York Stock Exchange from 1991 to 1995 and President and Chief Operating Officer of the New York Stock Exchange from 1988 to 1995. Shirley Strum Kenny.................... 64 Director of Computer Associates since July 1994. President's Office President of State University of New York at State University of Stony Brook since 1994. She was President of New York at Stony Brook Queens College of the City University of New Stony Brook, New York 11794 York from 1989 to 1994. She is also a director of Toys "R" Us, Inc. Sanjay Kumar........................... 36 Director of Computer Associates since January 1994. President and Chief Operating Officer since January 1994. He was Senior Vice President-Planning from April 1989 to December 1992 and Executive Vice President-Operations from January 1993 to December 1993. Charles B. Wang........................ 54 Director of Computer Associates since 1976. Chief Executive Officer since 1976 and Chairman of the Board since April 1980. He is also a director of Symbol Technologies, Inc.
II-2 EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Present Principal Occupation Name and or Employment; Material Positions Business Address Age Held During Past Five Years ---------------- --- --------------------------------- Michael A. McElroy.............. 54 Vice President and Secretary. He was elected Secretary effective January 1997 and has been a Vice President since 1989. Charles P. McWade............... 54 Senior Vice President-Business Development since April 1998. He was Senior Vice President-Finance from April 1990 to April 1998. He was Senior Vice President and Treasurer from April 1988 to March 1994. Lisa Savino..................... 33 Vice President and Treasurer since November 1997. She was Vice President and Assistant Treasurer April 1996 to November 1997. She was Assistant Vice President and Assistant Treasurer from April 1995 to April 1996. From 1990 to March 1995, she held various positions at Computer Associates. Ira H. Zar...................... 37 Senior Vice President-Finance and Chief Financial Officer since July 1998. He was Senior Vice President-Finance of Computer Associates since November 1997. He was Senior Vice President and Treasurer of Computer Associates from April 1994 to October 1997 and Vice President Finance from April 1990 to April 1994.
II-3 2. DIRECTORS AND EXECUTIVE OFFICERS OF MERGER SUBSIDIARY. The following table sets forth the name and position with Merger Subsidiary of each director and executive officer of Merger Subsidiary and his age, present principal occupation or employment, and material occupations, positions, offices or employments for the past five years.
Name Age Position With Merger Subsidiary Michael A. McElroy................ 53 Director, Vice President and Assistant Secretary of Merger Subsidiary since its incorporation on February 3, 1999. Vice President of Computer Associates since April 1989 and Secretary of Computer Associates since January 1997. Steven M. Woghin.................. 52 Director, Vice President, Secretary and Treasurer of Merger Subsidiary since its incorporation on February 3, 1999. Senior Vice President and General Counsel of Computer Associates since April 1995. He was Vice President-Legal of Computer Associates from April 1992 to March 1995. Prior to 1990 through April 1992, he was a partner in the law firm of Arter & Hadden. Ira H. Zar........................ 37 Director, President and Assistant Treasurer of Merger Subsidiary since its incorporation on February 3, 1999.
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 or any of its subsidiaries. To the knowledge of Computer Associates and Merger Subsidiary, none of Computer Associates' or Merger Subsidiary's directors, executive officers, affiliates or associates beneficially owns any equity securities, or rights to acquire any equity securities, of the Company and none has been involved in any transactions with the Company or any of its directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission. II-4 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: SUNTRUST BANK, ATLANTA BY MAIL: FACSIMILE TRANSMISSION (FOR BY HAND OR OVERNIGHT COURIER: SunTrust Bank, Atlanta ELIGIBLE INSTITUTIONS ONLY): SunTrust Bank, Atlanta P.O. Box 4625 404-865-5371 58 Edgewood Avenue Atlanta, GA 30302 404-332-3875 Room 225 CONFIRM BY TELEPHONE: Atlanta, GA 30303 800-568-3476
Questions or requests for assistance or additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent at the address and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: (800) 659-5550 EX-99.(A)(2) 3 FORM OF LETTER OF TRANSMITTAL Exhibit 99(a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF COMPUTER MANAGEMENT SCIENCES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED FEBRUARY 9, 1999 BY TheBetterPlan ("TBP"), 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 TUESDAY, MARCH 9, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- THE DEPOSITARY FOR THE OFFER IS: SUNTRUST BANK, ATLANTA BY MAIL: FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT COURIER: SunTrust Bank, Atlanta (FOR ELIGIBLE SunTrust Bank, Atlanta P.O. Box 4625 INSTITUTIONS ONLY): 58 Edgewood Avenue Atlanta, Georgia 30302 404-865-5371 Room 225 404-332-3875 Atlanta, Georgia 30303 CONFIRM BY TELEPHONE: 800-568-3476 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 ("DTC" or the "Book-Entry Transfer Facility") 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 the Book-Entry Transfer Facility (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 the Book-Entry Transfer Facility does not constitute delivery to the Depositary.
- ---------------------------------------------------------------------------------------------------------------------------- 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 Number(s)(1) Shares 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 THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution ------------------------------------------ DTC 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: --------------------------- If delivery is by book-entry transfer, give the following: DTC Account Number ------------------------------------------------ Transaction Code Number ------------------------------------------- -2- Ladies and Gentlemen: The undersigned hereby tenders to TheBetterPlan ("TBP"), Inc., a Florida corporation ("Merger Subsidiary") and a wholly owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), the above described shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"), pursuant to Merger Subsidiary's offer to purchase all outstanding Shares at a price of $28 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated February 9, 1999 (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 February 5, 1999) 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 the Book-Entry Transfer Facility, 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 February 5, 1999, the Company should declare or pay any cash or stock dividend or other distribution on or issue any rights with respect to the Shares, payable or distributable to stockholders of record on a date before the transfer to the name of Merger Subsidiary or its nominee or transferee on the Company's stock transfer records of the Shares accepted for payment pursuant to the Offer, then, subject to the provisions of the Offer to Purchase, (i) the purchase price per Share payable by Merger Subsidiary pursuant to the Offer will be reduced by the amount of any such cash dividend or cash distribution and (ii) the whole of any such non-cash dividend, distribution or right will be received and held by the tendering stockholder for the account of Merger Subsidiary and shall be required to be promptly remitted and transferred by each tendering stockholder to 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. Ira H. Zar, Mr. Michael A. McElroy and Mr. Steven M. Woghin, and each of them, and any other designees of Merger -3- 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 February 5, 1999), 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 February 5, 1999), that the undersigned own(s) the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that such tender of Shares complies with Rule 14e-4 under the Exchange Act, and that when the same are accepted for payment by Merger Subsidiary, Merger Subsidiary will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Merger Subsidiary to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other Shares or securities). All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall not be affected by, and shall survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors, assigns, administrators, trustees in bankruptcy, personal and legal representatives of the undersigned. Except as stated in the Offer, this tender is irrevocable, provided that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date or at any time on or after April 9, 1999, unless theretofore accepted for payment. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Merger Subsidiary upon the terms and subject to the conditions of the Offer. The undersigned recognizes 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. -4- 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). 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- 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 To be completed ONLY if the check for the purchase price of Shares purchased or purchase price of Shares purchased or certificates for Shares not tendered or not certificates for Shares not tendered or not purchased are to be issued in the name of purchased are to be mailed to someone other someone other than the undersigned. than the undersigned or to the undersigned at an address other than that shown above. Issue check and/or certificates to: Mail check and/or certificates to: Name Name -------------------------------------- -------------------------------------- (Please Print) (Please Print) Address Address ------------------------------------ ------------------------------------ - ------------------------------------------- ------------------------------------------- (Include Zip Code) (Include Zip Code) - ------------------------------------------- (Taxpayer Identification or Social Security No.)
-6- IMPORTANT - -------------------------------------------------------------------------------- SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature(s) of Holder(s) of Shares Dated: , 1999 (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: , 1999 - -------------------------------------------------------------------------------- -7- 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 the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) have not completed the instruction entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if delivery of Shares is to be made by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a Book-Entry Confirmation of all Shares delivered electronically, as the case may be, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or, in connection with a book-entry transfer, an Agent's Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal by the Expiration Date. If a stockholder's certificate for Shares is not immediately available or time will not permit all required documents to reach the Depositary by the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such stockholder's Shares may nevertheless be tendered pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by Merger Subsidiary must be received by the Depositary by the Expiration Date and (c) the certificates for all physically delivered Shares, or a Book-Entry Confirmation, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market trading days 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 THE 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- 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. -9- 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. 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. 8. WAIVER OF CONDITIONS. Subject to the terms of the Offer, Merger Subsidiary reserves the absolute right in its sole discretion to waive any of the specified conditions of the Offer (other than the Minimum Condition), in whole or in part, in the case of any Shares tendered. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the correct TIN, the Internal Revenue Service may subject the stockholder or other payee to a $50 penalty. In addition, payments that are made to such stockholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to 31% backup withholding. Certain stockholders (including among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the stockholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Depositary is required to withhold 31% of any such payments made to the stockholder or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service, provided that the required information is given to the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% on all payments made prior to the time a properly certified Taxpayer Identification Number is provided to the Depositary. However, such amounts will be refunded to such Stockholder if a Taxpayer Identification Number is provided to the Depositary within 60 days. The stockholder is required to give the Depositary the TIN (E.G., social security number or employer identification number) of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one -10- name or are 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- PAYER'S NAME: SUNTRUST BANK, ATLANTA
- ------------------------------ ------------------------------------------------------------------------------ PART 1 - PLEASE PROVIDE YOUR TIN IN THE Social Security Number or SUBSTITUTE BOX AT RIGHT AND CERTIFY BY SIGNING AND Employer Identification Number DATING BELOW. FORM W-9 ------------------ Department of the Treasury Internal Revenue Service Payer's Request for Taxpayer Identification Number ("TIN") ------------------------------------------------------------------------------------- PART 2 - Certification - Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions - You must cross out Item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on you tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). ---------------------------------------------------------------- -------------------- PART 3 SIGNATURE DATE , 1999 ---------- ------ 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 , 1999 --------------------------- ------------------------- -12- THE DEPOSITARY FOR THE OFFER IS: SUNTRUST BANK, ATLANTA BY MAIL: FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT COURIER: SunTrust Bank, Atlanta (FOR ELIGIBLE SunTrust Bank, Atlanta P.O. Box 4625 INSTITUTIONS ONLY): 58 Edgewood Avenue Atlanta, Georgia 30302 404-865-5371 Room 225 404-332-3875 Atlanta, Georgia 30303 CONFIRM BY TELEPHONE: 800-568-3476 THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect:(212) 269-5550 All Others Call Toll Free:(800) 659-5550 -13- EX-99.(A)(3) 4 FORM OF NOTICE OF GUARANTEED DELIVERY Exhibit 99(a)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF COMPUTER MANAGEMENT SCIENCES, INC. This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (defined below) if (i) certificates representing shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida 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 SunTrust Bank, Atlanta (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: SUNTRUST BANK, ATLANTA BY MAIL: FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT COURIER: SunTrust Bank, Atlanta (FOR ELIGIBLE SunTrust Bank, Atlanta P.O. Box 4625 INSTITUTIONS ONLY): 58 Edgewood Avenue Atlanta, Georgia 30302 404-865-5371 Room 225 404-332-3875 Atlanta, Georgia 30303 CONFIRM BY TELEPHONE: 800-568-3476 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE APPROPRIATE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to TheBetterPlan ("TBP"), Inc., a Florida 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 February 9, 1999 (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, the number of shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"), specified below, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Number of Shares and Certificate No(s) Name(s) of Record Holder(s): (if available): - ------------------------------------- ------------------------------------- - ------------------------------------- ------------------------------------- (Please type or print) Address(es): ------------------------- ------------------------------------- (Zip Code) [ ] Check here if Shares will be tendered by bookentry transfer. Area Code and Tel. No.: -------------- (Daytime telephone number) DTC Account Number: Signature(s): ---------------- ------------------------- -------------------------------------- Dated: , 1999 --------------------- 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 the Book-Entry Transfer Facility (defined in Section 3 of the Offer to Purchase), in either case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an Agent's Message (defined in Section 2 of the Offer to Purchase), together with any other documents required by the Letter of Transmittal, all within three Nasdaq National Market trading days after the date hereof. Name of Firm: ------------------------ -------------------------------------- (Authorized Signature) Address: ------------------------------ Name: --------------------------------- (Please type or print) - -------------------------------------- (Zip Code) Title: -------------------------------- Area Code and Tel. No.: Date: , 1999 ----------------------------- --------------------------- NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 LETTER TO BROKERS Exhibit 99(a)(4) Offer to Purchase for Cash All Outstanding Shares of Common Stock of Computer Management Sciences, Inc. at $28 Net Per Share by TheBetterPlan ("TBP"), 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 TUESDAY, MARCH 9, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- February 9, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing the material listed below in connection with the offer by TheBetterPlan ("TBP"), Inc., a Florida corporation ("Merger Subsidiary") and a wholly owned subsidiary of Computer Associates International, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"), at $28 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 February 9, 1999 (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; 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 SunTrust Bank, Atlanta, 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 TUESDAY, MARCH 9, 1999, 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 the Book-Entry Transfer Facility (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, TheBetterPlan ("TBP"), Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF TheBetterPlan ("TBP"), 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. EX-99.(A)(5) 6 LETTER TO CLIENTS Exhibit 99(a)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER MANAGEMENT SCIENCES, INC. AT $28 NET PER SHARE BY THEBETTERPLAN ("TBP"), 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 TUESDAY, MARCH 9, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated February 9, 1999, (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 TheBetterPlan ("TBP"), Inc., a Florida corporation ("Merger Subsidiary") and a wholly-owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"), at a purchase price of $28 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. Holders of Shares whose certificates for such Shares are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary, or complete the procedure for book-entry transfer set forth in Section 3 of the Offer to Purchase, prior to the Expiration Date (defined in Section 1 of the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the -12- Offer. Your attention is directed to the following: 1. The tender price is $28 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 Tuesday, March 9, 1999, unless the Offer is extended. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a confirmation of a book-entry transfer of such Shares as described in Section 2 of the Offer to Purchase), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or an Agent's Message (defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. 4. The Offer is conditioned upon, among other things, (i) there being validly tendered by the Expiration Date and not withdrawn a number of Shares which, together with the Shares then owned by Merger Subsidiary and Computer Associates, would represent at least a majority of the Fully Diluted Shares (defined in the Introduction to the Offer to Purchase) and (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. 5. Merger Subsidiary will pay any stock transfer taxes applicable to the sale of Shares to Merger Subsidiary pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions should be forwarded promptly to permit us to submit a tender on your behalf by the expiration of the Offer. If you do not instruct us to tender your Shares, they will not be tendered. 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- INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER MANAGEMENT SCIENCES, INC. BY THEBETTERPLAN ("TBP"), INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated February 9, 1999, and the related Letter of Transmittal, relating to the offer by TheBetterPlan ("TBP"), Inc., a Florida corporation and a wholly owned subsidiary of Computer Associates International, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"). The undersigned instructs 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: _________________, 1999 - ----------------------------------------------- Number of Shares ----------------------------- - ----------------------------------------------- (Signature) to be Tendered: ______ Shares* ----------------------------- Please Print Names(s) ----------------------------- Address ---------------------- ----------------------------- Include Zip Code Area Code and Telephone No. ---------------- Taxpayer Identification or Social Security No. ------- ----------------------------- - ------------------------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 PRESS RELEASE Exhibit 99(a)(6) COMPANY PRESS RELEASE COMPUTER ASSOCIATES TO ACQUIRE COMPUTER MANAGEMENT SCIENCES, INC. LEADING SERVICES FIRM TO AUGMENT CA GLOBAL PROFESSIONAL SERVICES PORTFOLIO CASH TENDER OFFER VALUED AT $435 MILLION ISLANDIA, N.Y.--(BUSINESS WIRE)--Feb. 8, 1999-- Computer Associates International, Inc. (CA) and Computer Management Sciences, Inc. (CMSI) have entered into a merger agreement for CA to acquire CMSI through a cash tender offer followed by a cash merger. A wholly-owned subsidiary of CA will offer to purchase all outstanding shares of CMSI's common stock (NASDAQ: CMSX - news) for $28 per share. The merger has been unanimously approved by the boards of directors of both CA and CMSI. CA will fund the acquisition through cash balances and existing credit facilities. The acquisition of CMSI, which custom-develops cutting-edge IT solutions for a Fortune 1000 client base and will become part of CA's Global Professional Services (GPS), reflects GPS' growth strategy of implementing leading-edge business solutions. The acquisition will accelerate the delivery of powerful new solutions built around CA's Unicenter TNG and Jasmine technologies into the upper echelons of the enterprise-wide distributed applications market space. CA will also expand CMSI's unique Systems Outsourcing Centers (SOC) worldwide. 