-----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, BcKl4JfREh1MNSX78OSH0DCujhtBzcmExt9KRCzFrcONhDUXOkVFW7vqykyLhvqB d8/nheIZlUkqLPCn/xpNrQ== 0000940180-99-000345.txt : 19990331 0000940180-99-000345.hdr.sgml : 19990331 ACCESSION NUMBER: 0000940180-99-000345 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19990330 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERLINK COMPUTER SCIENCES INC CENTRAL INDEX KEY: 0000745597 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 942990567 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-47657 FILM NUMBER: 99579124 BUSINESS ADDRESS: STREET 1: 47370 FREMONT BLVD CITY: FREMONT STATE: CA ZIP: 94538 MAIL ADDRESS: STREET 1: 47370 FREMONT BLVD CITY: FREMONT STATE: CA ZIP: 94538 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERLINK COMPUTER SCIENCES INC CENTRAL INDEX KEY: 0000745597 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 942990567 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-47657 FILM NUMBER: 99579125 BUSINESS ADDRESS: STREET 1: 47370 FREMONT BLVD CITY: FREMONT STATE: CA ZIP: 94538 MAIL ADDRESS: STREET 1: 47370 FREMONT BLVD CITY: FREMONT STATE: CA ZIP: 94538 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STERLING SOFTWARE INC CENTRAL INDEX KEY: 0000716714 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 751873956 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 300 CRESCENT COURT STREET 2: SUITE 1200 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149811000 MAIL ADDRESS: STREET 1: 300 CRESCENT COURT STREET 2: SUITE 1200 CITY: DALLAS STATE: TX ZIP: 75201 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STERLING SOFTWARE INC CENTRAL INDEX KEY: 0000716714 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 751873956 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 300 CRESCENT COURT STREET 2: SUITE 1200 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149811000 MAIL ADDRESS: STREET 1: 300 CRESCENT COURT STREET 2: SUITE 1200 CITY: DALLAS STATE: TX ZIP: 75201 SC 14D1 1 SCHEDULE 14D1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND STATEMENT ON SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 Interlink Computer Sciences, Inc. (Name of Subject Company) Sterling Software (Southwest), Inc. Sterling Software, Inc. (Bidders) Common Stock, $.001 par value (Title of Class of Securities) 458747 10 2 (CUSIP Number of Class of Securities) Don J. McDermett, Jr., Esq. Sterling Software, Inc. 300 Crescent Court Suite 1200 Dallas, Texas 75201 Telephone: (214) 981-1000 Facsimile: (214) 981-1265 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) Copy to: Richard J. Grossman, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Telephone: (212) 735-3000 Facsimile: (212) 735-2000 CALCULATION OF FILING FEE - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Transaction Valuation:* $71,783,208 Amount of Filing Fee:** $14,356.64 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- * Estimated for purpose of calculating the filing fee only. The calculation assumes the purchase of 10,254,744 shares of common stock, $.001 par value (including the associated Preferred Share Purchase Rights, the "Shares") (which represents 8,308,107 Shares outstanding, 1,614,896 Shares reserved for issuance upon the exercise of options, 260,706 Shares reserved for issuance upon the exercise of warrants, and 71,035 Shares issuable under the Employee Stock Purchase Plan (the "ESPP") of Interlink Computer Sciences, Inc. (the "Company")), at a price per Share of $7.00 in cash. Such number of Shares represents all the Shares outstanding as of March 23, 1999, and assumes the exercise of all existing options and warrants to acquire Shares from the Company and the issuance by the Company of 71,035 Shares under the ESPP. ** The amount of the filing fee, calculated in accordance with rule 0-11(d) of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate value of cash offered by Sterling Software (Southwest), Inc. for such number of Shares. [_] Check box if any part of the fee is offset has 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: Not Applicable Filing Party: Not Applicable Form or Registration No.: Not Applicable Date Filed: Not Applicable - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 458747102 14D-1/13D (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Sterling Software (Southwest), Inc. IRS ID No.: Applied for - ------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) ( ) (b) ( ) - ------------------------------------------------------------------------------- (3) SEC USE ONLY - ------------------------------------------------------------------------------- (4) SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ( ) - ------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- (7)SOLE VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------------------------------------------------------ (8)SHARED VOTING POWER 2,025,118* ------------------------------------------------------ (9) SOLE DISPOSITIVE POWER 0 ------------------------------------------------------ (10) SHARED DISPOSITIVE POWER 2,025,118* - ------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,025,118* - ------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ( ) - ------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) **19.75 % - ------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON CO * On March 23, 1999, Sterling Software, Inc., a Delaware corporation ("Parent"), and Sterling Software (Southwest), Inc., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), entered into Stockholder Agreements (the "Stockholder Agreements") with certain significant stockholders and the executive officers and the directors (collectively, the "Stockholders") of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), pursuant to which the Stockholders, among other things, granted to Parent an option to purchase an aggregate of 2,025,118 shares of common stock, $.001 par value per share (including the associated Preferred Share Purchase Rights, the "Shares"), of the Company owned or which may be acquired upon the exercise of options by them (representing 1,171,068 owned Shares and options to acquire 854,050 Shares). The Stockholder Agreements are described more fully in Section 11 of the Offer to Purchase, dated March 30, 1999. ** This calculation assumes the purchase of 10,254,744 Shares (which represents 8,308,107 Shares outstanding, 1,614,896 Shares reserved for issuance upon the exercise of options, 260,706 Shares reserved for issuance upon the exercise of warrants, and 71,035 Shares issuable under the Company's Employee Stock Purchase Plan (the "ESPP")), at a price per Share of $7.00 in cash. Such number of Shares represents all the Shares outstanding as of March 23, 1999, and assumes the exercise of all existing options and warrants to acquire Shares from the Company and the issuance by the Company of 71,035 Shares under the ESPP. 2 CUSIP No. 458747102 14D-1/13D (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Sterling Software, Inc. IRS ID No.: 75-1873956 - ------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) ( ) (b) ( ) - ------------------------------------------------------------------------------- (3) SEC USE ONLY - ------------------------------------------------------------------------------- (4) SOURCE OF FUNDS* WC - ------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ( ) - ------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- (7)SOLE VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------------------------------------------------------ (8)SHARED VOTING POWER 2,025,118* ------------------------------------------------------ (9) SOLE DISPOSITIVE POWER 0 ------------------------------------------------------ (10) SHARED DISPOSITIVE POWER 2,025,118* - ------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,025,118* - ------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ( ) - ------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) **19.75 % - ------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON CO * On March 23, 1999, Sterling Software, Inc., a Delaware corporation ("Parent"), and Sterling Software (Southwest), Inc., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), entered into Stockholder Agreements (the "Stockholder Agreements") with certain significant stockholders and the executive officers and the directors (collectively, the "Stockholders") of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), pursuant to which the Stockholders, among other things, granted to Parent an option to purchase an aggregate of 2,025,118 shares of common stock, $.001 par value per share (including the associated Preferred Share Purchase Rights, the "Shares"), of the Company owned or which may be acquired upon the exercise of options by them (representing 1,171,068 owned Shares and options to acquire 854,050 Shares). The Stockholder Agreements are described more fully in Section 11 of the Offer to Purchase, dated March 30, 1999. ** This calculation assumes the purchase of 10,254,744 Shares (which represents 8,308,107 Shares outstanding, 1,614,896 Shares reserved for issuance upon the exercise of options, 260,706 Shares reserved for issuance upon the exercise of warrants, and 71,035 Shares issuable under the Company's Employee Stock Purchase Plan (the "ESPP")), at a price per Share of $7.00 in cash. Such number of Shares represents all the Shares outstanding as of March 23,1999, and assumes the exercise of all existing options and warrants to acquire Shares from the Company and the issuance of 71,035 Shares under the ESPP. 3 This Tender Offer Statement on Schedule 14D-1 and Statement on Schedule 13D (the "Schedule 14D-1/13D") relates to the offer by Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation ("Parent"), to purchase all of the outstanding shares of common stock, par value $.001 per share (the "Common Stock," and including the associated Preferred Share Purchase Rights, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), at a purchase price of $7.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated March 30, 1999 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal (the "Letter of Transmittal") (which, as amended or supplemented from time to time, together constitute the "Offer"), a copy of which is attached hereto as Exhibit (a)(2). Item 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Interlink Computer Sciences, Inc. The information set forth in Section 8 ("Certain Information Concerning the Company") of the Offer to Purchase is incorporated herein by reference. (b) The exact title of the class of equity securities being sought in the Offer is Common Stock, par value $.001 per share, including the associated Preferred Share Purchase Rights, of the Company. The information set forth in the Introduction of the Offer to Purchase 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 is filed by Purchaser and Parent. The information set forth in Section 9 ("Certain Information Concerning Parent, Sterling (U.S. of America) and Purchaser") of the Offer to Purchase and in Schedule I thereto is incorporated herein by reference. (e) and (f) During the last five years, neither Purchaser nor Parent nor, to the best knowledge of Purchaser or Parent, none of the persons listed in Schedule I to the Offer to Purchase, have (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 or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in Section 9 ("Certain Information Concerning Parent, Sterling (U.S. and America) and Purchaser") and Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements") of the Offer to Purchase is incorporated herein by reference. Item 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in the Introduction and Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (b) and (c) Not applicable. 4 Item 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)--(e) The information set forth in the Introduction, Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements") and Section 12 ("Plans for the Company; Other Matters") of the Offer to Purchase is incorporated herein by reference. (f)--(g) The information set forth in the Introduction and Section 7 ("Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act Registration; Margin Regulations") 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 the Introduction, Section 9 ("Certain Information Concerning Parent, Sterling (U.S. of America) and Purchaser") and Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements") of the Offer to Purchase and in Schedule I thereto is incorporated herein by reference. Item 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES The information set forth in the Introduction, Section 9 ("Certain Information Concerning Parent, Sterling (U.S. of America) and Purchaser"), Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; The Merger Agreement and Certain Other Agreements") and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. Item 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. Item 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not applicable. Item 10. ADDITIONAL INFORMATION. (a) Except as disclosed in Items 3 and 7 above, there are no present or proposed material contracts, arrangements, understandings or relationships between Purchaser or Parent, or to the best knowledge of Purchaser and Parent, any of the persons listed in Schedule I to the Offer to Purchase, and the Company, or any of its executive officers, directors, controlling persons or subsidiaries. (b)--(c) The information set forth in the Introduction, Section 14 ("Conditions to the Offer") and Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act Registration; Margin Regulations") and Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, to the extent not otherwise incorporated herein by reference, is incorporated herein by reference. 5 Item 11. MATERIALS TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated March 30, 1999. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Joint Press Release of Parent and the Company dated March 24, 1999. (a)(8) Press Release of Parent dated March 30, 1999. (a)(9) Summary Advertisement dated March 30, 1999. (b) None. (c)(1) Agreement and Plan of Merger, dated as of March 23, 1999, by and among Parent, Purchaser and the Company. (c)(2) Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser and Adtel Limited Partnership, Adventact Limited Partnership, Advent International Investors II Limited Partnership, Adwest Limited Partnership, Global Private Equity II Limited Partnership and Golden Gate Development and Investment Limited Partnership. (c)(3) Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser and Cisco Systems, Inc. (c)(4) Form of Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser and directors and executive officers of the Company (together with a schedule indicating the number of Shares and options to purchase Shares owned by each director and executive officer who entered into a Stockholder Agreement). (c)(5) Exclusivity Agreement, dated March 16, 1999, by and between Parent and the Company. (d) None. (e) Not applicable. (f) None.
6 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: March 30, 1999 Sterling Software, Inc. By: /s/ Don J. McDermett, Jr. ---------------------------------- Name: Don J. McDermett, Jr. Title: Senior Vice President and General Counsel Sterling Software (Southwest), Inc. By: /s/ Don J. McDermett, Jr. ---------------------------------- Name: Don J. McDermett, Jr. Title: Vice President 7 INDEX TO EXHIBITS
Exhibit Description - ------- ----------- (a)(1) Offer to Purchase dated March 30, 1999. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Joint Press Release of Parent and the Company dated March 24, 1999. (a)(8) Press Release of Parent dated March 30, 1999. (a)(9) Summary Advertisement dated March 30, 1999. (b) None (c)(1) Agreement and Plan of Merger, dated as of March 23, 1999, by and among Parent, Purchaser and the Company. (c)(2) Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser and Adtel Limited Partnership, Adventact Limited Partnership, Advent International Investors II Limited Partnership, Adwest Limited Partnership, Global Private Equity II Limited Partnership and Golden Gate Development and Investment Limited Partnership. (c)(3) Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser and Cisco Systems, Inc. (c)(4) Form of Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser and directors and executive officers of the Company (together with a schedule indicating the number of Shares and options to purchase Shares owned by each director and executive officer who entered into a Stockholder Agreement). (c)(5) Exclusivity Agreement, dated March 16, 1999, by and between Parent and the Company. (d) None. (e) Not applicable. (f) None.