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. The offer will also be subject to other customary conditions. CMSI specializes in Internet development, business process re-engineering, strategy planning, evolutionary downsizing, rapid application development, object-oriented databases, vendor software evaluation, and other key technology areas. "Our partnership with CMSI extends our continuing strategy of building GPS through highly-focused acquisitions that complement CA's core competencies and that address the most critical requirements of today's global enterprise," said CA President and COO Sanjay Kumar. "CMSI's proven development methodologies and extensive experience with strategic re-engineering make them an ideal addition to GPS' already formidable technology and business resources." "This is a very exciting time to be joining the CA family," said CMSI Chairman and Chief Executive Officer Jerry W. Davis. "Our two companies have an ideal fit in terms of technical strengths, business vision and corporate culture. We're especially enthusiastic about the contributions this acquisition will allow us to make globally in high-growth areas such as Internet commerce applications and multimedia content delivery." CMSI primarily addresses the information processing needs of Fortune 1000 companies and state and local governments through the creation, manipulation and integration of software applications, while simultaneously providing IT outsourcing, facilities management and maintenance of legacy and client/server computer systems. The company focuses on an IT middle market, comprised of engagement opportunities with project sizes ranging from $250,000 to $10 million. Clients include Coca-Cola, CSX Corporation, Kemper Financial Services, Lockheed Aeronautical Systems Company, Merrill Lynch and Wachovia Bank. CMSI's national network of SOCs, which CA will expand internationally to include Europe, Asia, South America and other regions, are highly-secured systems development service centers equipped with advanced hardware and software to simulate almost any development environment. SOCs allows CMSI to maintain a repository of re-usable software applications, code strings and components that ultimately reduce the time and effort needed during the initial development phase of a project. Each SOC is networked to provide CMSI with the ability to staff projects from any SOC or branch location for concurrent development. Consultant/customer training centers provide complete staging capability to train users of newly-completed systems prior to deployment at customer sites. The delivery of CMSI's IT services is supported by its proprietary Evolution Methodology, an integrated set of stages, tasks, work products, techniques, tools and project management guidelines that provide a standard approach for planning, development and maintenance. "Merging with CA is clearly the best growth avenue for CMSI," said Harry C. Stonecipher, a member of the CMSI board and president of Boeing Corporation. "This is also an outstanding opportunity for CMSI people to apply their world-class talents to an even more exciting set of global business opportunities." This marks the fourth in a series of acquisitions to broaden the capabilities of GPS. Formed last April in response to increased client demand for turnkey best-of-class solutions, GPS has been strengthened by CA's previous acquisitions of Realogic, Inc., LDA Systems, Inc. and Aventura Systems ASA. CMSI's profit margin is one of the highest in the computer services industry. On January 25, the company reported year-end 1998 results with a 27 percent increase in total revenue to $90.2 million and a 34 percent jump in net income to $12.4 million. All of CMSI's 900-plus employees will join CA, bringing the GPS workforce to over 3,000 professionals. CMSI (www.cmsx.com) is headquartered in Jacksonville, Florida and maintains branch offices and SOCs in strategic markets throughout the United States. Certain CMSI shareholders, including Jerry W. Davis, CMSI Chairman and CEO, and Anthony V. Weight, CMSI Acting CEO and Corporate Secretary, and affiliated entities, have agreed to tender their shares, representing an aggregate of approximately 34 percent of the outstanding shares, to CA. GPS, which will continue to grow organically and through acquisition, offers a broad spectrum of IT services in dozens of disciplines including infrastructure management, application development and integration, Y2K compliance services, asset management, deskside support, and end user productivity. Services range from consulting to implementation, to comprehensive outsourcing and facilities management. GPS is headquartered in Islandia, N.Y. and has offices in North and South America, Europe and the Far East. For more information on GPS, visit www.cai.com/gps/. Computer Associates International, Inc. (NYSE: CA - news), the world leader in mission-critical business computing, provides software, support and integration services in more than 100 countries around the world. CA has more than 13,000 employees and had revenue of $5.1 billion in calendar year 1998. For more information about CA, please call 516-342-5224 or email info@cai.com. CA's World Wide Web address is www.cai.com. All referenced product names are trademarks of their respective companies. Contact: Computer Associates International, Inc. Bob Gordon, CA public relations, (516) 342-2391 or bobg@cai.com Doug Robinson, CA investor relations, (516) 342-2745 or dougr@cai.com or Computer Management Sciences, Inc. Don White, CMSI public relations, (904) 737-8955 x2229 or DonW@cmsx.com Hunter Blankenbaker, CMSI investor relations, (904) 737-8955 x2236 or Hunter.Blankenbaker@cmsx.com EX-99.(A)(7) 8 TAXPAYER GUIDELINES Exhibit 99(a)(7) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- ------------------------------ ------------------------- ------------------------------ ------------------------- Give the name and Give the name and For this type of account: SOCIAL SECURITY number For this type of account: EMPLOYER IDENTIFICATION of -- number of -- - ------------------------------ ------------------------- ------------------------------ ------------------------- 1. An individual's account The individual 6. A valid trust, estate, or The legal entity (Do pension trust not furnish the 2. Two or more individuals The actual owner of the identifying number of (joint account) account or, if combined the personal funds, any one of the representative or individuals(1) trustee unless the legal entity itself is 3. Custodian account of a The minor(2) not designated in the minor (Uniform Gift to 7. Corporate account account title.)(4) Minors Act) 8. Religious, charitable, The corporation or educational 4. (a) The usual revocable The grantor-trustee(1) organization account The organization savings trust account (grantor is also trustee) 9. Partnership (b) So-called trust The actual owner(1) 10. Association, club, or The partnership account that is not a other tax-exempt legal or valid trust organization The organization under State law 11. A broker or registered The broker or nominee 5. Sole proprietorship The owner(3) nominee 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 13. Sole proprietorship The owner(3) account
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show the name of the owner. You may also enter your business name. You may use your Social Security Number or Employer Identification Number. (4) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under section 501(a), or an individual retirement plan or a custodial account under Section 403(b)(7). - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency, or instrumentality thereof. - - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - - A real estate investment trust. - - A common trust fund operated by a bank under section 584(a). - - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. - - A futures commission merchant registered with the Commodity Futures Trading Commission. - - A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc. Nominee List. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. Payments of interest not generally subject to backup withholding include the following: - - 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. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - - Payments described in section 6049(b)(5) to non-resident aliens. - - Payments on tax-free covenant bonds under section 1451. - - Payments made by certain foreign organizations. - - Mortgage interest paid to an individual. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments, other than interest, dividends, and patronage dividends, that are not subject to information reporting, are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(8) 9 SUMMARY ADVERTISEMENTS Exhibit 99(a)(8) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated February 9, 1999 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 COMPUTER MANAGEMENT SCIENCES, INC. AT $28 NET PER SHARE BY THEBETTERPLAN ("TBP"), INC. A WHOLLY OWNED SUBSIDIARY OF COMPUTER ASSOCIATES INTERNATIONAL, INC. TheBetterPlan ("TBP"), Inc., a Florida corporation ("Merger Subsidiary") and a wholly owned subsidiary of Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), is offering to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Computer Management Sciences, Inc., a Florida corporation (the "Company"), at $28 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated February 9, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Tendering stockholders of the Company will not be obligated to pay brokerage fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, MARCH 9, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN A NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED BY COMPUTER ASSOCIATES AND MERGER SUBSIDIARY, WOULD REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS AND (2) THE EXPIRATION OR TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of February 5, 1999 (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 after satisfaction or waiver of all conditions to the Merger (defined below) set forth in the Merger Agreement, 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 Florida Business Corporation Act) will be converted into the right to receive $28 in cash or any higher price paid for each Share in the Offer, without interest. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS UNANIMOUSLY APPROVED THE OFFER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES. Merger Subsidiary reserves the right, at any time or from time to time, in its sole discretion, to extend the period of time during which the Offer is open if, at the scheduled expiration date of the Offer or any extension thereof, any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and for a further period of time of not more than 20 business days, regardless of whether or not any of the conditions to the Offer have been satisfied, to meet the objective (which is not a condition to the Offer) that there be validly tendered and not withdrawn at least 80% of the Shares on a fully diluted basis. Any such extension will be made by giving oral or written notice thereof to the Depositary (defined below) and will be followed as promptly as practicable by public announcement thereof. For purposes of the Offer, Merger Subsidiary shall be deemed to have accepted for payment tendered Shares when, as and if Merger Subsidiary gives oral or written notice to SunTrust Bank, Atlanta (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 the Book-Entry Transfer -2- Facility (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 April 9, 1999, 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 the Book-Entry Transfer Facility 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 lists and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. -3- 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 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: (800) 659-5550 February 9, 1999 -4- EX-99.(C)(1) 10 MERGER AGREEMENT Exhibit 99(c)(1) - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER Dated as of February 5, 1999 Among COMPUTER ASSOCIATES INTERNATIONAL, INC. THEBETTERPLAN ("TBP"), INC. And COMPUTER MANAGEMENT SCIENCES, INC. - --------------------------------------------------------------------------------
TABLE OF CONTENTS Page ---- ARTICLE I THE OFFER SECTION 1.1. The Offer.........................................................................................1 SECTION 1.2. Company Action....................................................................................2 SECTION 1.3. Directors.........................................................................................2 ARTICLE II THE MERGER SECTION 2.1. The Merger........................................................................................3 SECTION 2.2. Conversion of Shares..............................................................................3 SECTION 2.3. Surrender and Payment.............................................................................4 SECTION 2.4. Dissenting Shares.................................................................................5 SECTION 2.5. Stock Options.....................................................................................5 ARTICLE III THE SURVIVING CORPORATION SECTION 3.1. Certificate of Incorporation......................................................................6 SECTION 3.2. Bylaws............................................................................................6 SECTION 3.3. Directors and Officers............................................................................6 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......................................................................................7 (d) Authority; Noncontravention............................................................................8
Page ---- (e) SEC Documents; Financial Statements; No Undisclosed Liabilities........................................9 (f) Disclosure Documents...................................................................................9 (g) Absence of Certain Changes or Events..................................................................10 (h) Litigation............................................................................................11 (i) Absence of Changes in Stock and Benefit Plans.........................................................11 (j) Participation and Coverage in Benefit Plan............................................................11 (k) ERISA Compliance......................................................................................11 (l) Taxes.................................................................................................12 (m) State Takeover Statutes...............................................................................13 (n) Brokers; Schedule of Fees and Expenses................................................................14 (o) Permits; Compliance with Laws; Environmental Matters..................................................14 (p) Contracts; Debt Instruments...........................................................................14 (q) Opinion of Financial Advisor..........................................................................16 (r) Interests of Officers and Directors...................................................................16 (s) Technology............................................................................................16 (t) Change of Control.....................................................................................17 SECTION 4.2. Representations and Warranties of Parent and Merger Subsidiary...................................17 (a) Organization, Standing and Corporate Power............................................................17 (b) Authority; Noncontravention...........................................................................17 (c) Disclosure Documents..................................................................................18 ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1. Conduct of Business..............................................................................19 SECTION 5.2. Stockholder Meeting; Proxy Material..............................................................20 SECTION 5.3. Access to Information............................................................................21 SECTION 5.4. Other Offers.....................................................................................21 SECTION 5.5. State Takeover Statutes..........................................................................21
-ii- Page ---- ARTICLE VI COVENANTS OF PARENT AND MERGER SUBSIDIARY SECTION 6.1. Obligations of Merger Subsidiary.................................................................22 SECTION 6.2. Voting of Shares.................................................................................22 SECTION 6.3. Indemnification..................................................................................22 ARTICLE VII ADDITIONAL AGREEMENTS SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification................................................22 SECTION 7.2. Public Announcements.............................................................................24 SECTION 7.3. Confidentiality..................................................................................24 ARTICLE VIII CONDITIONS TO THE MERGER SECTION 8.1. Conditions to the Obligations of Each Party......................................................24 ARTICLE IX TERMINATION SECTION 9.1. Termination......................................................................................25 SECTION 9.2. Effect ofTermination.............................................................................26 ARTICLE X GENERAL PROVISIONS SECTION 10.1. Nonsurvival of Representations and Warranties...................................................26 SECTION 10.2. Notices.........................................................................................26 SECTION 10.3. Amendments; No Waivers..........................................................................27 SECTION 10.4. Fees and Expenses...............................................................................27 SECTION 10.5. Successors and Assigns..........................................................................28
-iii- SECTION 10.6. Governing Law...................................................................................28 SECTION 10.7. Counterparts; Effectiveness; Interpretation.....................................................29 SECTION 10.8. Enforcement.....................................................................................29 SECTION 10.9. Severability....................................................................................29 SECTION 10.10 Entire Agreement; No Third Party Beneficiaries..................................................29
-iv- AGREEMENT AND PLAN OF MERGER dated as of February 5, 1999 among COMPUTER ASSOCIATES INTERNATIONAL, INC., a Delaware corporation ("Parent"), THEBETTERPLAN ("TBP"), INC., a Florida corporation and a wholly owned subsidiary of Parent ("Merger Subsidiary"), and COMPUTER MANAGEMENT SCIENCES, INC., a Florida corporation (the "Company"). The parties agree as follows: ARTICLE I THE OFFER SECTION 1.1. THE OFFER. (a) Provided that nothing shall have occurred that would result in a failure to satisfy any of the conditions set forth in Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the date hereof, but in no event later than five business days following the public announcement of the terms of this Agreement, commence an offer (the "Offer") to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of the Company at a price of $28.00 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 and to make any change in the terms or conditions of the Offer; PROVIDED that, without the written consent of the Company, no change may be made which changes the form of consideration to be paid, decreases the price per Share or the number of Shares sought in the Offer, imposes conditions to the Offer in addition to those set forth in Annex I, changes or waives the Minimum Condition, extends the Offer (except as set forth in the following sentence), or makes any other change to any condition to the Offer set forth in Annex I which is materially adverse to the holders of Shares. Subject to the terms of the Offer in this Agreement and the satisfaction (or waiver to the extent permitted by this Agreement) of the conditions to the Offer, Merger Subsidiary shall accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the applicable expiration date of the Offer and shall pay for all such Shares promptly after acceptance; PROVIDED that Merger Subsidiary may extend the Offer if, at the scheduled expiration date of the Offer or any extension thereof any of the conditions to the Offer shall not have been satisfied, until such time as such conditions are satisfied or waived, and Merger Subsidiary may extend the Offer for a further period of time of not more than 20 business days to meet the objective (which is not a condition to the Offer) that there be validly tendered, in accordance with the terms of the Offer, prior to the expiration date of the Offer (as so extended) and not withdrawn a number of Shares, which together with Shares then owned by Parent and Merger Subsidiary, represents at least 80% of the Fully Diluted Shares. (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 a reasonable opportunity to review and comment on the Schedule 14D-l prior to its being filed with the SEC. SECTION 1.2. COMPANY ACTION. (a) The Company hereby consents to the Offer and represents that its Board of Directors, at a meeting duly called and held, has (i) unanimously determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger (defined below in Section 2.1), and the Stockholder Option Agreement, dated as of February 5, 1999 (the "Stockholder Option Agreement"), among the stockholders of the Company that are named therein ("Stockholders") and Merger Subsidiary, and the transactions contemplated thereby, 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, and the Stockholder Option Agreement and the transactions contemplated thereby, which approval satisfies in full the requirements of Sections 607.0901 and 607.0902 of the General Corporation Act of the State of Florida (the "Florida 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 The Robinson-Humphrey Company LLC has delivered to the Company's Board of Directors its opinion that the consideration to be paid in the Offer and the Merger is fair to the holders of Shares from a financial point of view. The Company has been advised that all of its directors and executive officers presently intend either to tender their Shares pursuant to the Offer or to vote in favor of the Merger. The Company will promptly furnish Parent and Merger Subsidiary with a list of its stockholders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, in each case as of the most recent practicable date, and will provide to Parent and Merger Subsidiary such additional information (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Parent or Merger Subsidiary may reasonably request in connection with the Offer. (b) As soon as practicable on the day that the Offer is commenced the Company will file with the SEC and disseminate to holders of Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of the Company's Board of Directors referred to above, subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Holland & Knight LLP, counsel to the Company. The Company, Parent and Merger Subsidiary each agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect. The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to its being filed with the SEC. SECTION 1.3. DIRECTORS. (a) Effective upon the acceptance for payment by Merger Subsidiary of a majority of the Shares pursuant to the Offer, Parent shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors (giving effect to the election of any additional directors pursuant to this Section) and (ii) the percentage that the number of Shares owned by Parent or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all action necessary to cause Parent's designees to be elected or appointed to the Company's Board of Directors, including, -2- without limitation, increasing the number of directors, or seeking and accepting resignations of incumbent directors, or both; PROVIDED that, after the acceptance for payment and prior to the Effective Time (defined below in Section 2.1(b)), the Company's Board of Directors shall always have one member who is neither a designee nor an affiliate of Parent or Merger Subsidiary nor an employee of the Company (an "Independent Director"). If the number of Independent Directors is reduced below one for any reason prior to the Effective Time, the departing Independent Director shall be entitled to designate a person to fill such vacancy. No action proposed to be taken by the Company to amend or terminate this Agreement or waive any action by Parent or Merger Subsidiary shall be effective without the approval of the Independent Director. At such times, the Company will use its best efforts to cause individuals designated by Parent to constitute the same percentage as such individuals represent on the Company's Board of Directors of (x) each committee of the Board, (y) each board of directors of each subsidiary (defined below in Section 4.1(a)) and (z) each committee of each such board. (b) The Company's obligations to appoint designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act (defined below in Section 4.1(d)) and Rule 14f-l promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-l in order to fulfill its obligations under this Section 1.3 and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-l to fulfill its obligations under this Section 1.3. Parent will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. ARTICLE II THE MERGER SECTION 2.1. THE MERGER. (a) At the Effective Time, Merger Subsidiary shall be merged (the "Merger") with and into the Company in accordance with the Florida Law, whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation"). (b) As soon as practicable after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, the Company and Merger Subsidiary will file articles of merger with the Department of State of the State of Florida and make all other filings or recordings required by Florida Law in connection with the Merger. The Merger shall become effective at such time as the articles of merger are duly filed with the Department of State of the State of Florida or, with the consent of the Independent Director, at such later time as is specified in the articles 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 Florida 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 -3- 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 $28.00 in cash or any higher price paid for each Share in the Offer, without interest (the "Merger Consideration"). SECTION 2.3. SURRENDER AND PAYMENT. (a) Prior to the Effective Time, Parent shall appoint a bank or trust company (the "Exchange Agent") for the purpose of exchanging certificates representing Shares for the Merger Consideration. Parent will make available to the Exchange Agent, as needed, the Merger Consideration to be paid in respect of the Shares (the "Exchange Fund"). For purposes of determining the Merger Consideration to be made available, Parent shall assume that no holder of Shares will perfect his right to appraisal of his Shares. Promptly after the Effective Time, Parent will send, or will cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal for use in such exchange (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the certificates representing Shares to the Exchange Agent). The Exchange Agent shall, pursuant to irrevocable instructions, make the payments provided in this Section 2.3. The Exchange Fund shall not be used for any other purpose, except as provided in this Agreement. (b) Each holder of Shares that have been converted into a right to receive the Merger Consideration, upon surrender to the Exchange Agent of a certificate or certificates representing such Shares, together with a properly completed letter of transmittal covering such Shares and such other documents as may be reasonably requested, will be entitled to receive the Merger Consideration payable in respect of such Shares. Until so surrendered, each such certificate shall, after the Effective Time, represent for all purposes, only the right to receive such Merger Consideration. (c) If any portion of the Merger Consideration is to be paid to a person other than the registered holder of the Shares represented by the certificate or certificates surrendered in exchange therefor, it shall be a condition to such payment that the certificate or certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such Shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. For purposes of this Agreement, "person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. (d) After the Effective Time, there shall be no further registration of transfers of Shares. If, after the Effective Time, certificates representing Shares are presented to the Surviving Corporation, they shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article II. (e) Any portion of the Exchange Fund made available to the Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by the holders of Shares six months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged his Shares for the Merger Consideration in accordance with this Section 2.3 prior to that time shall thereafter look only to Parent for payment of the Merger Consideration in respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable to any holder of Shares for any amount paid to a public official pursuant to applicable abandoned property laws. Any amounts remaining unclaimed by holders -4- of Shares immediately prior to such time as such amounts would otherwise escheat to or become property of any governmental entity shall, to the extent permitted by applicable law, become the property of Parent free and clear of any claims or interest of any person previously entitled hereto. (f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which appraisal rights have been perfected shall be returned to Parent, upon demand. SECTION 2.4. DISSENTING SHARES. Notwithstanding Section 2.2, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Florida Law shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. If after the Effective Time such holder fails to perfect or withdraws or loses his right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of Shares, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. SECTION 2.5. STOCK OPTIONS. (a) The Company shall amend each of the Company's Stock Plans (defined below) to provide that, at the Effective Time, each of the then outstanding Company Options (defined below), whether vested or unvested in accordance with the relevant Stock Plans and stock option agreements, shall by virtue of the Merger, and without any further action on the part of any holder thereof, be assumed by Parent and converted into an option to purchase that number of shares of common stock, par value $.10 per share ("Parent Common Stock"), of Parent determined by multiplying the number of Shares subject to such Company Option at the Effective Time by the quotient obtained by dividing (x) $28.00 by (y) the average closing price of Parent Common Stock on the New York Stock Exchange Composite Tape for the 30 consecutive trading days immediately prior to the Effective Time (such quotient, the "Conversion Number"), at an exercise price per share of Parent Common Stock equal to the quotient obtained by dividing (x) the exercise price per Share of such Company Option immediately prior to the Effective Time by (y) the Conversion Number. If the foregoing calculation results in an assumed Company Option being exercisable for a fraction of a share of Parent Common Stock, then the number of shares of Parent Common Stock subject to such option shall be rounded down to the nearest whole number of shares. The term, exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder (the "Code"), if applicable, and all other terms and conditions of Company Options will, to the extent permitted by law and otherwise reasonably practicable, be unchanged. Continuous employment with the Company or any of its subsidiaries shall be credited to the optionee for purposes of determining the vesting of the number of shares of Parent Common Stock subject to exercise under the optionee's assumed Company Option after the Effective Time. "Company Options" means any option granted, and not exercised or expired, to a current or former employee, director or independent contractor of the Company or any of its subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock option, stock bonus, stock award, or stock purchase plan, program, or arrangement of the Company or any of its subsidiaries or any predecessor thereof (collectively, the "Stock Plans") or any other contract or agreement entered into by the Company or any of its subsidiaries. (b) Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery pursuant to the terms set forth in this Section 2.5. Parent shall cause the shares of Parent Common Stock issuable upon exercise of the assumed Company Options to be registered, or to be issued pursuant to a then effective registration statement, -5- no later than 90 days after the Effective Time on Form S-8 promulgated by the SEC and shall use its best efforts to maintain the effectiveness of such registration statement or registration statements for so long as such assumed Company Options remain outstanding. With respect to those individuals who subsequent to the Merger will be subject to the reporting requirements under Section 16(a) of the Exchange Act, Parent shall administer the Company Options assumed pursuant to this Section 2.5 in a manner that complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but shall have no responsibility for such compliance by the Company or its predecessors. (c) Paragraphs (a) and (b) of this Section 2.5 notwithstanding, the Company shall further amend the Stock Plans to provide holders of Company Options, which Company Options are then vested and exercisable (including Company Options which became vested and exercisable in accordance with the relevant Stock Plans and stock option agreements as a result of the consummation of the Offer or the Merger), the opportunity to elect to receive cash in an amount set forth below in exchange for each vested and exercisable Company Option. Pursuant to such amendment, Parent and the Company shall take all actions necessary to provide that, as to those holders who so elect, at or immediately prior to the Effective Time, (i) each vested and exercisable Company Option, so surrendered for cash, shall be cancelled and (ii) in consideration of such cancellation, and except to the extent that Parent and the holder of any such Company Option otherwise agree, the Company shall pay to each such holder of Company Options an amount in cash in respect thereof equal to the product of (1) the excess of the Merger Consideration over the exercise price thereof and (2) the number of Shares subject thereto. ARTICLE III THE SURVIVING CORPORATION SECTION 3.1. CERTIFICATE OF INCORPORATION. The certificate of incorporation of Merger Subsidiary in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law, except that the name of the Surviving Corporation shall be changed to the name of the Company. SECTION 3.2. BYLAWS. The bylaws of Merger Subsidiary in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable law. SECTION 3.3. DIRECTORS AND OFFICERS. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (i) the directors of Merger Subsidiary at the Effective Time shall be the directors of the Surviving Corporation, and (ii) the officers of the Merger Subsidiary at the Effective Time shall be the officers of the Surviving Corporation. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Parent and Merger Subsidiary as follows: (a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company and each of its 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 subsidiaries is duly -6- 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 condition (financial or otherwise), business, assets, results of operations or prospects of 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 Articles of Incorporation and By-Laws and the certificates of incorporation and by-laws of its Significant Subsidiaries, 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 subsidiary have been validly issued and are fully paid and nonassessable and are owned by the Company, by another subsidiary of the Company or by the Company and another such subsidiary, free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens") and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock (other than restrictions under applicable securities laws)). Except for the capital stock of its subsidiaries, the Company does not own, directly or indirectly, any capital stock or other ownership interest in any person. (c) CAPITAL STRUCTURE. The authorized capital stock of the Company consists of 40,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $.01 per share (the "Preferred Stock"). At the time of execution of this Agreement, (i) 14,644,054 shares of Common Stock were issued and outstanding, (ii) no shares of Preferred Stock were issued and outstanding, (iii) no shares of Common Stock were held by the Company in its treasury or by any of the Company's subsidiaries, and (iv) 2,556,785 shares of Common Stock were reserved for issuance pursuant to the Stock Plans. Except as set forth above, at the time of execution of this Agreement, no shares of capital stock or other voting securities of the Company are issued, reserved for issuance or outstanding. All outstanding shares of capital stock of the Company are, and all shares which may be issued pursuant to the Stock Plans will be, when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. 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. The Company has delivered to Parent complete -7- and correct copies of the Stock Plans and all forms of Company Options. Section 4.1(c) of the Disclosure Schedule sets forth a complete and accurate list of all Company Options outstanding as of the date of this Agreement and the exercise price of each outstanding Company Option. (d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite corporate power and authority to enter into this Agreement and, except for any required approval by the Company's stockholders in connection with the consummation of the Merger, to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Company, except for any required approval by the Company's stockholders in connection with the consummation of the Merger. This Agreement has been duly executed and delivered by the Company and, assuming this Agreement constitutes a valid and binding agreement of Parent and Merger Subsidiary, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its subsidiaries under, (i) the Articles of Incorporation or By-Laws of the Company or the comparable charter or organizational documents of any of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to the Company or any of its subsidiaries or their respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its subsidiaries or their respective properties or assets, other than, in the case of clause (ii) or (iii) above, any such conflicts, violations, defaults, rights or Liens that individually or in the aggregate could not reasonably be expected to (A) have a Material Adverse Effect, (B) impair the ability of the Company to perform its obligations under this Agreement or (C) prevent or materially delay consummation of any of the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with or exemption by (collectively, "Consents") any federal, state or local government or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign (a "Governmental Entity"), is required by or with respect to the Company or any of its subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated by this Agreement, except for (i) the filing of a premerger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii) compliance with any applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act"), (iii) the filing of articles of merger in accordance with Florida Law and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, and (iv) such other consents, approvals, orders, authorizations, registrations, declarations and filings 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 January 1, 1996 (the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended, and the rules and regulations thereunder (the "Securities Act"), or the Exchange Act, as the case may be, applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement -8- 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 in all material respects the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the Company Filed SEC Documents (defined below in Section 4.1(g)), neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) and there is no existing condition, situation or set of circumstances which are required by generally accepted accounting principles to be set forth on a consolidated balance sheet of the Company and its consolidated subsidiaries or in the notes thereto, except for liabilities which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (f) DISCLOSURE DOCUMENTS. (i) Each document required to be filed by the Company with the SEC in connection with the transactions contemplated by this Agreement (the "Company Disclosure Documents"), including, without limitation, the Schedule 14D-9, the proxy or information statement of the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in connection with the Merger, and any amendments or supplements thereto will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act. (ii) At the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time such stockholders vote on adoption of this Agreement, the Company Proxy Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. At the time of the filing of any Company Disclosure Document other than the Company Proxy Statement and at the time of any distribution thereof, such Company Disclosure Document will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 4.1(f)(ii) will not apply to statements or omissions included in the Company Disclosure Documents based upon information furnished to the Company in writing by Parent or Merger Subsidiary specifically for use therein. (iii) The information with respect to the Company or any subsidiary that the Company furnishes to Parent or Merger Subsidiary in writing specifically for use in the Offer Documents will not, at the time of the filing thereof, at the time of any distribution thereof and at the time of the consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the SEC Documents filed and publicly available prior to the date of this Agreement (the "Company Filed SEC Documents"), since December 31, 1997, 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 -9- cash, stock or property) with respect to any of the Company's capital stock or any repurchase, redemption or other acquisition by the Company or any of its subsidiaries of any outstanding shares of capital stock or other securities of the Company or any of its subsidiaries, (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iv) (A) any granting by the Company or any of its subsidiaries to any current or former director, officer or employee of the Company or any of its subsidiaries of any increase in compensation or benefits or severance or termination pay or benefits, except in the ordinary course of business consistent with past practice or as was required under employment, severance or termination agreements or plans in effect as of December 31, 1997, or (B) any entry by the Company or any of its subsidiaries into any employment, deferred compensation, severance or termination agreement with any such current or former director, officer or employee, except in the ordinary course of business consistent with past practice, (v) any damage, destruction or loss, whether or not covered by insurance, that has had or could have a Material Adverse Effect, (vi) any change in accounting methods, principles or practices by the Company or any of its subsidiaries, (vii) any amendment of any material term of any outstanding security of the Company or any of its subsidiaries, (viii) any incurrence, assumption or guarantee by the Company or any of its subsidiaries of any indebtedness for borrowed money other than in the ordinary course of business consistent with past practice, but in no event in the amount of more than $100,000 in the aggregate, (ix) any creation or assumption by the Company or any of its subsidiaries of any Lien on any asset other than in the ordinary course of business consistent with past practice, but in no event in the amount of more than $100,000 for any one transaction or $500,000 in the aggregate, (x) any making of any loan, advance or capital contributions to or investment in any person other than in the ordinary course of business consistent with past practice, but in no event in the amount of more than $100,000 for any one transaction or $500,000 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 this Agreement, but in no event representing commitments on behalf of the Company or any of its subsidiaries of more than $100,000 for any transaction or $500,000 for any series of transactions, (xii) any material labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any of its subsidiaries, which employees were not subject to a collective bargaining agreement at December 31, 1997, or any material lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees or (xiii) any agreement, commitment, arrangement or undertaking by the Company or any of its subsidiaries to perform any action described in clauses (i) through (xii). (h) LITIGATION. Except as disclosed in the Company Filed SEC Documents or in Section 4.1(h) of the Disclosure Schedule, there is no suit, action or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries that, individually or in the aggregate, could reasonably be expected to (i) have a Material Adverse Effect, (ii) impair the ability of the Company to perform its obligations under this Agreement or (iii) prevent or materially delay the consummation of the Offer, the Merger or any of the other transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its subsidiaries having, or which, insofar as reasonably can be foreseen, in the future would have, any such effect. Section 4.1(h) of the Disclosure Schedule sets forth, with respect to any pending suit, action or proceeding to which the Company or any its subsidiaries is a party and which involves claims which if adversely determined -10- would exceed $250,000, the forum, the parties thereto, the subject matter thereof and the amount of damages claimed. (i) ABSENCE OF CHANGES IN STOCK AND BENEFIT PLANS. Since December 31, 1997, 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 or any other options to purchase Shares or stock of any subsidiary of the Company (including any discretionary acceleration of the exercise periods or vesting by the Company's Board of Directors or any committee thereof or any other persons administering a Stock Plan) or authorization of cash payments in exchange for any Company Options, restricted stock, stock bonus or other awards granted under any of such Stock Plans or any other options to purchase Shares or stock of any subsidiary of the Company; or (ii) any adoption or amendment by the Company or any of its subsidiaries of any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, stock appreciation right, retirement, vacation, severance, disability, death benefit, hospitalization, medical, workers' compensation, supplementary unemployment benefits or other plan, arrangement or understanding providing benefits to any current or former employee, officer or director of the Company or any of its subsidiaries or any beneficiary thereof entered into, maintained or contributed to, as the case may be, by the Company or any of its subsidiaries (collectively, "Benefit Plans"), other than immaterial amendments to any such Benefit Plan. (j) PARTICIPATION AND COVERAGE IN BENEFIT PLAN. There has been no written interpretation or announcement (whether or not written) by the Company or any of its subsidiaries relating to, or change in employee participation or coverage under, any Benefit Plan which would increase (other than in an immaterial manner) the expense of maintaining such Benefit Plan above the level of the expense incurred in respect thereof for the fiscal year ended on December 31, 1997. (k) ERISA COMPLIANCE. (i) Section 4.1(k) of the Disclosure Schedule contains a list and brief description of (A) all "employee pension benefit plans" (defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), "employee welfare