8 EX-99.(A)(1) 2 OFFER TO PURCHASE EXHIBIT (A)(1) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Preferred Share Purchase Rights) of Interlink Computer Sciences, Inc. at $7.00 Net Per Share by Sterling Software (Southwest), Inc. an indirect wholly owned subsidiary of Sterling Software, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF MARCH 23, 1999, BY AND AMONG STERLING SOFTWARE, INC. ("PARENT"), STERLING SOFTWARE (SOUTHWEST), INC. ("PURCHASER") AND INTERLINK COMPUTER SCIENCES, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT, PURCHASER OR ANY SUBSIDIARY OF PARENT, REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING (ON A FULLY DILUTED BASIS) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. THE OFFER IS NOT SUBJECT TO A FINANCING CONDITION. SEE SECTION 14. --------------- IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares should either (i) complete and sign the enclosed Letter of Transmittal (or facsimile thereof) in accordance with the Instructions in the Letter of Transmittal, have such stockholder's signature thereon guaranteed (if required by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of Transmittal (or a facsimile thereof) and any other required documents to the Depositary (as defined herein) and either deliver the certificates for such Shares to the Depositary or tender such Shares pursuant to the procedure for book-entry transfer set forth in Section 3 of this Offer to Purchase or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Any stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee to tender such Shares. Any stockholder who desires to tender Shares and whose certificates evidencing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3 of this Offer to Purchase. Questions and requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be directed to the Information Agent or brokers, dealers, commercial banks or trust companies. --------------- The Information Agent for the Offer is: GEORGESON & COMPANY INC. March 30, 1999 TABLE OF CONTENTS INTRODUCTION............................................................... 3 THE OFFER.................................................................. 6 1. Terms of the Offer................................................. 6 2. Acceptance for Payment and Payment................................. 8 3. Procedures for Tendering Shares.................................... 9 4. Withdrawal Rights.................................................. 11 5. Certain Federal Income Tax Consequences............................ 12 6. Price Range of the Shares; Dividends............................... 13 7. Effect of the Offer on the Market for the Shares; NASDAQ Quotation; Exchange Act Registration; Margin Regulations..................... 13 8. Certain Information Concerning the Company......................... 14 9. Certain Information Concerning Parent, Sterling (U.S. of America) and Purchaser..................................................... 18 10. Sources and Amount of Funds........................................ 20 11. Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements.......................................... 20 12. Plans for the Company; Other Matters............................... 34 13. Dividends and Distributions........................................ 36 14. Conditions to the Offer............................................ 36 15. Certain Legal Matters.............................................. 38 16. Fees and Expenses.................................................. 40 17. Miscellaneous...................................................... 40 SCHEDULE I: Information Concerning Directors and Executive Officers of Parent, Sterling (U.S. of America) and Purchaser.................................. I-1
2 To the Holders of Common Stock of Interlink Computer Sciences, Inc.: INTRODUCTION Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser"), a wholly owned subsidiary of Sterling Software (U.S. of America), Inc., a Delaware corporation ("Sterling (U.S. of America)") and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation ("Parent"), hereby offers to purchase all outstanding shares of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights issued pursuant to the Rights Agreement (as defined below) (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), at a price of $7.00 per Share, net to the seller in cash, without interest (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended or supplemented from time to time, collectively constitute the "Offer"). Tendering stockholders of record who tender Shares directly will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a bank or broker should check with such institution as to whether they will charge any service fees. Purchaser will pay all fees and expenses of BankBoston, N.A., which is acting as the depositary for the Offer (in such capacity, the "Depositary") and Georgeson & Company Inc., which is acting as information agent for the Offer (in such capacity, the "Information Agent"), incurred in connection with the Offer and in accordance with the terms of the agreements entered into between Purchaser and/or Parent and each such person. See Section 16. THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. Hambrecht & Quist LLC ("Hambrecht & Quist"), financial advisor to the Company, has delivered to the Company Board its opinion, dated as of March 23, 1999 (the "Financial Advisor Opinion"), to the effect that, as of such date and based upon and subject to certain matters stated therein, the cash consideration to be received by the holders of Shares (other than Purchaser, Parent and their affiliates) in the Offer and the Merger is fair to such holders from a financial point of view. A copy of the Financial Advisor Opinion is attached as an exhibit to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by the Company with the Securities and Exchange Commission (the "Commission") in connection with the Offer and which is being mailed to holders of Shares herewith. Holders of Shares are urged to, and should, read the Financial Advisor Opinion carefully. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT, PURCHASER OR ANY SUBSIDIARY OF PARENT, REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING (ON A FULLY DILUTED BASIS) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to Purchase, "fully diluted basis" takes into account the exercise of all outstanding options, warrants and other rights and securities exercisable into shares of Common Stock whether or not vested or then exercisable and the purchase of all Shares issuable under employee stock purchase or similar benefit plans. The Company has represented and warranted to Parent and Purchaser that, as of March 22, 1999, there were 8,308,107 Shares issued and outstanding, not more than 80,000 Shares would be issued prior to 3 April 30, 1999 pursuant to the Company's 1996 Employee Stock Purchase Plan (the "ESPP"), 1,614,896 Shares were issuable pursuant to the exercise of options to purchase Shares ("Options") granted under the Company's 1992 Stock Option Plan and 1996 Director Stock Option Plan (collectively, the "Company Option Plans"), 260,706 Shares were issuable pursuant to the exercise of outstanding warrants (the "Warrants"), no Shares of preferred stock, par value $.001 per Share (the "Preferred Stock"), were issued and outstanding and 100,000 shares of Series A Participating Preferred Stock were reserved for issuance pursuant to the Rights Agreement. The Merger Agreement provides, among other things, that the Company will not, without the prior written consent of Parent, issue any additional Shares (except upon the exercise of outstanding Options and Warrants and pursuant to the ESPP). Pursuant to separate Stockholder Agreements (as defined herein) entered into by Parent and Purchaser with certain significant stockholders of the Company and the executive officers and directors of the Company (each, a "Stockholder"), Parent and Purchaser have the right to purchase from such Stockholders at a price of $7.00 per Share (or any higher price offered by Parent or a subsidiary of Parent to the stockholders of the Company generally) an aggregate of 2,025,118 Shares (or approximately 19.7% of the Company's Shares on a fully diluted basis), including 854,050 Shares which may be acquired by the Stockholders upon exercise of Options. The Stockholders have advised Parent that they intend to tender their Shares pursuant to the Offer. Based on the foregoing and assuming the issuance of 71,035 Shares pursuant to the ESPP and the exercise of all outstanding Options and Warrants, Purchaser believes that the Minimum Condition will be satisfied if 5,127,373 Shares (including Shares subject to the Stockholder Agreements) are validly tendered and not withdrawn prior to the Expiration Date. Accordingly, Purchaser believes that if 3,102,255 Shares are validly tendered and not withdrawn prior to the Expiration Date by holders of Shares other than the Stockholders, the Minimum Condition will be satisfied. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 23, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware General Corporation Law, as amended (the "DGCL"), as soon as practicable, but not later than the tenth business day, after the completion of the Offer and satisfaction or waiver, if permissible, of all conditions to the Merger (as defined below), including the purchase of Shares pursuant to the Offer (sometimes referred to herein as the "consummation" of the Offer) and the approval and adoption of the Merger Agreement by the stockholders of the Company (if required by applicable law), Purchaser shall be merged with and into the Company (the "Merger") and the Company will be the surviving corporation in the Merger (the "Surviving Corporation"). At the effective time of the Merger (the "Effective Time"), each Share then outstanding (other than Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any of its subsidiaries, including Purchaser, and (iii) stockholders who properly perfect their dissenters' rights under the DGCL) will be converted into the right to receive $7.00 in cash or any higher price per Share paid in the Offer (the "Merger Consideration"), without interest. The Merger Agreement is more fully described in Section 11. The Merger Agreement provides that, promptly after (i) the purchase of and payment for any Shares by Purchaser or any of its affiliates as a result of which Purchaser and its affiliates own beneficially at least a majority of the then outstanding Shares and (ii) compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f- 1 promulgated thereunder, whichever shall occur later, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board as is equal to the product of the total number of directors on the Company Board (giving effect to any increase in the size of such Board) multiplied by the percentage that the number of Shares beneficially owned by Purchaser at such time (including Shares accepted for payment) bears to the total number of Shares then outstanding. In furtherance thereof, the Company shall, upon request of Parent, use its best efforts promptly either to increase the size of the Company Board or to secure the resignations of such number of its incumbent directors, or both, as is necessary to enable such designees of Parent to be so elected or appointed to the Company Board, and the Company shall take all actions available to the Company to cause such designees of Parent to be so elected or appointed. At such time, the Company shall, if requested by Parent, also take all action necessary to cause persons designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as Parent is entitled to designate on the Company Board of (i) each committee of the Company Board, (ii) each board of directors (or similar body) of each subsidiary of the Company and (iii) each 4 committee (or similar body) of each such board. Notwithstanding the foregoing, Purchaser, Parent and the Company have agreed to use their respective reasonable best efforts to ensure that at least two of the members of the Company Board shall, at all times prior to the Effective Time, be persons who were directors of the Company on the date of the Merger Agreement. Consummation of the Merger is conditioned upon, among other things, the approval and adoption by the requisite vote of stockholders of the Company of the Merger Agreement, if required by the DGCL, other applicable law or the Company's Restated Certificate of Incorporation (the "Certificate of Incorporation"). Under the DGCL and pursuant to the Certificate of Incorporation, the affirmative vote of the holders of a majority of the outstanding Shares is the only vote of any class or series of the Company's capital stock that would be necessary to approve the Merger Agreement and the Merger at any required meeting of the Company's stockholders. If the Minimum Condition is satisfied and as a result of the purchase of Shares by Purchaser pursuant to the Offer (and, if necessary, the Stockholder Agreements), Purchaser and its affiliates will own at least a majority of the outstanding Shares, and Purchaser will be able to effect the Merger without the affirmative vote of any other stockholder. Pursuant to the Merger Agreement, Parent and Purchaser have agreed to vote the Shares acquired by them pursuant to the Offer or otherwise in favor of the Merger. See Section 12. The Merger Agreement is more fully described in Section 11. Under Section 253 of the DGCL, if a corporation owns at least 90% of the outstanding shares of each class of a subsidiary corporation, the corporation holding such stock may merge such subsidiary into itself, or itself into such subsidiary, without any action or vote on the part of the board of directors or the stockholders of such other corporation (a "short-form merger"). In the event that Purchaser acquires in the aggregate at least 90% of the outstanding Shares pursuant to the Offer or otherwise, then, at the election of Parent, a short-form merger could be effected without any further approval of the Company Board or the stockholders of the Company. The Company agreed in the Merger Agreement that, in the event that Purchaser or any other subsidiary of Parent acquires at least 90% of the outstanding Shares in the Offer, it will, at the request of Purchaser, take all necessary actions to cause the Merger to become effective as soon as practicable after the expiration of the Offer, without a meeting of the stockholders of the Company. Even if Purchaser does not own 90% of the outstanding Shares following consummation of the Offer, Parent or Purchaser could seek to purchase additional Shares in the open market or otherwise in order to reach the 90% threshold and employ a short- form merger. The per Share consideration paid for any Shares so acquired in open market purchases may be greater or less than the Offer Price. Parent presently intends to effect a short-form merger, if permitted to do so under the DGCL, pursuant to which Purchaser will be merged with and into the Company. See Section 12. As a condition and inducement to Parent's and Purchaser's entering into the Merger Agreement and incurring the liabilities therein, the Stockholders, who collectively have voting power and dispositive power with respect to an aggregate of 1,171,068 Shares and own Options to acquire an additional 854,050 Shares, concurrently with the execution and delivery of the Merger Agreement entered into separate Stockholder Agreements (the "Stockholder Agreements"), dated as of March 23, 1999, with Parent and Purchaser. Pursuant to the Stockholder Agreements, the Stockholders have agreed, among other things, to grant Parent an irrevocable proxy with respect to the voting of their Shares in favor of the Merger upon the terms and subject to the conditions set forth therein. The Stockholders have also granted to Parent an option to purchase the Shares subject to the Stockholder Agreements, at an option price of $7.00 per Share (or any higher price offered by Parent or a subsidiary of Parent to the stockholders of the Company generally), at any time commencing on March 23, 1999 and continuing for varying periods. The Stockholders have advised Parent that they intend to tender all of their Shares pursuant to the Offer. The Stockholder Agreements are more fully described in Section 11. The Company has distributed one Right for each outstanding Share pursuant to the Preferred Shares Rights Agreement, dated as of February 25, 1998, between the Company and BankBoston, N.A., as Rights Agent, as amended (the "Rights Agreement"). The Company has represented in the Merger Agreement that it has taken all action which may be necessary under the Rights Agreement so that (i) the Rights will be inoperative with 5 respect to the acquisition of Shares by Parent, Purchaser or their affiliates pursuant to the Merger Agreement, the Offer and/or the Stockholder Agreements, (ii) the execution and delivery of the Merger Agreement and the Stockholder Agreements (and any amendments thereto) and the consummation of the Merger and the other transactions contemplated thereby will not cause (x) Parent and/or Purchaser to constitute an Acquiring Person (as defined in the Rights Agreement), (y) the Rights to become exercisable or (z) a Distribution Date, Section 13 Event, Transaction, Triggering Event or Shares Acquisition Date (as each such term is defined in the Rights Agreement) to occur, and (iii) the Rights shall not become exercisable upon or at any time after the acceptance for payment of Shares pursuant to the Offer and/or the purchase of, or the right to acquire, Shares pursuant to the Stockholder Agreements and/or the consummation of the Merger. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE OFFER 1. Terms of the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date, and not withdrawn in accordance with Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Monday, April 26, 1999, unless and until Purchaser, in accordance with the terms of the Merger Agreement, shall have extended the period of time during 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 Purchaser, shall expire. In the Merger Agreement, Parent and Purchaser have agreed that if all conditions to Purchaser's obligation to accept for payment and pay for Shares pursuant to the Offer are not satisfied on the scheduled Expiration Date, Purchaser may, in its sole discretion, extend the Offer for additional periods; provided, however, that Purchaser may not extend the Offer beyond July 31, 1999 without the consent of the Company. The Offer is conditioned upon the satisfaction of the Minimum Condition, the expiration or termination of all waiting periods imposed by the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the other conditions set forth in Section 14. If such conditions are not satisfied prior to the Expiration Date, Purchaser reserves the right, subject to the terms of the Merger Agreement and subject to complying with applicable rules and regulations of the Commission, to (i) decline to purchase any Shares tendered in the Offer and terminate the Offer and return all tendered Shares to the tendering stockholders, (ii) waive any or all conditions to the Offer (except the Minimum Condition) and, to the extent permitted by applicable law, purchase all Shares validly tendered, (iii) extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain all Shares which have been tendered during the period or periods for which the Offer is extended, or (iv) subject to the next paragraph, amend the