benefit plans" (defined in Section 3(l) of ERISA) and all other Benefit Plans maintained, or contributed to, by the Company or any of its subsidiaries or ERISA affiliates (defined below) for the benefit of any current or former employees, officers or directors of the Company or any of its subsidiaries or ERISA affiliates or under which the Company or any of its subsidiaries or ERISA affiliates has any liability other than Benefit Plans exempt from Title I of ERISA pursuant to Section 4(b)(4) of ERISA and (B) all Benefit Plans maintained outside of the United States primarily for the benefit of persons substantially all of whom are non-resident aliens with respect to the United States. For purposes of this Agreement, "ERISA affiliate" of the Company means any person which, together with the Company or any of its subsidiaries, would be treated as a single employer under Section 414 of the Code. The only Benefit Plans described in clause (A) of the preceding sentence which 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 material deficit or material unfunded actuarial liability. Any Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified and, to the Company's knowledge, nothing has occurred to cause the loss of such qualified status. -11- (iii) No Benefit Plan is covered by Title IV of ERISA or Section 412 of the Code. Neither the Company nor any of its subsidiaries has incurred or expects to incur any liability under Title IV of ERISA or any liability or penalty under Section 4975 or 4980B of the Code or Section 502(i) of ERISA. (iv) Except as disclosed in Section 4.1(k)(iv) of the Disclosure Schedule, there are no pending or anticipated claims against or otherwise involving any of the Benefit Plans and no suit, action or other litigation has been brought against or with respect to any Benefit Plan (excluding, in each case, claims for benefits incurred in the ordinary course of Benefit Plan activities). (v) All 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 required by law or as disclosed in Section 4.1(k)(vi) of the Disclosure Schedule, neither the Company nor any of its subsidiaries has any 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. (i) The Company and each of its subsidiaries have timely filed all tax returns, statements, reports and forms required to be filed with any tax authority and in accordance with all applicable laws. All such tax returns are correct and complete in all respects. All taxes owed by the Company and any of its subsidiaries (whether or not shown on any tax return) have been paid. There are no 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. (iii) Neither the Company nor any of its subsidiaries expects any authority to assess any additional taxes against the Company or any of its subsidiaries for any period for which tax returns have been filed. No dispute or claim concerning any tax liability of the Company or any of its subsidiaries has been proposed or claimed in writing by any authority. The Company has provided Parent with a list of all Federal, state, local, and foreign income tax returns filed with respect to the Company and any of its subsidiaries for taxable periods ended on or after December 31, 1995, indicating those tax returns that have been audited, and indicating those tax returns that currently are the subject of audit. The Company has provided Parent with correct and complete copies of all its Federal income tax returns, and examination reports, and statements of deficiencies assessed against or agreed to by the Company and any of its subsidiaries since December 31, 1995. (iv) Neither the Company nor any of its subsidiaries has waived any statute of limitations in respect of taxes or agreed to any extension of time with respect to a tax assessment or deficiency. (v) Neither the Company nor any of its subsidiaries has filed a consent pursuant to Section 341(f) of the Code concerning collapsible corporations. Neither the Company nor any of its subsidiaries is a party to any tax allocation or sharing agreement. Neither the Company nor any of its subsidiaries has any 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 -12- income tax return) under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (vi) As of the date of the most recent financial statements included in the Company Filed SEC Documents, the unpaid taxes of the Company and its subsidiaries did not exceed the liability for taxes (rather than any reserve for deferred taxes established to reflect timing differences between book and tax income) set forth on the face of such financial statements. (vii) Neither the Company nor any of its subsidiaries is required to include in income any adjustment pursuant to Section 481(a) of the Code (or similar provisions of other law or regulations) in its current or in any future taxable period by reason of a change in accounting method; nor does the Company or any of its subsidiaries have any knowledge that the Internal Revenue Service (or other taxing authority) has proposed or is considering proposing, any such change in accounting method. Neither the Company nor any of its subsidiaries is a party to any agreement, contract, or arrangement that, individually or collectively, could give rise to the payment of any amount (whether in cash or property, including Shares) that would not be deductible pursuant to the terms of Sections 162(a)(1), 162(m), 162(n) or 280G of the Code. (m) STATE TAKEOVER STATUTES. The Board of Directors of the Company has unanimously approved this Agreement, the Stockholder Option Agreement and the transactions contemplated hereby and thereby including, without limitation, the Offer and the Merger, and such approval is sufficient to render inapplicable to this Agreement, the Stockholder Option Agreement and the transactions contemplated hereby and thereby including, without limitation, the Offer and the Merger, the provisions of Sections 607.0901 and 607.0902 of Florida Law. To the best of the Company's knowledge, no other "fair price", "moratorium", "control share acquisition", or other anti-takeover statute or similar statute or regulation, applies or purports to apply to the Offer, the Merger, this Agreement or any of the other transactions contemplated hereby or thereby. (n) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment banker, financial advisor or other person, other than The Robinson-Humphrey Company LLC, the fees and expenses of which will be paid by the Company (and a copy of whose engagement letters and a calculation of the fees that would be due thereunder has been provided to Parent), is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its subsidiaries. Assuming consummation of the Offer and the Merger, no such engagement letter obligates the Company to continue to use their services or pay fees or expenses in connection with any future transaction. (o) PERMITS; COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i) 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 material respects with all applicable statutes, laws or material ordinances, regulations, rules, judgments, decrees or orders of any Governmental Entity, and neither the Company nor any of its subsidiaries has received any notice from any Governmental Entity or any other person that either the Company or any of its subsidiaries is in violation of, or has violated, in any material respect any applicable statutes, laws or material ordinances, regulations, rules, judgments, decrees or orders. -13- (ii) Neither the Company nor any of its subsidiaries has (i) placed, held, located, released, transported or disposed of any Hazardous Substance (as defined below) on, under, from or at any of the Company's or any of its subsidiaries' properties or any other properties, other than in a manner that could not, in all such cases taken individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (ii) any knowledge of the presence of any Hazardous Substances that have been released into the environment on, under or at any of the Company's or any of its subsidiaries' properties other than that which could not reasonably be expected to have or result in a Material Adverse Effect, or (iii) received any written notice (A) of any violation of any applicable statute, law, ordinance, regulation, rule, judgment, decree or order of any Governmental Entity relating to any matter of pollution, protection of the environment or environmental regulation or control or regarding Hazardous Substances (collectively, "Environmental Laws") that has not been resolved or settled with the relevant Governmental Entity, (B) of the institution or pendency of any suit, action, claim, proceeding or investigation by any Governmental Entity or any third party in connection with any such violation, (C) requiring the response to or remediation of Hazardous Substances at or arising from any of the Company's or any of its subsidiaries' properties or any other properties, (D) alleging non-compliance by the Company or any of its subsidiaries with the terms of any permit required under any Environmental Law in any manner reasonably likely to require material expenditures or to result in material liability or (E) demanding payment for response to or remediation of Hazardous Substances at or arising from any of the Company's or any of its subsidiaries' properties or any other properties. For purposes of this Agreement, the term "Hazardous Substance" shall mean any material defined as toxic or hazardous, including any petroleum and petroleum products, under any applicable Environmental Law. (p) CONTRACTS; DEBT INSTRUMENTS. (i) Except as otherwise disclosed in Section 4.1(p)(i) 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 $100,000 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 $50,000 or $150,000, respectively, and is not terminable by it or its subsidiary on 30 days' notice or less without penalty or obligation to make payments related to such termination; (B) any joint venture contract or arrangement or any other agreement which has involved or is expected to involve a sharing of revenues of $100,000 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 $100,000; (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 other transactions contemplated hereby; (E) any agreement, contract, policy, license, Permit, document, instrument, arrangement or commitment that limits in any material respect the freedom of the Company or any subsidiary of the Company to compete in any line of business or with any person or in any -14- geographic area or which would so limit in any material respect the freedom of the Company or any subsidiary of the Company after the Effective Time; or (F) any other agreement, contract, policy, license, Permit, document, instrument, arrangement or commitment not made in the ordinary course of business which is material to the Company and its subsidiaries taken as a whole. (ii) Neither the Company nor any subsidiary of the Company is in default in any material respect under the terms of any exclusive license or distribution agreement or arrangement that, by its terms, provides for payments to the Company or any of its subsidiaries of $100,000 or more per annum or any other material license or distribution agreement or arrangement, true and complete copies or descriptions of all of which have been delivered to Parent. To the knowledge of the Company, none of the parties to any of the contracts identified in Section 4.1(p)(i) 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 $100,000 is outstanding or may be incurred and (B) the respective principal amounts currently outstanding thereunder. For purposes of this Section 4.1(p)(iii), "indebtedness" shall mean, with respect to any person, without duplication, (A) all obligations of such person for borrowed money, or with respect to deposits or advances of any kind to such person, (B) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (C) all obligations of such person upon which interest charges are customarily paid, (D) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person, (E) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding obligations of such person to creditors for raw materials, inventory, services and supplies incurred in the ordinary course of such person's business), (F) all capitalized lease obligations of such person, (G) all obligations of others secured by any Lien on property or assets owned or acquired by such person, whether or not the obligations secured thereby have been assumed, (H) all obligations of such person under interest rate or currency swap transactions (valued at the termination value thereof), (I) all letters of credit issued for the account of such person (excluding letters of credit issued for the benefit of suppliers to support accounts payable to suppliers incurred in the ordinary course of business), (J) all obligations of such person to purchase securities (or other property) which arises out of or in connection with the sale of the same or substantially similar securities or property, and (K) all guarantees and arrangements having the economic effect of a guarantee of such person of any indebtedness of any other person. (q) OPINION OF FINANCIAL ADVISOR. The Company has received the opinion of The Robinson-Humphrey Company LLC, dated the date hereof, a copy of which has been or, within two business days of the date hereof, will be provided to Parent, to the effect that, as of such date, the consideration to be paid in the Offer and the Merger is fair to the Company's stockholders from a financial point of view. (r) INTERESTS OF OFFICERS AND DIRECTORS. None of the Company's or any of its subsidiaries' officers or directors has direct or indirect 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 -15- of a stockholder and rights under existing employee benefit plans and except for any such interest which would not be required to be disclosed under the Exchange Act. (s) TECHNOLOGY. (i) The Company exclusively owns, or is licensed to use, without restriction (other than as set forth in Section 4.1(s)(i) of the Disclosure Schedule), the rights to all patents, trademarks, trade names, service marks, copyrights and any applications therefor, maskworks, net lists, schematics, inventories, technology, trade secrets, source codes, know-how, computer software programs or applications and tangible or intangible proprietary information or material that in any material respect are used or proposed 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(s)(i) of the Disclosure Schedule lists: (A) all 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 any foreign offices; 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, and includes the identities of the parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. 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(s)(i) of the Disclosure Schedule. (ii) No claims with respect to the Company Intellectual Property Rights have been asserted or, to the knowledge of the Company, are threatened by any person nor does the Company or any subsidiary of the Company know of any valid grounds for any bona fide claims (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 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. All granted and issued patents and all registered trademarks and service marks listed in Section 4.1(s)(i) of the Disclosure Schedule and all copyrights held by the Company or any of its subsidiaries are valid, enforceable and subsisting. To the Company's knowledge, there has not been and there is not any material unauthorized use, infringement or misappropriation of any of the Company Intellectual Property Rights by any third party, employee or former employee. (iii) No Company Intellectual Property Right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting in any manner the licensing thereof by the Company or any of its subsidiaries. Neither the Company nor any of its subsidiaries has entered into any agreement to indemnify any other person against any charge of infringement of any Company Intellectual Property Right. 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 the Company Intellectual Property Rights. (t) CHANGE OF CONTROL. Except as set forth in Section 4.1(i), 4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (i) result in or increase the amount of any payment or benefit (including a payment or benefit contingent on the occurrence of one or more events including, without limitation, termination of employment) becoming due to any current or former employee, director or -16- independent contractor of the Company or any of its subsidiaries, from the Company or any of its subsidiaries under the terms of any Stock Plan, Benefit Plan, agreement or otherwise, or (ii) result in the acceleration of the time of payment, exercise or vesting of any such payment or benefits. Pursuant to the terms of the relevant stock option agreements, all then outstanding Company Options will immediately vest and become exercisable in connection with the consummation of the Offer. 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 jurisdiction of its incorporation 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 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 of any Governmental Entity is required by or with respect to Parent, Merger Subsidiary or any other subsidiary of Parent in connection with the execution and delivery of this Agreement or the consummation by Parent or Merger Subsidiary, as the case may be, of any of the transactions contemplated by this Agreement, except for (i) the filing of a premerger notification and report form under the HSR Act, (ii) compliance with any applicable requirements of the Exchange Act, (iii) the filing of articles of merger in accordance with Florida Law and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business and (iv) 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 on Parent and its subsidiaries taken as a whole or (y) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. -17- (c) DISCLOSURE DOCUMENTS. (i) The information with respect to Parent and its subsidiaries that Parent furnishes to the Company in writing specifically for use in any Company Disclosure Document will not contain, any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (A) in the case of the Company Proxy Statement at the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time the stockholders vote on adoption of this Agreement, and (B) in the case of any Company Disclosure Document other than the Company Proxy Statement, at the time of the filing thereof and at the time of any distribution thereof. (ii) The Offer Documents, when filed, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not at the time of the filing thereof, at the time of any distribution thereof or at the time of consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, PROVIDED, that this representation and warranty will not apply to statements or omissions in the Offer Documents based upon information furnished to Parent or Merger Subsidiary in writing by the Company specifically for use therein. ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1. CONDUCT OF BUSINESS. During the period from the date of this Agreement to the Effective Time, the Company shall, and shall cause its subsidiaries to, carry on their respective businesses in the ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent therewith, use all reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to, without the prior written approval of Parent: (a) (i) declare, set aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock, other than dividends and distributions by any direct or indirect wholly owned subsidiary of the Company to its parent, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (other than in connection with the exercise of Company Options); (b) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than the issuance of Shares upon the exercise of Company Options outstanding on the date of this Agreement in accordance with their terms on such date); (c) amend its articles or certificate of incorporation, by-laws or other comparable charter or organizational documents; -18- (d) acquire or agree to acquire (including, without limitation, by merger, consolidation or acquisition of stock or assets) any business, including through the acquisition of any interest in any corporation, partnership, joint venture, association or other business organization or division thereof; (e) (i) mortgage or otherwise encumber or subject to any Lien, any of the Company Intellectual Property Rights or any other material properties or assets, (ii) except in the ordinary course of business consistent with past practice and pursuant to existing contracts or commitments, sell, lease, transfer or otherwise dispose of any of the Company Intellectual Property Rights or any other material properties or assets, or (iii) except in the ordinary course of business consistent with past practice or pursuant to existing contracts or commitments, license any of the Company Intellectual Property Rights; (f) make or agree to make any new capital expenditures in excess of $100,000, except pursuant to existing commitments which are set forth in Section 5.1 of the Disclosure Schedule; (g) make any material tax election (unless required by law) or settle or compromise any material income tax liability; (h) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice and in accordance with their terms, of (i) liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company Filed SEC Documents or (ii) liabilities incurred in the ordinary course of business consistent with past practice; or, subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Holland & Knight LLP, counsel to the Company, waive the benefits of, or agree to modify in any manner, any confidentiality, standstill, non-competition or similar agreement to which the Company or any of its subsidiaries is a party; (i) commence a lawsuit other than (i) for the routine collection of bills or (ii) to enforce this Agreement or (iii) in such cases where the Company in good faith determines that the failure to commence suit would result in a material impairment of a valuable aspect of the Company's business, provided that the Company consults with Parent prior to filing such suit; (j) (i) enter into or amend any employment agreement, (ii) enter into any agreement pursuant to which the Company or any of it subsidiaries will provide services for a term of more than 30 days at a fixed or capped price or otherwise pursuant to terms that are not consistent with agreements entered into by the Company or any of its subsidiaries in the ordinary course of business, (iii) enter into any customer sale or license agreement with non-standard terms or at discounts from list prices in excess of 10%, (iv) pay commissions to sales employees except on the basis of executed customer contracts with respect to products actually delivered to customers, (v) enter into any contracts or series of related contracts in excess of $250,000, (vi) enter into or amend any agreement or arrangement for professional services or advice, (vii) enter into any customer agreements providing for product replacements or (viii) make any determination as to amounts payable under any plan, arrangement, or agreement, providing for discretionary incentive compensation or bonus to any officer, director, employee or independent contractor of the Company or any of its subsidiaries; (k) authorize any of, or commit or agree to take any of, the foregoing actions; or (l) (i) take or agree or commit to take any action that would make any representation or warranty of the Company hereunder inaccurate in any respect at, or as of any time prior to, the -19- Effective Time or (ii) omit or agree or commit to omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. SECTION 5.2. STOCKHOLDER MEETING; PROXY MATERIAL. The Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable following Merger Subsidiary's acquisition of Shares in the Offer for the purpose of voting on the approval and adoption of this Agreement and the Merger unless a vote of stockholders of the Company is not required by Florida Law. The Directors of the Company shall, subject to their fiduciary duties as advised in writing by