Offer. The Merger Agreement provides that, without the prior written consent of the Company, Purchaser shall not (and Parent shall cause Purchaser not to) (i) decrease or change the form of the consideration to be paid in the Offer or decrease the number of Shares sought pursuant to the Offer, (ii) impose additional conditions to the Offer, (iii) extend the expiration date of the Offer beyond the initial Expiration Date of the Offer, except (A) as required by applicable law, (B) that if, immediately prior to the Expiration Date of the Offer (as it may be extended), the Shares tendered and not withdrawn pursuant to the Offer constitute more than 75% and less than 90% of the outstanding Shares, Purchaser may extend the Offer for one or more periods not to exceed an aggregate of 10 business days, notwithstanding that all conditions to the Offer are satisfied as of such Expiration Date of the Offer and (C) that if any condition to the Offer has not been satisfied or waived, Purchaser may, in its sole discretion, extend the Expiration Date of the Offer for one or more periods, provided that the Expiration Date of the Offer may not be extended beyond July 31, 1999, (iv) waive the Minimum Condition, or (v) amend 6 any term or other condition of the Offer in any manner materially adverse to holders of Shares; provided, however, that, except as set forth above and subject to applicable legal requirements, Purchaser may waive any condition to the Offer other than the Minimum Condition in its sole discretion and; provided, further, that the Offer may be extended in connection with an increase in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the Commission. Notwithstanding the foregoing, if all the conditions to the Offer have not been satisfied or waived at the initial expiration date of the Offer and all such conditions are reasonably capable of being satisfied within the applicable period set forth below, the Purchaser has agreed in the Merger Agreement to (i) extend the Offer for 10 business days from the initial Expiration Date of the Offer or (ii) extend the Offer for 20 business days from the initial Expiration Date of the Offer if the condition relating to the HSR Act has not been satisfied and is reasonably capable of being satisfied. The Merger Agreement requires Purchaser to accept for payment and pay for all Shares validly tendered and not withdrawn pursuant to the Offer if all conditions to the Offer are satisfied on the Expiration Date. As used in this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the Exchange Act. Any extension, amendment or termination of the Offer will be followed as promptly as practicable by public announcement thereof, the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act. Without limiting the obligation of Purchaser under such Rules or the manner in which Purchaser may choose to make any public announcement, Purchaser currently intends to make announcements by issuing a press release to the Dow Jones News Service. If Purchaser extends the Offer, or if Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its purchase of, or payment for, Shares or is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to Purchaser's rights under the Offer, the Depositary may retain tendered Shares on behalf of Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 4. However, the ability of Purchaser to delay the payment for Shares which Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by, or on behalf of, holders of securities promptly after the termination or withdrawal of the Offer. If Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which the 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 then existing, including the relative materiality of the changed terms or information. In a public release, the Commission has stated its view that an offer must remain open for a minimum period of time following a material change in the terms of the Offer and that waiver of a material condition, such as the Minimum Condition, is a material change in the terms of the Offer. The release states that an offer should remain open for a minimum of five (5) business days from the date a material change is first published, or sent or given to security holders and that, if material changes are made with respect to information not materially less significant than the offer price and the number of shares being sought, a minimum of ten (10) business days may be required to allow adequate dissemination and investor response. The requirement to extend the Offer will not apply to the extent that the number of business days remaining between the occurrence of the change and the then-scheduled Expiration Date equals or exceeds the minimum extension period that would be required because of such amendment. If, prior to the Expiration Date, Purchaser increases the consideration offered to holders of Shares pursuant to the Offer, such increased consideration will be paid to all holders whose Shares are purchased in the Offer whether or not such Shares were tendered prior to such increase. The Company has provided Purchaser with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, dealers, banks and similar 7 persons whose names, or the names of whose nominees, appear on the stockholder lists 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. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment and will pay for, as soon as practicable after the Expiration Date, all Shares validly tendered prior to the Expiration Date and not properly withdrawn in accordance with Section 4. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to Purchaser and not withdrawn, if, as and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance for payment of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from Purchaser and transmitting payment 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 a timely Book Entry Confirmation (as defined below) with respect thereto), (ii) a Letter of Transmittal (or 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 (as defined below), and (iii) any other documents required by the Letter of Transmittal. Accordingly, payment may be made to tendering stockholders at different times if delivery of the Shares and other required documents occur at different times. The per share consideration paid to any holder of Shares pursuant to the Offer will be the highest per share consideration paid to any other holder of such Shares pursuant to the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Purchaser expressly reserves the right, in its sole discretion, to delay acceptance for payment of, or payment for, Shares in order to comply in whole or in part with any applicable law. If Purchaser is delayed in its acceptance for payment of, or payment for, Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to Purchaser's rights under the Offer (including such rights as are set forth in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to exercise, and duly exercise, withdrawal rights as described in Section 4. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted representing more Shares than are tendered, certificates evidencing Shares not tendered or not accepted for purchase will be returned to the tendering stockholder, or such other person as the tendering stockholder shall specify in the Letter of Transmittal, as promptly as practicable following the expiration, termination or withdrawal of the Offer. In the case of Shares delivered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility (as defined in Section 3) pursuant to the procedures set forth in Section 3, such Shares will be credited to such account maintained at the Book-Entry Transfer Facility as the tendering stockholder shall specify in the Letter of Transmittal, as promptly as practicable following the expiration, termination or withdrawal of the Offer. If no such instructions are given with respect to Shares delivered by book-entry transfer, any such Shares not tendered or not purchased will be returned by crediting the account at the Book-Entry Transfer Facility designated in the Letter of Transmittal as the account from which such Shares were delivered. Purchaser reserves the right to transfer or assign, in whole or, from time to time, in part, to one or more of its affiliates, the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will 8 not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. Procedures for Tendering Shares. Valid Tender. For Shares to be validly tendered pursuant to the Offer, either (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees, or in the case of a book-entry transfer, an Agent's Message, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either certificates evidencing tendered Shares must be received by the Depositary at one of such addresses or such Shares must be delivered to the Depositary pursuant to the procedures for book-entry transfer set forth below and a Book-Entry Confirmation (as defined below) must be received by the Depositary, in each case prior to the Expiration Date, or (ii) the tendering stockholder must comply with the guaranteed delivery procedures described below. Book-Entry Transfer. 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 (2) business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, and any other required documents must, in any case, be transmitted to, and received by, the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book- entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 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 such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in the Book Entry Transfer Facility's systems whose name appears on a security position listing as the owner of the Shares) of Shares tendered therewith and such registered holder has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security 9 Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In all other cases, all signatures on Letters of Transmittal must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the certificates for 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, or certificates for Shares not tendered or not accepted for payment are to be returned, to a person other than the registered holder of the certificates surrendered, then the tendered certificates for such Shares must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates for Shares are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such stockholder's tender may be effected if all 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 Purchaser, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) the certificates for (or a Book-Entry Confirmation with respect to) such Shares, together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents, are received by the Depositary within three (3) trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the NASDAQ National Market (the "NASDAQ National Market"), operated by the National Association of Securities Dealers, Inc. (the "NASD"), is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Binding Agreement. The valid tender of Shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer. Appointment. By executing the Letter of Transmittal as set forth above (including delivery through an Agent's Message), the tendering stockholder will irrevocably appoint designees of Parent as such stockholder's attorneys- in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by Purchaser and with respect to any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after March 23, 1999 (collectively, "Distributions"). All such proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective if, as and when, and only to the extent that, Purchaser accepts for payment Shares tendered by such stockholder as provided herein. All such powers of attorney and proxies will be irrevocable and will be deemed granted in consideration of the acceptance for payment by Purchaser of Shares tendered in accordance with the terms of the Offer. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares (and any and all Distributions) will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such stockholder (and, if given, will not be deemed effective). The designees of Parent will thereby be empowered to exercise all voting and other rights with respect to such Shares (and any and all Distributions), including, without limitation, in respect of any annual or special meeting of the Company's stockholders (and any adjournment or postponement thereof), actions by written consent in lieu of any such meeting or otherwise, as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper. Purchaser 10 reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any and all Distributions), including voting at any meeting of stockholders. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by Purchaser, in its sole discretion, which determination will be final and binding. Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or the acceptance for payment of which, or payment for which, may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in its sole discretion, subject to the provisions of the Merger Agreement, to waive any defect or irregularity in any tender of Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects or irregularities relating thereto have been cured or waived. None of Purchaser, Parent, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Subject to the terms of the Merger Agreement, Purchaser's interpretation of the terms and conditions of the Offer in this regard (including the Letter of Transmittal and the instructions thereto) will be final and binding. Backup Withholding. Under the "backup withholding" provisions of federal income tax law, unless a tendering registered holder, or its assignee (in either case, the "Payee"), satisfies the conditions described in Instruction 10 of the Letter of Transmittal or is otherwise exempt, the cash payable as a result of the Offer may be subject to backup withholding tax at a rate of 31% of the gross proceeds. To prevent backup withholding, each Payee should complete and sign the Substitute Form W-9 provided in the Letter of Transmittal. See Instruction 10 to the Letter of Transmittal. 4. Withdrawal Rights. Except as otherwise provided in this Section 4 or as provided by applicable law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to the procedures set forth below at any time prior to the Expiration Date and, unless theretofore accepted for payment and paid for by Purchaser pursuant to the Offer, may also be withdrawn at any time after May 29, 1999. To be effective, a written, telegraphic 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. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 3, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's procedures. Withdrawals of tendered Shares may not be rescinded, and any Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its sole discretion, which determination will be final and binding. None of Purchaser, Parent, the Depositary, the Information Agent or any other person will be under any duty to give notification of 11 any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. Certain Federal Income Tax Consequences. The following is a general summary of certain federal income tax consequences of the Offer and the Merger relevant to a beneficial holder of Shares whose Shares are tendered and accepted for payment pursuant to the Offer or whose Shares are converted to cash in the Merger (a "Holder"). This discussion is for general information only and does not purport to consider all aspects of federal income taxation that may be relevant to holders of Shares. The discussion is based on the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect as of the date hereof and all of which are subject to change (possibly with retroactive effect). This discussion applies only to Holders that hold Shares as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment), and does not apply to Shares acquired pursuant to the exercise of employee stock options or otherwise as compensation, Shares held as part of a "straddle," "hedge," "conversion transaction," "synthetic security" or other integrated investment, or to certain types of Holders (including, without limitation, financial institutions, insurance companies, tax-exempt organizations and dealers in securities) that may be subject to special rules. This discussion does not address the federal income tax consequences to a Holder that, for federal income tax purposes, is a non- resident alien individual, a foreign corporation, a foreign partnership or a foreign estate or trust, nor does it consider the effect of any state, local, foreign or other tax laws. EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO IT OF THE SALE OF ITS SHARES, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE CHANGES IN TAX LAWS. The receipt of cash for Shares pursuant to the Offer or the Merger will be a taxable transaction for federal income tax purposes and may also be a taxable transaction under applicable state, local and foreign income and other tax laws. For federal income tax purposes, a Holder who sells Shares pursuant to the Offer or receives cash in exchange for Shares pursuant to the Merger will generally recognize capital gain or loss equal to the difference (if any) between the amount of cash received and the Holder's adjusted tax basis in Shares sold or surrendered in the Merger. Gain or loss must be determined separately for each block of Shares tendered pursuant to the Offer or surrendered for cash pursuant to the Merger (for example, Shares acquired at the same cost in a single transaction). Such capital gain or loss will be long-term capital gain or loss if the Holder has held such Shares for more than one year at the time of the consummation of the Offer or the Merger. For federal income tax purposes, net capital gain recognized by individuals (or an estate or certain trusts) from the sale of property held for more than twelve months will generally be taxed at a maximum tax rate of 20% (or 10% if the capital gain would be taxed at only a 15% tax rate if such gain were treated as ordinary income). There are limitations on the deductibility of capital losses. Payments in connection with the Offer or Merger may be subject to "backup withholding" at a rate of 31% unless a Holder of Shares (i) provides a correct taxpayer identification number ("TIN") (which, for an individual Holder, is the Holder's social security number) and any other required information, or (ii) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, and otherwise complies with applicable requirements of the backup withholding rules. A Holder that does not provide a correct TIN may be subject to penalties imposed by the Internal Revenue Service (the "IRS"). Shareholders may prevent backup withholding by completing and signing the Substitute Form W-9 included as part of the Letter of Transmittal. Any amount paid as backup withholding does not constitute an additional tax and will be creditable against the Holder's federal income tax liability, provided that the required information is given to the IRS. Each Holder should consult its tax advisor as to such Holder's qualification for exemption from backup withholding and the procedure for obtaining such exemption. 12 6. Price Range of the Shares; Dividends. The Shares are traded through the NASDAQ National Market under the symbol "INLK." The following table sets forth, for each of the fiscal quarters indicated, the high and low reported sales price per Share on the NASDAQ National Market.