Holland & Knight LLP, 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 Holland & Knight LLP, counsel to the Company, will use its best efforts to obtain the necessary approvals by its stockholders of this Agreement and the transactions contemplated hereby and (iii) will otherwise comply with all legal requirements applicable to such meeting. SECTION 5.3. ACCESS TO INFORMATION. From the date hereof until the Effective Time, the Company will give Parent, its counsel, financial advisors, auditors and other authorized representatives access (during normal business hours and upon reasonable notice) to the offices, properties, books and records of the Company and the subsidiaries, will furnish to Parent, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such persons may reasonably request and will instruct the Company's employees, counsel and financial advisors to cooperate with Parent in its investigation of the business of the Company and the subsidiaries; PROVIDED that no investigation pursuant to this Section 5.3 shall affect any representation or warranty given by the Company to Parent hereunder. SECTION 5.4. OTHER OFFERS. Until the termination of this Agreement, the Company and its subsidiaries will not, and will not authorize or permit the officers, directors, employees or other agents of the Company and its subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal (defined below) or (ii) subject to the fiduciary duties of the Board of Directors of the Company under applicable law, as advised in writing by Holland & Knight LLP, counsel to the Company, and in response to an unsolicited request therefor by a person who a majority of the Company's Board of Directors believes intends to submit a Superior Acquisition Proposal (defined below), engage in negotiations with, or disclose any nonpublic information relating to the Company or any of its subsidiaries or afford access to the properties, books or records of the Company or any of its subsidiaries to, any person that has advised the Company or otherwise publicized the fact that such person may be considering making, or that has made, an Acquisition Proposal; PROVIDED, nothing herein shall prohibit the Company's Board of Directors from taking and disclosing to the Company's stockholders a position with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. The Company will promptly notify Parent after receipt of any Acquisition Proposal or any notice that any person is considering making an Acquisition Proposal or any request for nonpublic information relating to the Company or any of its subsidiaries or for access to the properties, books or records of the Company or any of its subsidiaries by any person that has advised the Company or otherwise publicized the fact that such person may be considering making, or that has made, an Acquisition Proposal and will keep Parent fully informed of the status and details of any such Acquisition Proposal, indication or request. For purposes of this Agreement, "Acquisition Proposal" means any offer or proposal for, or any indication of interest in, a merger or other business combination involving the Company or any of its subsidiaries or the acquisition of any significant equity interest in, or a significant portion of the assets of, the Company or any of its subsidiaries, other than the transactions contemplated by this Agreement; and "Superior -20- Acquisition Proposal" means an Acquisition Proposal which a majority of the disinterested directors determines in its good faith judgment (based on advice of the Company's independent financial advisor) to be more favorable to the Company's stockholders than the Offer or the Merger, and for which financing, to the extent required, is then committed. SECTION 5.5. STATE TAKEOVER STATUTES. If any "fair price", "control share acquisition", "moratorium" or other anti-takeover statute, or similar statute or regulation shall become applicable to this Agreement, the Stockholder Option Agreement or any of the transactions contemplated hereby or thereby, including, without limitation, the Offer or the Merger, the Company and its Board of Directors shall take all action necessary to ensure that the Offer, the Merger and the other transactions contemplated hereby and thereby, may be consummated as promptly as practicable on the terms contemplated hereby and otherwise to minimize the effect of such statute or regulation on the Offer, the Merger and the other transactions contemplated hereby or thereby. ARTICLE VI COVENANTS OF PARENT AND MERGER SUBSIDIARY SECTION 6.1. OBLIGATIONS OF MERGER SUBSIDIARY. Parent will take all action necessary to cause Merger Subsidiary to perform its obligations under this Agreement and to consummate the Offer and the Merger on the terms and conditions set forth in this Agreement (including ensuring that Merger Subsidiary has sufficient funds to consummate the Offer and the Merger). SECTION 6.2 VOTING OF SHARES. Parent agrees to make a quorum and vote all Shares acquired in the Offer or otherwise beneficially owned by it in favor of adoption of this Agreement at the Company Stockholder Meeting. SECTION 6.3 INDEMNIFICATION. For six years after the Effective Time, Parent agrees that it will and will cause the Surviving Corporation to indemnify and hold harmless the current and former directors and officers of the Company in respect of acts or omissions occurring prior to the Effective Time to the same extent such persons are indemnified or are entitled to indemnification by the Company pursuant to the Company's articles of incorporation, by-laws or the Florida Law in effect on the date of this Agreement, subject to any limitations imposed from time to time by applicable law. Parent will cause to be maintained for a period of not less than two years from the Effective Time the Company's current directors' and officers' insurance and indemnification policy to the extent that it provides coverage for events occurring prior to the Effective Time (the "D&O Insurance") for all persons who are directors or officers of the Company on the date of this Agreement, so long as the annual premium therefor would not be in excess of 115% of the amount per annum the Company paid in its last full fiscal year, which amount has been disclosed to Parent. If the existing D&O Insurance cannot be maintained, expires or is terminated or canceled during such two-year period, Parent will use all reasonable efforts to cause to be obtained as much D&O Insurance as can be obtained for the remainder of such period for an annualized premium not in excess of 115% of the amount per annum the Company paid in its last full fiscal year, which amount has been disclosed to Parent, on terms and conditions substantially similar to the existing D&O Insurance. -21- ARTICLE VII ADDITIONAL AGREEMENTS SECTION 7.1. HSR ACT FILINGS; REASONABLE EFFORTS; NOTIFICATION. (a) Each of Parent and the Company shall (i) promptly make or cause to be made the filings required of such party or any of its subsidiaries under the HSR Act with respect to the transactions contemplated by this Agreement, (ii) comply at the earliest practicable date with any request under the HSR Act for additional information, documents, or other material received by such party or any of its subsidiaries from the Federal Trade Commission or the Department of Justice or any other Governmental Entity in respect of such filings or such transactions, and (iii) cooperate with the other party in connection with any such filing and in connection with resolving any investigation or other inquiry of any such agency or other Governmental Entity under any Antitrust Laws (defined below) with respect to any such filing or any such transaction. Each party shall promptly inform the other party of any communication with, and any proposed understanding, undertaking, or agreement with, any Governmental Entity regarding any such filings or any such transaction. Neither party shall participate in any meeting with any Governmental Entity in respect of any such filings, investigation, or other inquiry without giving the other party notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend and participate. (b) Each of Parent and the Company shall use all reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental Entity with respect to the transactions contemplated by this Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other federal, state or foreign statutes, rules, regulations, orders or decrees that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, "Antitrust Laws"). In connection therewith, if any administrative or judicial action or proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as violative of any Antitrust Law, and, if by mutual agreement, Parent and the Company decide that litigation is in their best interests, each of Parent and the Company shall cooperate and use all reasonable efforts vigorously to contest and resist any such action or proceeding and to have vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent (each an "Order"), that is in effect and that prohibits, prevents, or restricts consummation of any such transaction. Each of Parent and the Company shall use all reasonable efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of this Agreement. (c) Subject to the fiduciary duties of the Board of Directors of the Company as advised in writing by Holland & Knight LLP, 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, (ii) neither Parent nor any of its subsidiaries shall be required to take or agree to take -22- any other action or agree to any limitation that could reasonably be expected to have an adverse effect on the business, assets, condition (financial or otherwise), results of operations or prospects of Parent and its subsidiaries taken as a whole or of Parent combined with the Surviving Corporation after the Effective Time, (iii) neither the Company nor its subsidiaries shall be required to divest any of their respective businesses, product lines or assets, or to take or agree to take any other action or agree to any limitation that could reasonably be expected to have a Material Adverse Effect, and (iv) no party shall be required to agree to the imposition of or to comply with, any condition, obligation or restriction on Parent or any of its subsidiaries or on the Surviving Corporation or any of its subsidiaries of the type referred to in clause (a) or (b) of Annex I and (v) neither Parent nor Merger Subsidiary shall be required to waive any of the conditions to the Offer set forth in Annex I or any of the conditions to the Merger set forth in Section VIII. (e) Each party shall give prompt notice to the other parties upon learning of (i) any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it to comply with or satisfy in any respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; PROVIDED, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. (f) The Company shall give prompt notice to Parent, and Parent or Merger Subsidiary shall give prompt notice to the Company, of: (i) any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement; (ii) any notice or other communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and (iii) any actions, suits, claims, investigations or proceedings commenced or, to the best of its knowledge threatened against, relating to or involving or otherwise affecting it or any of its subsidiaries (x) which, in the case of the Company, if pending on the date of this Agreement would have been required to have been disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l), 4.1(o) or (y) in the case of any party, which relate to the consummation of the transactions contemplated by this Agreement. SECTION 7.2. PUBLIC ANNOUNCEMENTS. Parent and Merger Subsidiary, on the one hand, and the Company, on the other hand, will consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, including the Offer and the Merger, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement will be in a form agreed to by the parties and such press release will be issued no later than the next business day immediately succeeding the date of this Agreement. SECTION 7.3. CONFIDENTIALITY. Parent and its subsidiaries will hold, and will cause their Representatives (defined in the Confidentiality Agreement, dated January 7, 1999 (the "Confidentiality Agreement"), between Parent and the Company) to hold, any Evaluation Material (defined in the Confidentiality Agreement) in confidence in accordance with the terms of the Confidentiality Agreement. -23- 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 Florida Law, this Agreement shall have been adopted by the stockholders of the Company in accordance with such Law; (ii) any applicable waiting period under the HSR Act relating to the Merger shall have expired; (iii) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger, and no proceeding challenging this Agreement or the transactions contemplated hereby or seeking to prohibit, alter, prevent or materially delay the Merger shall have been instituted by any person before any court, arbitrator or governmental body, agency or official and be pending; (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 articles of merger in accordance with Florida 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. ARTICLE IX TERMINATION SECTION 9.1. TERMINATION. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the stockholders of the Company): (a) by mutual written consent of the Company and Parent; (b) by either the Company or Parent, if the Merger has not been consummated by September 30, 1999 (PROVIDED that the party seeking to terminate this Agreement shall not have breached its obligations under this Agreement in any material respect); (c) by either the Company or Parent, if there shall be any law or regulation that makes consummation of the Merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Parent or the Company from consummating the Merger is entered and such judgment, injunction, order or decree shall become final and nonappealable; (d) by either the Company or Parent, (x) if Parent or Merger Subsidiary shall have failed to commence the Offer within five business days following the date of this Agreement (PROVIDED that Parent shall not be entitled to terminate this Agreement pursuant to this sub-clause (x) as a result of its breach of this Agreement), (y) if Parent or Merger Subsidiary shall not have purchased any Shares pursuant to the Offer prior to July 31, 1999 or -24- (z) if the Offer shall have been terminated without Parent or Merger Subsidiary having purchased any Shares pursuant to the Offer; (e) by Parent, upon the occurrence of any Trigger Event described in clauses (i) through (v) of Section 10.4(b); or (f) by the Company, upon the occurrence of any Trigger Event described in clause (v) of Section 10.4(b). SECTION 9.2. EFFECT OF TERMINATION. If this Agreement is terminated pursuant to Section 9.1, this Agreement shall become void and of no effect with no liability on the part of any party hereto or their respective officers and directors, except that the agreements contained in Sections 7.3, 10.4, 10.6 and 10.8 shall survive the termination hereof and except to the extent that such termination results from the willful and material breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement. ARTICLE X GENERAL PROVISIONS SECTION 10.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 10.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. SECTION 10.2. NOTICES. All notices, requests and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) or by telecopy (with copies by overnight courier) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or Merger Subsidiary, to: Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar President and Chief Operating Officer Fax: 516-342-3300 with a copy to: Howard, Smith & Levin LLP 1330 Avenue of the Americas New York, New York 10019 Attention: Scott F. Smith Fax: 212-841-1010 -25- (b) if to the Company, to: Computer Management Sciences, Inc. 8133 Baymeadows Way Jacksonville, Florida 32256 Attention: Halsey Wise President and Chief Operating Officer Fax: 904-367-0134 with a copy to: Holland & Knight LLP 50 North Laura Street Jacksonville, Florida 32202 Attention: L. Kinder Cannon III Fax: 904-358-2199 SECTION 10.3. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company, Parent and Merger Subsidiary or in the case of a waiver, by the party against whom the waiver is to be effective; PROVIDED that after the adoption of this Agreement by the stockholders of the Company, no such amendment or waiver shall, without the further approval of such stockholders, alter or change (i) the amount or kind of consideration to be received in exchange for any shares of capital stock of the Company, (ii) any term of the certificate of incorporation of the Surviving Corporation or (iii) any of the terms or conditions of this Agreement if such alteration or change would adversely affect the holders of any shares of capital stock of the Company. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 10.4. FEES AND EXPENSES. (a) Except as otherwise provided in this Section, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. (b) The Company agrees to pay Parent a fee in immediately available funds equal to $20,000,000 promptly, but in no event later than one business day, after the termination of this Agreement as a result of the occurrence of any of the events set forth below (a "Trigger Event"): (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 person or group (as defined in Section 13(d)(3) of the 1934 Act) (other than Parent or any of its affiliates) shall have become the beneficial owner (as defined in Rule 13d-3 -26- promulgated under the 1934 Act) of at least 25% of the outstanding Shares or shall have acquired, directly or indirectly, at least 25% of the assets of the Company; (iii) 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; (iv) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified in a manner adverse to Parent or Merger Subsidiary its approval or recommendation of the Offer, the Merger or this Agreement or its approval of the entry by Parent and Merger Subsidiary into the Stockholder Option Agreement, in any such case whether or not such withdrawal or modification is required by the fiduciary duties of the Board of Directors (or any special committee thereof); or (v) prior to the purchase of any Shares under the Offer, the Company shall have received any Acquisition Proposal which the Board of Directors has determined is more favorable to the Company's shareholders than the transactions contemplated by this Agreement, whether or not such determination is required by the fiduciary duties of the Board of Directors; PROVIDED that, if (x) the only Trigger Event having occurred is an event pursuant to clause (iii) above and (y) the breaches of representation or warranty, or failures to observe or perform any obligation under clause (iii) above (A) individually or in the aggregate would not have or result in a Material Adverse Effect or prevent or materially delay the consummation of the transactions contemplated by this Agreement or (B) were unintentional, then the amount of the fee payable by the Company to the Parent under this Section 10.4(b) shall be $5,000,000 instead of $20,000,000. (c) If this Agreement is terminated as a result of the occurrence of a Trigger Event, in addition to any amounts paid or payable by the Company to Parent pursuant to Section 10.4(b), the Company shall promptly assume and pay, or reimburse Parent for, all fees payable and expenses incurred by Parent (including the fees and expenses of its counsel) in connection with this Agreement and the transactions contemplated hereby. 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, Florida Law. -27- SECTION 10.7. COUNTERPARTS; EFFECTIVENESS; INTERPRETATION. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". SECTION 10.8. ENFORCEMENT. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents to submit itself to the exclusive personal jurisdiction of any court of the United States located in the State of New York or of any New York state court in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. SECTION 10.9. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. SECTION 10.10. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and the Confidentiality Agreement (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof, and (b) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. -28- The parties hereto have caused this Agreement to be signed by their respective authorized officers as of the date first written above. COMPUTER ASSOCIATES INTERNATIONAL, INC. By: /S/ CHARLES P. MCWADE ---------------------------------- Name: Charles P. McWade Title: Senior Vice President THEBETTERPLAN ("TBP"), INC. By: /S/ STEVEN M. WOGHIN ---------------------------------- Name: Steven M. Woghin Title: Vice President and Secretary COMPUTER MANAGEMENT SCIENCES, INC. By: /S/ ANTHONY V. WEIGHT ---------------------------------- Name: Anthony V. Weight Title: Acting Chief Executive Officer and Corporate Secretary -29- ANNEX I Notwithstanding any other provision of the Offer, Parent and Merger Subsidiary shall not be required to accept for payment or (subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger Subsidiary's obligation to pay for or return tendered Shares after the termination or withdrawal of the Offer)) to 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 February 5, 1999 and prior to the acceptance for payment of Shares pursuant to the Offer, any of the following conditions exist: (a) there shall be instituted or pending any action or proceeding by any Governmental Entity or by any other person, domestic or foreign, before any Governmental Entity or arbitrator, (i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the acquisition by Merger Subsidiary or any of its affiliates of Shares pursuant to the Stockholder Option Agreement, 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 the Stockholder Option Agreement, 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 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 the Stockholder Option Agreement, 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 the Stockholder Option Agreement, this Agreement, the Offer or the Merger, that, in the judgment of Parent, is substantially 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, assets, condition (financial or otherwise), capitalization, operations or results of operations of the Company or any of its subsidiaries that, in the reasonable judgment of Parent, is or is likely to have a Material Adverse Effect; or (d) a tender or exchange offer for some or all of the Shares shall have been made by another person, or it shall have been publicly disclosed or Parent shall have otherwise learned that (i) any person or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired beneficial ownership of more than 25% of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 25% of any class or series of capital stock of the Company (including the Shares) other than acquisitions for bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on file with the Commission on February 5, 1999, (ii) any such person or group which, prior to February 5, 1999, had filed such a Schedule with the Commission shall have acquired beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, which, together with such ownership as is reflected on such Schedule, shall constitute 25% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares) which, together with such ownership as is reflected on such Schedule, shall constitute 25% or more of any such class or series or (iii) any person shall have filed a Notification and Report Form under the HSR Act reflecting an intent to acquire the Company or any material portion of assets of the Company or securities of the Company which, together with such ownership as is reflected on any such Schedule, shall constitute 25% or more of any such class of securities; or (e) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or the American Stock Exchange, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any Governmental Entity on the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which would reasonably be expected to have a Material Adverse Effect or prevent (or materially delay) the consummation of the Offer or (v) in the case of any of the foregoing existing at the time of commencement of the Offer, a material acceleration or worsening thereof; or (f) any Consent (other than the filing of articles of merger or approval by the stockholders of the Company of the Merger (if required by Florida Law)) required to be filed, occurred or been obtained by the Company or any of its subsidiaries or Parent of any of its subsidiaries (including Merger Subsidiary) in connection with the execution and delivery of this Agreement, the Offer and the consummation of the transactions contemplated by this Agreement shall not have been filed, occurred or been obtained (other than any such Consents the failure to file, occur or obtain in the aggregate, could not reasonably be expected to (i) have a Material Adverse Effect or (ii) prevent or materially delay the consummation of the Offer or the Merger); or (g) 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 -2- 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 (h) any party to the Stockholder Option Agreement other than Merger Subsidiary or Parent shall have breached or failed to perform in any material respect any of its agreements under the Stockholder Option Agreement or any of the representations and warranties of any such party set forth in the Stockholder Option Agreement shall not be true in any material respect, in each case, when made or at any time prior to the consummation of the Offer as if made at and as of such time, or the Stockholder Option Agreement shall have been invalidated or terminated with respect to any Shares subject thereto; or (i) this Agreement or the Stockholder Option Agreement shall have been terminated in accordance with its terms; or (j) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified in a manner adverse to Parent or Merger Subsidiary its approval or recommendation of the Offer, the Merger or this Agreement or its approval of the entry by Parent and Merger Subsidiary into the Stockholder Option Agreement; or (k) 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 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 discretion regardless of the circumstances (including any action or omission by Parent or Merger Subsidiary) giving rise to any such condition or (other than the Minimum Condition) may, subject to the terms of this Agreement, 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. -3- EX-99.(C)(2) 11 STOCKHOLDER OPTION AGREEMENT Exhibit 99(c)(2) AGREEMENT, dated as of February 5, 1999, among TheBetterPlan ("TBP"), Inc., a Florida corporation ("Buyer"), and the holders (the "Stockholders") of the shares of common stock, $0.01 par value (the "Shares") of Computer Management Sciences, Inc., a Florida corporation (the "Company"), listed on the signature pages hereof. In order to induce Buyer and certain of its affiliates to enter into an agreement and plan of merger (the "Merger Agreement") with the Company, Buyer has requested the Stockholders, and the Stockholders have agreed, to enter into this Agreement. The parties hereto agree as follows: ARTICLE I STOCK OPTION SECTION 1.1. GRANT OF STOCK OPTION. Each of the Stockholders hereby grants to Buyer an irrevocable option (the "Option") to purchase the number of shares opposite such Stockholder's name on the signature pages hereto and any additional Shares acquired by such Stockholder in any capacity (whether by exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities or by means of a purchase, dividend, distribution or otherwise) (such "Stockholder's Shares" and, collectively, the "Stockholder Shares") at a purchase price of $28.00 per Stockholder Share (as adjusted pursuant to Section 1.6, the "Purchase Price"). With respect to each Stockholder, such Stockholder's Shares do not include Shares held pursuant to (i) the Company's Employee Stock Ownership Plan and Trust (the "ESOP") created pursuant to the Trust Agreement, dated as of November 17, 1989, between the Company and the trustee thereof or (ii) the Company's Profit Sharing-401(k) Plan dated December 30, 1994 (the "401(k) Plan"). SECTION 1.2. EXERCISE OF OPTION. (a) Subject to the conditions set forth in Section 1.5 hereof, the Option may be exercised by Buyer, in whole or in part, at any time or from time to time after the date hereof and prior to the 30th business day after the termination of the Merger Agreement in accordance with the terms thereof. In the event Buyer wishes to exercise the Option for all or some of the Stockholder Shares other than pursuant to the Offer (as defined in the Merger Agreement), Buyer shall send a written notice (the "Exercise Notice") to the Stockholders specifying the total number of Stockholder Shares it wishes to purchase pursuant to such exercise (and the corresponding number of each such Stockholder's Shares) and the place, the date (not less than one nor more than 20 business days from the date of the Exercise Notice) and the time for the closing of such purchase, provided that such date and time may be earlier than one day after the Exercise Notice if reasonably practicable. Each closing of a purchase of Stockholder Shares pursuant to this Section 1.2(a) (a "Closing") shall take place at the place, on the date and at the time designated by Buyer in its Exercise Notice, provided that if, at the date of the Closing herein provided for, the conditions set forth in Section 1.5 shall not have been satisfied (or waived), Buyer may postpone the Closing until a date within five business days after such conditions are satisfied. (b) Except to the extent otherwise provided in Section 1.2(c) below, Buyer shall not be under any obligation to deliver any Exercise Notice and may allow the Option to terminate without purchasing any Stockholder Shares hereunder; provided however that once Buyer has delivered to the Stockholders an Exercise Notice, subject to the terms and conditions of this Agreement, Buyer shall be bound to effect the purchase as described in such Exercise Notice. (c) Buyer agrees that, if Buyer shall have accepted Shares for payment and purchased Shares pursuant to the Offer, Buyer shall, within ten business days of such purchase, exercise the Option in its entirety (or any remaining portion of the Option). SECTION 1.3. CLOSING. At the Closing, (a) each Stockholder shall deliver to Buyer (in accordance with Buyer's instructions) a certificate or certificates (the "Certificates") representing all of such Stockholder's Shares, duly endorsed or accompanied by stock powers duly executed in blank and (b) Buyer shall deliver to such Stockholder a certified or bank cashier's check or checks payable to or upon the order of such Stockholder in an amount equal to (i) the number of such Stockholder's Shares being purchased at such Closing multiplied by (ii) the Purchase Price (the "Purchase Amount"). SECTION 1.4. AGREEMENT TO TENDER. Each of the Stockholders hereby agrees to validly tender (or cause the record owner of such shares to validly tender) upon the request of Buyer such Stockholder Shares. Upon receipt of instructions from the Buyer, 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 (but if such Shares are not accepted for payment or are withdrawn and are to be returned pursuant to the Offer, to return such Shares to such Stockholder whereupon they shall continue to be held by such Stockholder subject to the terms and conditions of this Agreement), (ii) the Certificates 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"). No tender pursuant to this Section 1.4 will excuse any of the obligations of the Stockholders hereunder. SECTION 1.5. CONDITIONS. The obligation of each Stockholder to sell Stockholder Shares at any Closing is subject to the following conditions: (i) The representations and warranties of Buyer contained in Article IV shall be true and correct in all material respects on the date thereof as if made on such date; (ii) All waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act") applicable to such exercise of the Option shall have expired or been terminated; (iii) There shall be no preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, nor any statute, rule, regulation or order -2- promulgated or enacted by any governmental authority, prohibiting or otherwise restraining such exercise of the Option; and (iv) The Buyer shall have commenced the Offer. SECTION 1.6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR MERGER. (a) In the event of any change in the Company's capital stock by reason of stock dividends, stock splits, mergers, consolidations, recapitalizations, combinations, conversions, exchanges of shares, extraordinary or liquidating dividends, or other changes in the corporate or capital structure of the Company which would have the effect of diluting or changing the Buyer's rights hereunder, the number and kind of shares or securities subject to the Option and the purchase price per Stockholder Share (but not the total purchase price) shall be appropriately and equitably adjusted so that the Buyer shall receive upon exercise of the Option the number and class of shares or other securities or property that the Buyer would have received in respect of the Stockholder Shares purchasable upon exercise of the Option if the Option had been exercised immediately prior to such event. Each Stockholder shall take such steps in connection with such consolidation, merger, liquidation or other such action as may be necessary to assure that the provisions hereof shall thereafter apply as nearly as possible to any securities or property thereafter deliverable upon exercise of the Option. (b) In the event the consideration per Share to be paid by Buyer pursuant to the Offer is increased, the Purchase Price shall be similarly increased and in the event the Closing hereunder shall have occurred, Buyer shall promptly pay to each Stockholder the product of the amount of such increase in the Purchase Price multiplied by the number of such Stockholder's Shares as to which the Option has been exercised. ARTICLE II GRANT OF PROXY SECTION 2.1. PROXY. Each Stockholder hereby revokes any and all previous proxies granted with respect to such Stockholder's Shares. Each Stockholder, by this Agreement, with respect to such Stockholder's Shares, does hereby constitute and appoint Buyer, or any nominee of Buyer, with full power of substitution, as its true and lawful attorney and proxy, for and in its name, place and stead, to vote each of such Stockholder's Shares as its proxy, at every annual, special or adjourned meeting, or solicitation of consents, of the stockholders of the Company (including the right to sign its name (as stockholder) to any consent, certificate or other document relating to the Company that the law of the State of Florida may permit or require) (i) in favor of the adoption of the Merger Agreement and this Agreement and approval of the Merger and the other transactions contemplated hereby and by the Merger Agreement, (ii) against any proposal for any recapitalization, merger, sale of assets or other business combination between the Company and any person or entity (other than the Merger) or any other action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement not being fulfilled, and (iii) in favor of any other matter relating to consummation of the transactions contemplated by the Merger Agreement and this Agreement. Each Stockholder further agrees to cause such Stockholder's -3- Shares that are outstanding and owned by it beneficially to be voted in accordance with the foregoing. The proxy granted by each Stockholder pursuant to this Article II is irrevocable and is granted in consideration of Buyer's entering into this Agreement and the Merger Agreement; PROVIDED, HOWEVER, that such proxy shall be revoked upon termination of this Agreement in accordance with its terms. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each of the Stockholders severally represents and warrants to the Buyer that: SECTION 3.1. VALID TITLE. Such Stockholder is the sole, true, lawful and beneficial owner of such Stockholder's Shares with no restrictions on such Stockholder's voting rights or rights of disposition pertaining thereto. At any Closing, such Stockholder will convey good and valid title to such Stockholder's Shares being purchased free and clear of any and all claims, liens, charges, encumbrances and security interests. None of such Stockholder's Shares is subject to any voting trust or other agreement or arrangement with respect to the voting of such Shares. SECTION 3.2. NON-CONTRAVENTION. The execution, delivery and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby (i) are within such Stockholder's powers, have been duly authorized by all necessary action (including any consultation, approval or other action by or with any other person), (ii) require no action by or in respect of, or filing with, any governmental body, agency, official or authority (except as required under the HSR Act), and (iii) do not and will not contravene or constitute a default under, or give rise to a right of termination, cancellation or acceleration of any right or obligation of such Stockholder or to a loss of any benefit 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. SECTION 3.3. BINDING EFFECT. This Agreement has been duly executed and delivered by such Stockholder and is the valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights generally. 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 3.4. TOTAL SHARES. Each Stockholder is the record and Beneficial Owner of the number of Shares set forth next to such Stockholder's name on the signature pages hereto. Such Shares constitute all of the Shares owned of record or Beneficially Owned by such Stockholder (other than Shares held pursuant to the ESOP or the 401(k) Plan). Except as set forth on such signature pages, neither such Stockholder nor any beneficial owner or owners of such Stockholder's Shares own any options to purchase or rights to subscribe for or otherwise -4- acquire any securities of the Company. Each Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Article II of this Agreement, sole power of disposition, sole power of conversion, sole power to demand appraisal rights and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Shares beneficially owned by such Stockholder with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. The terms "Beneficially Own" or "Beneficial Ownership" with respect to any securities shall mean having "beneficial ownership" of such securities as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended. SECTION 3.5. 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 IV REPRESENTATIONS AND WARRANTIES OF BUYER The Buyer represents and warrants to each of the Stockholders: SECTION 4.1. CORPORATE POWER AND AUTHORITY. Buyer has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by the board of directors of Buyer and no other corporate action on the part of Buyer is necessary to authorize the execution, delivery or performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyer and is a valid and binding agreement of Buyer, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights generally. SECTION 4.2. ACQUISITION FOR BUYER'S ACCOUNT. Any Stockholder Shares to be acquired upon exercise of the Option will be acquired by Buyer for its own account and not with a view to the public distribution thereof and will not be transferred except in compliance with the Securities Act of 1933. ARTICLE V COVENANTS OF THE STOCKHOLDERS Each of the Stockholders hereby covenants and agrees that: SECTION 5.1. NO PROXIES FOR OR ENCUMBRANCES ON STOCKHOLDER SHARES. Except pursuant to the terms of this Agreement, such Stockholder shall not, without the prior written consent of Buyer, directly or indirectly, (i) grant any proxies or enter into any voting trust or other agreement or arrangement with respect to the voting of any Shares or (ii) acquire, sell, -5- assign, transfer, encumber or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the direct or indirect acquisition or sale, assignment, transfer, encumbrance or other disposition of, any Shares during the term of this Agreement. Such Stockholder shall not seek or solicit any such acquisition or sale, assignment, transfer, encumbrance or other disposition or any such contract, option or other arrangement or assignment or understanding and agrees to notify Buyer promptly and to provide all details requested by Buyer if such Stockholder shall be approached or solicited, directly or indirectly, by any person with respect to any of the foregoing. SECTION 5.2. NO SHOPPING. Such Stockholder shall not directly or indirectly (i) solicit, initiate or encourage (or authorize any person to solicit, initiate or encourage) any inquiry, proposal or offer from any person to acquire the business, property or capital stock of the Company or any direct or indirect subsidiary thereof, or any acquisition of a substantial equity interest in, or a substantial amount of the assets of, the Company or any direct or indirect subsidiary thereof, whether by merger, purchase of assets, tender offer or other transaction or (ii) subject to the fiduciary duty under applicable law of such Stockholder as a director of the Company or a trustee of the ESOP or the 401(k) Plan (if such Stockholder is such a director or trustee), participate in any discussion or negotiations regarding, or furnish to any other person any information with respect to, or otherwise cooperate in any way with, or participate in, facilitate or encourage any effort or attempt by any other person to do or seek any of the foregoing. Such Stockholder shall promptly advise Buyer of the terms of any communications it may receive relating to any of the foregoing. SECTION 5.3. CONDUCT OF STOCKHOLDERS. Such Stockholder will not (i) 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 (ii) omit, or agree or commit to omit, to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. SECTION 5.4. DISCLOSURE. Each Stockholder hereby permits Buyer to publish and disclose in the offer documents and, if approval of the Company's shareholders is required under applicable law, a proxy statement (including all documents and schedules filed with the SEC) their identity and ownership of the Shares and the nature of their commitments, arrangements and understandings under this Agreement. ARTICLE VI MISCELLANEOUS SECTION 6.1. EXPENSES. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. SECTION 6.2. FURTHER ASSURANCES. In the event the Buyer exercises the Option, the Buyer and the Stockholders will each execute and deliver or cause to be executed and delivered all further documents and instruments and use its best efforts to secure such consents and take all such further action as may be reasonably necessary in order to consummate the -6- transactions contemplated hereby or to enable the Buyer and any assignee to exercise and enjoy all benefits and rights of the Stockholders with respect to the Option and the Stockholder Shares. SECTION 6.3. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations and which may be required under any agreements, contracts, commitments, instruments, understandings, arrangements or restrictions of any kind to which such party is a party or by which such party is governed or bound, to consummate and make effective the transactions contemplated by this Agreement. SECTION 6.4. SPECIFIC PERFORMANCE. The parties hereto agree that the Buyer may be irreparably damaged if for any reason any Stockholder failed to sell such Stockholder's Shares (or other securities deliverable pursuant to Section 1.5) upon exercise of the Option or to perform any of its other obligations under this Agreement, and that the Buyer would not have an adequate remedy at law for money damages in such event. Accordingly, the 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 the Buyer may have against any Stockholder for any failure to perform its obligations under this Agreement. SECTION 6.5. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be deemed to have been duly given when delivered in person, by telecopy, or by registered or certified mail (postage prepaid, return receipt requested) to such party at its address set forth on the signature page hereto. SECTION 6.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained in this Agreement shall survive delivery of and payment for the Stockholder Shares. SECTION 6.7. AMENDMENTS. 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. SECTION 6.8. 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 consent of the Buyer. SECTION 6.9. 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 6.10. JURISDICTION. Each of the parties hereto (a) consents to submit itself to the exclusive personal jurisdiction of any court of the United States located in the State of New York or of any New York state court in the event any dispute arises out of this Agreement or the transactions -7- contemplated by this Agreement, and (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. SECTION 6.11. 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. -8- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. TheBetterPlan ("TBP"), Inc. By: /S/ STEVEN M. WOGHIN ----------------------- Name: Steven M. Woghin Title: Vice President and Treasurer c/o Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar President and Chief Operating Officer Fax: 516-342-3300 SHARES OPTIONS SUNDOWN (1995) LIMITED PARTNERSHIP, - ------ ------- a Delaware limited partnership 1,417,438 0 By: DOWNUNDER (1995) COMPANY, INC. as general partner /S/ ANTHONY V. WEIGHT ------------------------------ Name: Anthony V. Weight Title: President c/o Anthony V. Weight 13918 Mandarin Oaks Lane Jacksonville, Florida 32223 SHARES OPTIONS - ------ ------- 123,317 182,982 /S/ ANTHONY V. WEIGHT --------------------- Anthony V. Weight 13918 Mandarin Oaks Lane Jacksonville, Florida 32223
-9-
SHARES OPTIONS FIRST ONEIDA (1995) LIMITED PARTNERSHIP, - ------ ------- a Delaware limited partnership 2,382,454 0 By: BULL GATOR, INC., as general partner /S/ JERRY W. DAVIS ------------------------------ Name: Jerry W. Davis Title: President c/o Jerry W. Davis 8210 Bahia Blanca Court Jacksonville, Florida 32256 SHARES OPTIONS - ------ ------- 0 214,810 /S/ JERRY W. DAVIS ------------------ Jerry W. Davis 8210 Bahia Blanca Court Jacksonville, Florida 32256 SHARES OPTIONS - ------ ------- 183,748 179,000 /S/ LARRY A. LONGHI ------------------- Larry A. Longhi 14173 Pine Island Drive Jacksonville, Florida 32224 SHARES OPTIONS CMSI CAPITAL, L.P., a Delaware limited - ------ ------- partnership 929,665 0 By: CMSI INVESTORS, INC., as general partner By: /S/ W. ROBINSON FRAZIER ------------------------ Name: W. Robinson Frazier Title: President c/o Frazier & Frazier Suite A 1515 Riverside Avenue Jacksonville, Florida 32204