Common Stock ---------------- High Low -------- ------- Fiscal Year Ended June 30, 1997 First Quarter ended September 30, 1996*..................... $10.2500 $8.0000 Second Quarter ended December 31, 1996...................... 17.0000 8.3750 Third Quarter ended March 31, 1997.......................... 18.2500 10.5000 Fourth Quarter ended June 30, 1997.......................... 11.2500 5.0000 Fiscal Year Ended June 30, 1998 First Quarter ended September 30, 1997...................... $ 7.7500 $4.1250 Second Quarter ended December 31, 1997...................... 5.2813 3.3750 Third Quarter ended March 31, 1998.......................... 5.9375 3.3750 Fourth Quarter ended June 30, 1998.......................... 6.2500 3.2500 Fiscal Year Ending June 30, 1999 First Quarter ended September 30, 1998...................... $ 3.7500 $2.0000 Second Quarter ended December 31, 1998...................... 4.2500 1.8125 Third Quarter ending March 31, 1999 (through March 29, 1999)...................................................... 6.6875 2.7500
- -------- * Commencing August 15, 1996 On March 23, 1999, the last full trading day prior to the public announcement of the execution of the Merger Agreement by the Company, Parent and Purchaser, the last reported sales price of the Shares on the NASDAQ National Market was $5.75 per Share. On March 29, 1999, the last full trading day prior to the commencement of the Offer, the last reported sales price of the Shares on the NASDAQ National Market was $6.625 per Share. Stockholders are urged to obtain a current market quotation for the Shares. The Company did not declare or pay any cash dividends during any of the periods indicated in the above table. In addition, under the terms of the Merger Agreement, the Company is not permitted to declare or pay dividends with respect to the Shares without the prior written consent of Parent, and Parent does not intend to consent to any such declaration or payment. 7. Effect of the Offer on the Market for the Shares; NASDAQ Quotation; Exchange Act Registration; Margin Regulations. Market for the Shares. The purchase of Shares by Purchaser pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly and, which, depending upon the number of Shares so purchased, could adversely affect the liquidity and market value of the remaining Shares held by the public. Purchaser 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. NASDAQ Quotation. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the NASD for continued inclusion on the NASDAQ National Market, which requires that an issuer either (i) have at least 750,000 publicly held shares, held by at least 400 round lot shareholders, with a market value of at least $5,000,000, have at least 2 market makers, have net tangible assets of at least $4 million, and have a minimum bid price of $1 or (ii) have at least 1,100,000 publicly held shares, held by at least 400 round lot shareholders, with a market value of at least $15,000,000, have a minimum bid price of $5, have at least 4 market makers and have either (A) a market capitalization of at least $50,000,000 or (B) total assets and revenues each of at least $50,000,000. If the NASDAQ National Market were to cease to 13 publish quotations for the Shares, it is possible that the Shares would continue to trade in the over-the-counter market and that price or other quotations would be reported by other sources. The extent of the public market for such Shares and the availability of such quotations would depend, however, upon such factors as the number of stockholders and/or the aggregate market value of such securities remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act as described below, and other factors. Purchaser 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 lesser than the Offer Price. Exchange Act Registration. The Shares are currently registered under the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application of the Company to the Commission if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement pursuant to Section 14(a) in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as amended (the "Securities Act"), may be impaired or eliminated. Margin Regulations. The Shares are presently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which status has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding stock exchange listing and market quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. In addition, if registration of the Shares under the Exchange Act were terminated, the Shares would no longer constitute "margin securities." Purchaser currently intends to seek delisting of the Shares from the NASDAQ National Market and the termination of the registration of the Shares under the Exchange Act as soon after the completion of the Offer as the requirements for such delisting and termination are met. If the NASDAQ National Market listing and the Exchange Act registration of the Shares are not terminated prior to the Merger, then the Shares will be delisted from the NASDAQ National Market and the registration of the Shares under the Exchange Act will be terminated following the consummation of the Merger. 8. Certain Information Concerning the Company. General. The information concerning the Company contained in this Offer to Purchase, including that set forth below under the caption "Selected Financial Information," has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Neither Parent, Purchaser nor the Information Agent assumes responsibility for the accuracy or completeness of the information concerning the Company contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Parent, Purchaser or the Information Agent. The Company is a supplier of high-performance solutions for enterprise systems networking. The Company provides software and services which enable customers to use their IBM and IBM-compatible mainframes running the MVS or OS/390 operating systems as "enterprise servers" in distributed, heterogeneous client/server network environments. The Company's products and services enable customers to transport, access, secure and 14 manage mission-critical data and applications across distributed network environments. The Company develops and markets network transport products, which provide for enterprise server connectivity and network file transfer using Transmission Control Protocol and Internet Protocol ("TCP/IP"). During the fiscal year ended June 30, 1998, the Company expanded its product focus to include management and control of TCP/IP data and network performance, as well as security of data transmission over intranets, extranets and the Internet. Revenue from these new product areas was insignificant during that fiscal year. The Company's principal offices are located at 47370 Fremont Boulevard, Fremont, California 94538 and its telephone number is (510) 657-9800. At June 30, 1998, the Company had approximately 1,370 customers worldwide. The Company markets and sells its software and services primarily through its direct sales organization in North America and Europe and, to a lesser extent, through resellers and international distributors. Selected Financial Information. Set forth on the following page is certain selected consolidated financial information with respect to the Company, excerpted or derived from the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 and its Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, each as filed with the Commission pursuant to the Exchange Act. More comprehensive financial information is included in such reports and in other documents filed by the Company with the Commission. The following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information (including any related notes) contained therein. Such reports, documents and financial information may be inspected and copies may be obtained from the Commission in the manner set forth below. 15 SELECTED CONSOLIDATED FINANCIAL INFORMATION INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Six months ended December 31, Fiscal year ended June 30, ----------------- ----------------------------- 1998 1997 1998 1997 1996 ------- -------- --------- -------- -------- (unaudited) Income Statement Data: Revenues: Product.................... $ 7,939 $ 6,221 $ 15,920 $ 24,978 $ 19,670 Maintenance and consulting................ 7,563 6,842 13,129 14,856 14,332 ------- -------- --------- -------- -------- Total revenues........... 15,502 13,063 29,049 39,834 34,002 ------- -------- --------- -------- -------- Cost of revenues: Product.................... 464 864 1,299 3,025 3,413 Maintenance and consulting................ 2,095 2,269 4,700 4,712 4,594 ------- -------- --------- -------- -------- Total cost of revenues... 2,559 3,133 5,999 7,737 8,007 ------- -------- --------- -------- -------- Gross profit................. 12,943 9,930 23,050 32,097 25,995 ------- -------- --------- -------- -------- Operating expenses: Product development........ 5,601 5,551 11,226 7,742 5,241 Sales and marketing........ 