-10- EX-99.(C)(3) 12 CONFIDENTIALITY AGREEMENT Exhibit 99(c)(3) MUTUAL NONDISCLOSURE AGREEMENT This mutual nondisclosure agreement (the "Agreement") made by and between Computer Associates International, Inc., a Delaware corporation, with offices located at One Computer Associates Plaza, Islandia, New York 11788-7000 ("CA") and Computer Management Sciences, Inc., a corporation with offices at Jacksonville, FL ("Company"). WHEREAS, CA is in the business of developing, manufacturing and licensing proprietary computer software programs and, in connection therewith has developed certain information that CA considers to be confidential consisting of, or concerning the matter described in Exhibit A hereto (the "CA Information"); and WHEREAS, Company has expressed an interest in reviewing the CA Information for the purpose described in Exhibit A (the "Purpose"); and WHEREAS, Company has developed certain information that Company considers to be confidential consisting of, or concerning the matter described in Exhibit B hereto (the "Company Information"); and WHEREAS, CA has expressed an interest in reviewing the Company Information for the purpose described in Exhibit B (the "Purpose"); and WHEREAS, the CA Information and the Company Information, (referred to collectively as the "Information"), whether subject to patent or copyright protection, or not capable of being so protected are highly confidential and proprietary to, and constitute trade secrets of each respective company; and each party is willing to disclose its Information to the other only if the recipient on behalf of itself, its employees, agents, successors, heirs and assigns, agrees to make no use or disclosure thereof except as provided herein. NOW, THEREFORE, in consideration of the mutual disclosure of the Information by the parties to each other, each of the parties, on behalf of itself, its employees, agents, successors, heirs and assigns, agrees and promises as follows: 1. In the absence of prior written consent of the disclosing party, the receiving party shall not disclose to any third party, directly or indirectly, the existence or contents of the Information, whether disclosed either orally, in writing, or by any other means, nor the results of its evaluation thereof. Each receiving party may disclose the Information to its employees but only to the extent necessary to carry out the Purpose as described in the applicable Exhibit. Each receiving party further warrants and agrees to use its best efforts to prevent disclosure of the Information by its employees, as well as any of its agents, successors, heirs and assigns to whom such receiving party discloses such Information, by taking at least such steps to protect such Information as it takes to protect its own confidential and proprietary information, including by obtaining a written agreement of each such person to maintain the confidentiality of the Information. 2. Each disclosing party shall at all times retain sole and exclusive title to, ownership of, all rights in and control over the use of all its Information. 3. Each receiving party shall refrain from making or causing to be made any copies of the Information without prior written authorization of the disclosing party. 4. Each receiving party, upon written request from the disclosing party, shall promptly destroy or return all of the disclosing party's Information to the disclosing party. 5. Each receiving party shall make no use, directly or indirectly, of the other party's Information furnished hereunder beyond the Purpose, without first securing the prior written consent of the disclosing party. 6. The obligations imposed on each receiving party under this Agreement shall expire on the earlier of: (a) the date upon which the disclosing party consents in writing to disclosure of its Information by the receiving party; or (b) the date upon which the disclosing party formally announces, releases, or otherwise discloses its Information to the public or otherwise without an accompanying written undertaking by the recipient to protect such Information from unauthorized disclosure. 7. As used herein, the term "Information" shall not include any information that the recipient can establish: (a) was known to the recipient prior to disclosure hereunder without an obligation of confidentiality; (b) was obtained by the recipient from a third party having the right to disclose it; (c) was or became generally available to the public without violation of this Agreement; (d) was disclosed with the written authorization of the disclosing party; or (e) was developed by the recipient independent of any reference to the Information and independent of the participation of any person who had access to the Information. 8. Either party may: (i) develop, manufacture, market and provide any products or services, directly or through any third party, which are competitive to the other party; and (ii) freely assign and re-assign its employees in any way it chooses. 9. The parties understand and agree that: (i) no contract or agreement providing for any transaction involving the parties shall be deemed to exist between them unless and until a final definitive agreement has been executed and delivered, and Company hereby waive, in advance, any claims (including, without limitation, breach of contract) in connection with any transaction between the parties unless and until the parties shall have entered into a final definitive agreement; (ii) unless and until a final definitive agreement regarding a transaction between the parties has been executed and delivered, none of the parties will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this Agreement, except for the matters specifically agreed to therein; and (iii) each party reserves the right, in its sole discretion, to reject any and all proposals made by a party or any of its representatives with regard to a transaction between the parties, and to terminate discussions and negotiations at any time. 2 10. Each of Company and CA understand that the other has endeavored to include in the Information materials that may be relevant to an evaluation of the Merger, and each acknowledges that the other and its Representatives make no representation or warranty (express or implied) under this Agreement as to the accuracy or completeness of the Information. Each of Company and CA agrees that neither party hereto, nor their respective Representatives, shall have any liability to the other party or its Representatives based upon this Agreement for any such inaccuracy or incompleteness, it being understood that only those particular representations and warranties that may be made with regard to such information in a definitive agreement, when, as and if executed, and subject to such limitations and restrictions as may be specified in any such definitive agreement, shall have any legal effect. 11. Each of Company and CA agrees that in the event it or anyone to whom it transmits the Information pursuant to this Agreement is requested or becomes legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demands or similar process) to disclose any of the Information, it agrees to provide the other party with prompt written notice so that such party may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Agreement. If such protective order or other remedy is not obtained or if such party, in its sole discretion, waives compliance with any provision of this Agreement, the other party will furnish only that part of the Information that is legally required and will exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Information. 12. Each of Company and CA agrees that no failure or delay by the other in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise of any right, power, or privilege thereunder. 13. Each of Company and CA agrees that the other may be irreparably injured by a breach of this Agreement by it or its representatives and that such injured party may be entitled to equitable relief, including injunctive relief and specific performance, in the event of any breach of the provisions of this Agreement. Such remedies shall not be deemed to be the exclusive remedy for a breach of this Agreement, but shall be in addition to all other remedies available at law or equity. Company and CA each agrees that the other shall have the right to enforce all the terms of this Agreement. 14. For a period of one year, neither party will, without written consent of the other party, directly or indirectly solicit for employment any of the individuals involved in the discussions between the parties; provided, however, that the foregoing provision will not prevent either party from employing any such person who contacts it on his or her own initiative without any direct or indirect solicitation or encouragement. 3 IN WITNESS WHEREOF, and intending to be legally bound hereby, and further intending to bind its employees, agents, successors, heirs and assigns, the parties have executed this Agreement as of the 7th day of January, 1999. COMPUTER ASSOCIATES COMPUTER MANAGEMENT SCIENCES, INC. INTERNATIONAL, INC. BY /S/ CHARLES P. MCWADE BY /S/ R. HALSEY WISE ------------------------------- ------------------------------ NAME CHARLES P. MCWADE NAME R. HALSEY WISE ----------------------------- ---------------------------- TITLE SENIOR VICE PRESIDENT TITLE PRESIDENT / COO ---------------------------- --------------------------- 4 EXHIBIT A CA INFORMATION consists of: (i) Any oral or written information disclosed by CA to Company, (ii) all discussions, documents and correspondence between CA and Company, including, without limitation, the terms, conditions and existence of this agreement; (iii) CA's identity, involvement and possible interest in this matter. PURPOSE of disclosure is: To discuss potential business opportunities. EXHIBIT B COMPANY INFORMATION consists of: (i) Any oral or written information disclosed by Company to CA; (ii) all discussions, documents and correspondence between CA and Company, including, without limitation, the terms, conditions and existence of this agreement; (iii) Company's identity, involvement and possible interest in this matter. PURPOSE of disclosure is: To discuss potential business opportunities. EX-99.(C)(4) 13 DAVIS CONSULTING AGREEMENT Exhibit 99(c)(4) CONSULTING AND NON-COMPETE AGREEMENT, dated as of February 5, 1999 (the "AGREEMENT"), by and between Computer Management Sciences, Inc., a Florida corporation (the "COMPANY"), and Jerry W. Davis (the "CONSULTANT"). ------------------------------------------------------------- The Company is intending to enter into a Merger Agreement with Computer Associates International, Inc. (the "MERGER AGREEMENT"), pursuant to which the Company will become a subsidiary of Computer Associates International, Inc. The Consultant is a senior executive of the Company, has unique knowledge of the Company's business and has occupied a position of trust and confidence. The Company and the Consultant desire that, effective upon the Merger, the Consultant will continue as a consultant to the Company and will agree to refrain from competing with the Company all as set forth in this Agreement. In consideration of the mutual agreements, the Consultant and the Company agree as follows: 1. CONSULTING SERVICES. For the Consulting Period (as defined in Section 2), the Consultant shall provide from time to time and as requested by the Company the consulting services set forth in Schedule A (the "SERVICES"). The Consultant shall report to the President of the Company. The Consultant shall devote such time and energy to the business of the Company as reasonably required to perform the Services; the parties agree that the performance of the Services is not intended to require full time effort. 2. TERM. The Consultant and the Company agree that the consulting period (the "CONSULTING PERIOD") begins on the Effective Date (as defined in Section 7) and ends on the second anniversary of the Effective Date. The Consultant acknowledges that the Consulting Period may be terminated at any time, with or without cause or for any or no reason, at the option either of the Company or the Consultant, on 30 days written notice, as provided in Section 4. 3. CONSULTING FEE. Commencing on the Effective Date, the Company shall pay the Consultant an annual consulting fee of $250,000, payable in advance on the Effective Date and the first anniversary of the Effective Date. 4. TERMINATION. (a) TERMINATION WITHOUT CAUSE. If the Company terminates the Consulting Period without Cause prior to the second anniversary of the Effective Date, the Consultant shall be entitled to continued payment of all consulting fees. (b) TERMINATION FOR CAUSE. If (i) the Company terminates the Consulting Period at any time for Cause, or (ii) the Consultant terminates the Consulting Period at any time, the Consultant shall be entitled to receive the consulting fees paid through the date of termination. "CAUSE" shall mean (i) the Consultant's breach of any material term of this Agreement, including, but not limited to, the covenants set forth in Section 5 hereof; (ii) the Consultant's continued willful failure or refusal, after written notice, to perform his duties hereunder, (iii) the Consultant's conviction of a felony or of any crime involving moral turpitude, fraud or misrepresentation, or (iv) any gross negligence or willful misconduct by the Consultant resulting in substantial loss to the Company, substantial damage to the Company's reputation or theft or defalcation from the Company. (c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant dies or becomes Disabled, in which event the Consulting Period terminates, the Consultant (or, in the case of death, his estate), shall be entitled to continued payment of all consulting fees as death or disability benefits. "DISABLED" shall mean the Consultant's adjudication as mentally incompetent, or the occurrence of a mental or physical disability preventing the Consultant from performing his duties for 120 or more days within any calendar year. Any question as to the existence of his disability as to which the Consultant and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Consultant and the Company. If the Consultant and the Company cannot agree on a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of disability made in writing to the Consultant and the Company shall be final and conclusive for all purposes. (d) GENERAL. Upon the termination of the Consulting Period, for any reason, (i) the Company shall have no further obligations to the Consultant hereunder, other than as specifically set forth in this Agreement and (ii) the Consultant shall continue to be bound by the terms of this Agreement other than Section 1. 5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In consideration for, and as a condition to, the Company's payment of the non-compete payment, and in connection with the merger described herein, until the fifth anniversary of the Effective Date, the Consultant will not directly or indirectly, on Consultant's own behalf or in the service of or on behalf of any other individual or entity, either as a proprietor, employee, agent, independent contractor, consultant, director, officer, partner or stockholder (other than a stockholder of a corporation listed on a national securities exchange or whose stock is regularly traded in the over-the-counter market, provided that the Consultant at no time owns, directly or indirectly, in excess of 1% of the outstanding stock of any class of any such corporation): (i) participate or engage in any activities or business involving, or relating to, (I) the provision of information technology consulting and custom software development services, (II) any other business or activity engaged in by the Company on the date of this Agreement, or any other business or activity engaged in by the Company in the future and in which the Consultant actively participated or (III) any business or activity of any affiliate of the Company in which the Consultant actively participated (or, in each case of I, II and III, in any activities or business that are incidental thereto) within the United States of America ("COMPETITIVE ACTIVITIES"), including, without limitation, (A) selling goods or rendering services of the type (or similar to the type) sold or rendered by the Company, whether by means of electronic or traditional commerce; (B) soliciting any person or entity that is a current customer, that has been a customer within the past three years or that is or was a prospective customer prior to or during the Consulting Period, in each case, of the Company or an affiliate of the Company (provided that it shall not be deemed a breach of this Agreement if the Consultant solicits fewer than three such -2- customers for goods or services unrelated to the Competitive Activities), (C) assisting any person in any way to do, or attempt to do, anything prohibited by clauses (A) or (B) above and (D) be employed by any person or entity that has received services of the type described above from the Consultant or with which the Consultant otherwise had material contact while employed by the Company or which received services of the type describe above from any office or employee of the Company over which Consultant had management responsibility, in either case to provide or supervise, directly or indirectly, the services comprising a Competitive Activity; or (ii) perform any action, activity or course of conduct which is detrimental in any material respect to the businesses or business reputation of the Company (or any of its affiliates), including without limitation (A) soliciting, recruiting or hiring any employees of the Company (or any of its affiliates) or persons who have worked for the Company (or any of its affiliates) at any time since January 1, 1998 and (B) soliciting or encouraging any employee of the Company (or any of its affiliates) to leave the employment of the Company. (b) The Consultant shall not, without the written consent of the Company, disclose to any other person or use, whether directly or indirectly, any Confidential Information relating to or used by the Company or any of its affiliates, whether in written, oral or other form, except in connection with the performance of his duties hereunder. "CONFIDENTIAL INFORMATION" shall mean information about the Company or any of its affiliates, and their clients and customers that is not disclosed by the Company or any of its affiliates for financial reporting purposes and that was learned by the Consultant in the course of employment by the Company or any of its affiliates or in the course of performing the services under this Agreement, including (without limitation) any proprietary knowledge, product and service designs, trade secrets, manuals, technical information and plans, contracts, systems, procedures, databases, electronic files, disks and printouts, correspondence, internal reports, personnel files, information about employees of the Company and its affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with suppliers to and customers of the Company and its affiliates, sales and advertising material, business plans, marketing plans, financial data (including without limitation the revenues, costs or profits associated with services), customer and industry lists, customer information, customer lists coupled with product or service pricing, customer contacts, supplier contacts and other contact information, pricing policies, supplies, agents, risk analyses, engineering information and computer reports, computer software, computer systems, computer formats, computer screen designs and computer input and output specifications, inclusive of any pertinent documentation, techniques, processes, technical information and know-how. The Consultant acknowledges that such Confidential Information is specialized, unique in nature and of great value to the Company and its affiliates, and that such information gives the Company and its affiliates a competitive advantage. The Consultant's obligations under this Section 5(b) shall survive the termination of the Consulting Period and of this Agreement and shall be fully enforceable thereafter in accordance with the terms of this Agreement. (c) (i) Confidential Information does not include information which (A) is or becomes part of the public domain other than as a result of the Consultant's disclosure, or (B) -3- becomes available to the Consultant on a nonconfidential basis from a source other than the Company, provided that source is not bound with respect to that information by a confidentiality agreement with the Company or otherwise prohibited from transmitting that information by a contractual, legal or other obligation. (ii) If the Consultant is requested or (in the opinion of his counsel) required by law or judicial order to disclose any Confidential Information, the Consultant shall provide the Company with prompt notice of any such request or requirement so that the Company may seek an appropriate protective order or waiver of the Consultant's compliance with the provisions of this Section 5(c). The Consultant will not oppose any reasonable action by, and will cooperate with, the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information. If, failing the entry of a protective order or the receipt of a waiver hereunder, the Consultant is, in the opinion of his counsel, compelled by law to disclose a portion of the Confidential Information, the Consultant may disclose to the relevant tribunal without liability hereunder that portion of the Confidential Information which counsel advises the Consultant he is legally required to disclose, and each of the parties hereto agrees to exercise such party's best efforts to obtain assurance that confidential treatment will be accorded such Confidential Information. (d) If an award by a court or arbitration panel declares that any term or provision of this Section 5 is excessive in duration or scope or is unreasonable or unenforceable, the parties agree that the court or arbitration panel making such determination shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. (e) In the event of a breach or threatened breach by the Consultant of the provisions of this Section 5, the Consultant acknowledges that the Company will suffer irreparable injury and may not have an adequate remedy at law and therefore may be entitled to a temporary restraining order or a preliminary or permanent injunction restraining the Consultant from such breach without the requirement of posting security or proving actual damages as well as an equitable accounting of all profits or benefits arising out of such violation. In addition, in the event of a breach by the Consultant of the provisions of this Section 5, the Consultant agrees as liquidated damages hereunder to repay the full amount of the non-compete payment made pursuant to Section 5(f). Nothing contained in this Section 5 or elsewhere in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available at law or equity for such breach or threatened breach by the Consultant. (f) In consideration of the Consultant's covenants under this Section 5, the Company shall pay the Consultant on the Effective Date a non-compete payment in the sum of $9,500,000. (g) By executing this Agreement, Consultant assigns and transfers to the Company all his right, title, and interest in and to all intellectual property created, developed, conceived, or reduced to practice while employed as a Consultant by the Company or its -4- predecessor(s) arising in connection with the Services. While he is employed by the Company and when he ceases to be employed by the Company, Consultant shall fully and promptly disclose in writing to the Company, and hold in trust for the sole right and benefit of the Company, all ideas, plans, designs, methods, techniques, discoveries, inventions, developments, improvements, trade secrets, computer programs and software, and other proprietary data, records, knowledge, and information that Consultant solely or jointly knows, creates, conceives, develops, or reduces to practice while employed by, and arising in connection with the Services to, the Company (collectively "Intellectual Property"), whether or not patentable or capable of copyright or trademark registration, and whether or not created, conceived, developed, or reduced to practice at the request of the Company or during normal working hours. While employed by the Company and at all times thereafter, Consultant shall do all things, and execute all documents (including applications for patents, copyrights, and trademarks, and for renewals extensions, and divisions thereof), that are requested and reasonably required by the Company to create, enforce, or evidence the Company's rights to any Intellectual Property. If the Company is unable for any reason whatsoever to obtain Consultant's signature or assistance, Consultant irrevocably appoints the Company and each of its officers as his agent and attorney-in-fact, with full power of substitution, to sign, execute, and file in the name and on behalf of Consultant any document required to prosecute or apply for any foreign or United States patent, copyright, trademark, or other proprietary protection, including renewals, extensions, and divisions, and to do all other lawful acts and things to further the issuance or prosecution of patent, copyright, trademark, or other proprietary protection, all with the same legal force and effect as if done or executed by Consultant. 6. COOPERATION WITH REGARD TO LITIGATION. The Consultant agrees to cooperate with the Company at all times (including following termination of the Consulting Period for any reason) by making himself reasonably available to testify on behalf of the Company or its affiliates, in any action, suit or proceeding, whether civil, criminal, administrative, or investigative and to assist the Company or any of its affiliates in any such action, suit, or proceeding by providing information and meeting and consulting with the Company or representatives or counsel to the Company or its affiliates, as reasonably requested by such representatives or counsel. The Consultant shall be reimbursed by the Company for any expenses (including, but not limited to, legal fees) reasonably incurred by the Consultant in connection with his compliance with the foregoing covenant. 7. CONDITIONS TO EFFECTIVENESS. The Effective Date of this Agreement (the "EFFECTIVE Date") shall be the date that the merger of the Company and a wholly-owned subsidiary of Computer Associates International, Inc., becomes effective pursuant to the Merger Agreement. 8. DUTIES ON TERMINATION. At the Company's request at any time or upon termination of the Consulting Period for any reason, the Consultant agrees to deliver promptly to the Company all equipment, notebooks, documents, memoranda, reports, files, samples, books, correspondence, lists, computer tapes or disks, or other written or graphic records, and the like (and all copies thereof), relating to the Company's business, which are or have been in his possession or under his control. -5- 9. SEVERABILITY. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. 10. NOTICES. All notices and other communications under this Agreement shall be in writing and shall be given by first-class mail, certified or registered with return receipt requested or hand delivery acknowledged in writing by the recipient personally, and shall be deemed to have been duly given three days after mailing or immediately upon duly acknowledged hand delivery to the respective persons named below: If to the Company: Computer Management Sciences, Inc. 8133 Baymeadows Way Jacksonville, Florida 32256 Attention: R. Halsey Wise President and Chief Operating Officer with a copy to: Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar President and Chief Operating Officer If to the Consultant: Jerry W. Davis 8210 Bahia Blanca Court Jacksonville, Florida 32256 Either party may change such party's address for notices by notice duly given pursuant hereto. 11. GOVERNING LAW. This agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the internal laws of the State of New York without reference to the principles of conflicts of laws. 12. ENTIRE AGREEMENT. Except as specifically set forth herein, this Agreement represents the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements, representations and understandings. The Consultant acknowledges and agrees that neither the Company nor anyone acting on its behalf has made, and is not making, and in executing this Agreement, the Consultant has not relied upon, any representations, promises or inducements except to the extent the same is expressly set forth in this Agreement. -6- 13. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14. ASSIGNMENT OF RIGHTS BY THE CONSULTANT. The Consultant may not assign any rights hereunder without the prior written consent of the Company. Any such assignment in the absence of such written consent shall be void. The Company may assign this Agreement to any successor to the Company or a substantial part of the Company's business or assets. 15. AMENDMENTS; WAIVERS. (a) This Agreement may not be modified, amended, altered or supplemented except upon the written agreement executed by the parties hereto. (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. -7- The Company has caused this Agreement to be executed and delivered by its duly authorized officer and the Consultant has executed and delivered this Agreement as of the date set forth above. /S/ Jerry W. Davis ---------------------------------- Jerry W. Davis COMPUTER MANAGEMENT SCIENCES, INC. By: /S/ R. HALSEY WISE ------------------------------ Name: R. Halsey Wise Title: President and Chief Operating Officer -8- SCHEDULE A DESCRIPTION OF CONSULTING SERVICES Transition Services Integration Services Customer Relations and Retention Employee Relations and Retention Strategic Planning EX-99.(C)(5) 14 WEIGHT CONSULTING AGREEMENT Exhibit 99(c)(5) CONSULTING AND NON-COMPETE AGREEMENT, dated as of February 5, 1999 (the "AGREEMENT"), by and between Computer Management Sciences, Inc., a Florida corporation (the "COMPANY"), and Anthony V. Weight (the "CONSULTANT"). -------------------------------------------------------------- The Company is intending to enter into a Merger Agreement with Computer Associates International, Inc. (the "MERGER AGREEMENT"), pursuant to which the Company will become a subsidiary of Computer Associates International, Inc. The Consultant is a senior executive of the Company, has unique knowledge of the Company's business and has occupied a position of trust and confidence. The Company and the Consultant desire that, effective upon the Merger, the Consultant will continue as a consultant to the Company and will agree to refrain from competing with the Company all as set forth in this Agreement. In consideration of the mutual agreements, the Consultant and the Company agree as follows: 1. CONSULTING SERVICES. For the Consulting Period (as defined in Section 2), the Consultant shall provide from time to time and as requested by the Company the consulting services set forth in Schedule A (the "SERVICES"). The Consultant shall report to the President of the Company. The Consultant shall devote such time and energy to the business of the Company as reasonably required to perform the Services; the parties agree that the performance of the Services is not intended to require full time effort. 2. TERM. The Consultant and the Company agree that the consulting period (the "CONSULTING PERIOD") begins on the Effective Date (as defined in Section 7) and ends on the second anniversary of the Effective Date. The Consultant acknowledges that the Consulting Period may be terminated at any time, with or without cause or for any or no reason, at the option either of the Company or the Consultant, on 30 days written notice, as provided in Section 4. 3. CONSULTING FEE. Commencing on the Effective Date, the Company shall pay the Consultant an annual consulting fee of $250,000, payable in advance on the Effective Date and the first anniversary of the Effective Date. 4. TERMINATION. (a) TERMINATION WITHOUT CAUSE. If the Company terminates the Consulting Period without Cause prior to the second anniversary of the Effective Date, the Consultant shall be entitled to continued payment of all consulting fees. (b) TERMINATION FOR CAUSE. If (i) the Company terminates the Consulting Period at any time for Cause, or (ii) the Consultant terminates the Consulting Period at any time, the Consultant shall be entitled to receive the consulting fees paid through the date of termination. "CAUSE" shall mean (i) the Consultant's breach of any material term of this Agreement, including, but not limited to, the covenants set forth in Section 5 hereof; (ii) the Consultant's continued willful failure or refusal, after written notice, to perform his duties hereunder, (iii) the Consultant's conviction of a felony or of any crime involving moral turpitude, fraud or misrepresentation, or (iv) any gross negligence or willful misconduct by the Consultant resulting in substantial loss to the Company, substantial damage to the Company's reputation or theft or defalcation from the Company. (c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant dies or becomes Disabled, in which event the Consulting Period terminates, the Consultant (or, in the case of death, his estate), shall be entitled to continued payment of all consulting fees as death or disability benefits. "DISABLED" shall mean the Consultant's adjudication as mentally incompetent, or the occurrence of a mental or physical disability preventing the Consultant from performing his duties for 120 or more days within any calendar year. Any question as to the existence of his disability as to which the Consultant and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Consultant and the Company. If the Consultant and the Company cannot agree on a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of disability made in writing to the Consultant and the Company shall be final and conclusive for all purposes. (d) GENERAL. Upon the termination of the Consulting Period, for any reason, (i) the Company shall have no further obligations to the Consultant hereunder, other than as specifically set forth in this Agreement and (ii) the Consultant shall continue to be bound by the terms of this Agreement other than Section 1. 5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In consideration for, and as a condition to, the Company's payment of the non-compete payment, and in connection with the merger described herein, until the fifth anniversary of the Effective Date, the Consultant will not directly or indirectly, on Consultant's own behalf or in the service of or on behalf of any other individual or entity, either as a proprietor, employee, agent, independent contractor, consultant, director, officer, partner or stockholder (other than a stockholder of a corporation listed on a national securities exchange or whose stock is regularly traded in the over-the-counter market, provided that the Consultant at no time owns, directly or indirectly, in excess of 1% of the outstanding stock of any class of any such corporation): (i) participate or engage in any activities or business involving, or relating to, (I) the provision of information technology consulting and custom software development services, (II) any other business or activity engaged in by the Company on the date of this Agreement, or any other business or activity engaged in by the Company in the future and in which the Consultant actively participated or (III) any business or activity of any affiliate of the Company in which the Consultant actively participated (or, in each case of I, II and III, in any activities or business that are incidental thereto) within the United States of America ("COMPETITIVE ACTIVITIES"), including, without limitation, (A) selling goods or rendering services of the type (or similar to the type) sold or rendered by the Company, whether by means of electronic or traditional commerce; (B) soliciting any person or entity that is a current customer, that has been a customer within the past three years or that is or was a prospective customer prior to or during the Consulting Period, in each case, of the Company or an affiliate of the Company (provided that it shall not be deemed a breach of this Agreement if the Consultant solicits fewer than three such 2 customers for goods or services unrelated to the Competitive Activities), (C) assisting any person in any way to do, or attempt to do, anything prohibited by clauses (A) or (B) above and (D) be employed by any person or entity that has received services of the type described above from the Consultant or with which the Consultant otherwise had material contact while employed by the Company or which received services of the type describe above from any office or employee of the Company over which Consultant had management responsibility, in either case to provide or supervise, directly or indirectly, the services comprising a Competitive Activity; or (ii) perform any action, activity or course of conduct which is detrimental in any material respect to the businesses or business reputation of the Company (or any of its affiliates), including without limitation (A) soliciting, recruiting or hiring any employees of the Company (or any of its affiliates) or persons who have worked for the Company (or any of its affiliates) at any time since January 1, 1998 and (B) soliciting or encouraging any employee of the Company (or any of its affiliates) to leave the employment of the Company. (b) The Consultant shall not, without the written consent of the Company, disclose to any other person or use, whether directly or indirectly, any Confidential Information relating to or used by the Company or any of its affiliates, whether in written, oral or other form, except in connection with the performance of his duties hereunder. "CONFIDENTIAL INFORMATION" shall mean information about the Company or any of its affiliates, and their clients and customers that is not disclosed by the Company or any of its affiliates for financial reporting purposes and that was learned by the Consultant in the course of employment by the Company or any of its affiliates or in the course of performing the services under this Agreement, including (without limitation) any proprietary knowledge, product and service designs, trade secrets, manuals, technical information and plans, contracts, systems, procedures, databases, electronic files, disks and printouts, correspondence, internal reports, personnel files, information about employees of the Company and its affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with suppliers to and customers of the Company and its affiliates, sales and advertising material, business plans, marketing plans, financial data (including without limitation the revenues, costs or profits associated with services), customer and industry lists, customer information, customer lists coupled with product or service pricing, customer contacts, supplier contacts and other contact information, pricing policies, supplies, agents, risk analyses, engineering information and computer reports, computer software, computer systems, computer formats, computer screen designs and computer input and output specifications, inclusive of any pertinent documentation, techniques, processes, technical information and know-how. The Consultant acknowledges that such Confidential Information is specialized, unique in nature and of great value to the Company and its affiliates, and that such information gives the Company and its affiliates a competitive advantage. The Consultant's obligations under this Section 5(b) shall survive the termination of the Consulting Period and of this Agreement and shall be fully enforceable thereafter in accordance with the terms of this Agreement. (c) (i) Confidential Information does not include information which (A) is or becomes part of the public domain other than as a result of the Consultant's disclosure, or (B) 3 becomes available to the Consultant on a nonconfidential basis from a source other than the Company, provided that source is not bound with respect to that information by a confidentiality agreement with the Company or otherwise prohibited from transmitting that information by a contractual, legal or other obligation. (ii) If the Consultant is requested or (in the opinion of his counsel) required by law or judicial order to disclose any Confidential Information, the Consultant shall provide the Company with prompt notice of any such request or requirement so that the Company may seek an appropriate protective order or waiver of the Consultant's compliance with the provisions of this Section 5(c). The Consultant will not oppose any reasonable action by, and will cooperate with, the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Confidential Information. If, failing the entry of a protective order or the receipt of a waiver hereunder, the Consultant is, in the opinion of his counsel, compelled by law to disclose a portion of the Confidential Information, the Consultant may disclose to the relevant tribunal without liability hereunder that portion of the Confidential Information which counsel advises the Consultant he is legally required to disclose, and each of the parties hereto agrees to exercise such party's best efforts to obtain assurance that confidential treatment will be accorded such Confidential Information. (d) If an award by a court or arbitration panel declares that any term or provision of this Section 5 is excessive in duration or scope or is unreasonable or unenforceable, the parties agree that the court or arbitration panel making such determination shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. (e) In the event of a breach or threatened breach by the Consultant of the provisions of this Section 5, the Consultant acknowledges that the Company will suffer irreparable injury and may not have an adequate remedy at law and therefore may be entitled to a temporary restraining order or a preliminary or permanent injunction restraining the Consultant from such breach without the requirement of posting security or proving actual damages as well as an equitable accounting of all profits or benefits arising out of such violation. In addition, in the event of a breach by the Consultant of the provisions of this Section 5, the Consultant agrees as liquidated damages hereunder to repay the full amount of the non-compete payment made pursuant to Section 5(f). Nothing contained in this Section 5 or elsewhere in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available at law or equity for such breach or threatened breach by the Consultant. (f) In consideration of the Consultant's covenants under this Section 5, the Company shall pay the Consultant on the Effective Date a non-compete payment in the sum of $4,500,000. (g) By executing this Agreement, Consultant assigns and transfers to the Company all his right, title, and interest in and to all intellectual property created, developed, conceived, or reduced to practice while employed as a consultant by the Company or its 4 predecessor(s) arising in connection with the Services. While he is employed by the Company and when he ceases to be employed by the Company, Consultant shall fully and promptly disclose in writing to the Company, and hold in trust for the sole right and benefit of the Company, all ideas, plans, designs, methods, techniques, discoveries, inventions, developments, improvements, trade secrets, computer programs and software, and other proprietary data, records, knowledge, and information that Consultant solely or jointly knows, creates, conceives, develops, or reduces to practice while employed by, and arising in connection with the Services to, the Company (collectively "Intellectual Property"), whether or not patentable or capable of copyright or trademark registration, and whether or not created, conceived, developed, or reduced to practice at the request of the Company or during normal working hours. While employed by the Company and at all times thereafter, Consultant shall do all things, and execute all documents (including applications for patents, copyrights, and trademarks, and for renewals extensions, and divisions thereof), that are requested and reasonably required by the Company to create, enforce, or evidence the Company's rights to any Intellectual Property. If the Company is unable for any reason whatsoever to obtain Consultant's signature or assistance, Consultant irrevocably appoints the Company and each of its officers as his agent and attorney-in-fact, with full power of substitution, to sign, execute, and file in the name and on behalf of Consultant any document required to prosecute or apply for any foreign or United States patent, copyright, trademark, or other proprietary protection, including renewals, extensions, and divisions, and to do all other lawful acts and things to further the issuance or prosecution of patent, copyright, trademark, or other proprietary protection, all with the same legal force and effect as if done or executed by Consultant. 6. COOPERATION WITH REGARD TO LITIGATION. The Consultant agrees to cooperate with the Company at all times (including following termination of the Consulting Period for any reason) by making himself reasonably available to testify on behalf of the Company or its affiliates, in any action, suit or proceeding, whether civil, criminal, administrative, or investigative and to assist the Company or any of its affiliates in any such action, suit, or proceeding by providing information and meeting and consulting with the Company or representatives or counsel to the Company or its affiliates, as reasonably requested by such representatives or counsel. The Consultant shall be reimbursed by the Company for any expenses (including, but not limited to, legal fees) reasonably incurred by the Consultant in connection with his compliance with the foregoing covenant. 7. CONDITIONS TO EFFECTIVENESS. The Effective Date of this Agreement (the "EFFECTIVE Date") shall be the date that the merger of the Company and a wholly-owned subsidiary of Computer Associates International, Inc., becomes effective pursuant to the Merger Agreement. 8. DUTIES ON TERMINATION. At the Company's request at any time or upon termination of the Consulting Period for any reason, the Consultant agrees to deliver promptly to the Company all equipment, notebooks, documents, memoranda, reports, files, samples, books, correspondence, lists, computer tapes or disks, or other written or graphic records, and the like (and all copies thereof), relating to the Company's business, which are or have been in his possession or under his control. 5 9. SEVERABILITY. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. 10. NOTICES. All notices and other communications under this Agreement shall be in writing and shall be given by first-class mail, certified or registered with return receipt requested or hand delivery acknowledged in writing by the recipient personally, and shall be deemed to have been duly given three days after mailing or immediately upon duly acknowledged hand delivery to the respective persons named below: If to the Company: Computer Management Sciences, Inc. 8133 Baymeadows Way Jacksonville, Florida 32256 Attention: R. Halsey Wise President and Chief Operating Officer with a copy to: Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11788-7000 Attention: Sanjay Kumar President and Chief Operating Officer If to the Consultant: Anthony V. Weight 13918 Mandarin Oaks Lane Jacksonville, FL 32223 Either party may change such party's address for notices by notice duly given pursuant hereto. 11. GOVERNING LAW. This agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the internal laws of the State of New York without reference to the principles of conflicts of laws. 12. ENTIRE AGREEMENT. Except as specifically set forth herein, this Agreement represents the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements, representations and understandings. The Consultant acknowledges and agrees that neither the Company nor anyone acting on its behalf has made, and is not making, and in executing this Agreement, the Consultant has not relied upon, any representations, promises or inducements except to the extent the same is expressly set forth in this Agreement. 6 13. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14. ASSIGNMENT OF RIGHTS BY THE CONSULTANT. The Consultant may not assign any rights hereunder without the prior written consent of the Company. Any such assignment in the absence of such written consent shall be void. The Company may assign this Agreement to any successor to the Company or a substantial part of the Company's business or assets. 15. AMENDMENTS; WAIVERS. (a) This Agreement may not be modified, amended, altered or supplemented except upon the written agreement executed by the parties hereto. (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. 7 The Company has caused this Agreement to be executed and delivered by its duly authorized officer and the Consultant has executed and delivered this Agreement as of the date set forth above. /s/ Anthony V. Weight ------------------------------------- Anthony V. Weight COMPUTER MANAGEMENT SCIENCES, INC. By:/s/ R. Halsey Wise ------------------------------------- Name: R. Halsey Wise Title: President and Chief Operating Officer 8 SCHEDULE A DESCRIPTION OF CONSULTING SERVICES Transition Services Integration Services Customer Relations and Retention Employee Relations and Retention Strategic Planning -----END PRIVACY-ENHANCED MESSAGE-----