7,213 5,798 13,496 14,348 13,316 General and administrative............ 2,360 3,257 5,746 4,669 3,954 Purchased research and development and product amortization.............. 34 3,863 6,564 575 10,479 Loss (recovery) on sale of HARBOR.................... (3,044) 2,171 2,047 -- -- NetLOCK Restructuring Charge.................... 1,234 -- -- -- -- ------- -------- --------- -------- -------- Total operating expenses................ 13,398 20,640 39,079 27,334 32,990 ------- -------- --------- -------- -------- Operating income (loss)...... (455) (10,710) (16,029) 4,763 (6,995) Interest and other income (expense), net.............. 289 520 828 735 (507) ------- -------- --------- -------- -------- Income (loss) before income taxes and extraordinary items....................... (166) (10,190) (15,201) 5,498 (7,502) Benefit from (provision for) income taxes................ 47 6,000 7,794 (2,138) (114) ------- -------- --------- -------- -------- Net income (loss)............ $ (119) $ (4,190) $ (7,407) $ 3,360 $ (7,616) ======= ======== ========= ======== ======== Net income (loss) per share Basic...................... $ (0.01) $ (0.55) $ (0.95) $ 0.52 $ (3.11) Diluted.................... $ (0.01) $ (0.55) $ (0.95) $ 0.44 $ (3.11) Shares used in per share calculation Basic...................... 8,212 7,586 7,791 6,516 2,446 Diluted.................... 8,212 7,586 7,791 7,595 2,446 December 31, June 30, ----------------- ----------------------------- 1998 1997 1998 1997 1996 ------- -------- --------- -------- -------- (unaudited) Balance Sheet Data: Total Assets............... $40,842 $ 44,049 $ 42,782 $ 48,363 $ 25,925 Total Liabilities.......... 17,633 19,184 19,757 19,689 30,510 Stockholders' Equity (Deficit)................. 23,209 24,865 23,025 28,674 (4,585)
16 Certain Information Provided by the Company. In the course of the discussions described in "Section 11-- Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements" below, the Company provided Parent with certain business and financial information which was not publicly available. Such information included, among other things, forecasted results of operations for the Company's fiscal years ending June 30, 1999, June 30, 2000 and June 30, 2001 prepared by the management of the Company (the "Initial Forecasts"). In connection with Parent's due diligence review of the Company prior to executing the Merger Agreement, the Company provided Parent with an update of the Initial Forecasts for the six-month period ending June 30, 1999 (the "Second Half Fiscal Year 1999 Projections" and, together with the Initial Forecasts, the "Company Forecasts"). The Company Forecasts do not take into account, and have not been adjusted to reflect, any of the potential effects of the Offer or the Merger. The information from the Company Forecasts summarized below is included in this Offer to Purchase solely because such information was provided to Parent in connection with its evaluation of the Company. Parent did not rely on the Company Forecasts to any significant degree in formulating the price or other material terms of the Merger Agreement or the transactions contemplated thereby. As a matter of course, the Company does not make public projections or forecasts of its anticipated financial position or results of operations. Accordingly, the Company does not anticipate that it will, and it disclaims any obligation to, furnish updated forecasts or projections to any person, cause such information to be included in documents required to be filed with the Commission, or otherwise make such information public (irrespective in any such case of whether the Company Forecasts, in light of events or developments occurring after the time at which they were originally prepared, shall have ceased to have a reasonable basis). The inclusion herein of the summary of the Company Forecasts should not be regarded as an indication that the Company, Parent, Purchaser or any other person considers such information to be an accurate prediction of future events and should not be relied on as such. While presented with numerical specificity, the information from the Company Forecasts summarized below is based upon a variety of assumptions relating to general economic conditions and the business of the Company which may not be realized and is subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. One cannot predict whether the assumptions used in preparing the Company Forecasts will be accurate, and, accordingly, there can be no assurance, and no representation or warranty is made, that actual results will not vary materially from those set forth in the Company Forecasts. The Company Forecasts were not prepared with a view to public disclosure or compliance with published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants. The information from the Company Forecasts should be evaluated in conjunction with the historical financial statements and other information regarding the Company contained elsewhere in this Offer to Purchase and in the Company's public filings with the Commission. In light of the foregoing factors and the uncertainties inherent in the Company Forecasts, holders of Shares are cautioned not to place undue or significant reliance thereon. A summary of the Company Forecasts is set forth below. 17 Company Forecasts
Initial Forecast Forecast Forecast FY1999* FY2000 FY2001 -------- -------- -------- (Unaudited) (Dollars in thousands) Revenue Product.......................................... $17,690 $33,000 $51,500 Maintenance, Support and Services................ 15,931 17,132 22,154 ------- ------- ------- Total Revenue..................................... 33,621 50,132 73,654 Total Cost of Revenues............................ 6,200 9,190 13,421 ------- ------- ------- Gross Profit...................................... 27,421 40,942 60,233 Total Operating Expenses.......................... 26,326 33,170 46,205 ------- ------- ------- Operating Earnings................................ 1,095 7,772 14,028 Interest (income), net........................... (610) (751) (978) ------- ------- ------- Pre-Tax Profit.................................... 1,705 8,524 15,006 Tax expense--book................................ 682 3,324 5,852 ------- ------- ------- Net Income........................................ $ 1,023 $ 5,200 $ 9,154 ======= ======= =======
- -------- *Initial fiscal year 1999 projections were updated and such updated projections for fiscal year 1999 are set forth in the paragraph below. The Second Half Fiscal Year 1999 Projections projected the following with respect to the second half of the Company's fiscal year ending June 30, 1999: total revenues of $17,922,000, gross profit of $14,580,000, operating earnings of $1,849,000, pre-tax profit of $2,153,000 and net income of $1,313,000. As a result of the Company's revised Second Half Fiscal Year 1999 Projections, for the entire fiscal year 1999 the Company projected: total revenues of $33,425,000, gross profit of $27,524,000, operating earnings of $1,395,000, pre-tax profit of $1,988,000 and net income of $1,195,000. Available Information. The Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, options granted to them, the principal holders of the Company's securities and any material interests of such persons in transactions with the Company is required to be disclosed in proxy statements distributed to the Company's stockholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information should be obtainable by mail, upon payment of the Commission's customary charges, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a website on the internet at http://www.sec.gov that contains reports, proxy statements and other information relating to the Company which have been filed via the Commission's EDGAR System. 9. Certain Information Concerning Parent, Sterling (U.S. of America) and Purchaser. Parent, Sterling (U.S. of America) and Purchaser. Purchaser is a Delaware corporation that has not carried on any significant activities other than in connection with the Offer and the Merger. All of the outstanding capital stock of Purchaser is owned directly by Sterling (U.S. of America). Until immediately prior to the time Purchaser purchases Shares pursuant to the Offer, it is not anticipated that Purchaser will have any significant assets or liabilities or engage in any significant activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer and the Merger. 18 Sterling (U.S. of America) was incorporated in 1993 in the State of Delaware. All of the outstanding capital stock of Sterling (U.S. of America) is owned by Parent. Sterling (U.S. of America) is the subsidiary of Parent through which Parent's Network Management Division conducts business. Parent was founded in 1981 and became a publicly owned corporation in 1983. Parent is a worldwide developer and supplier of application development, information management and systems management software products and services, as well as a supplier of specialized information technology ("IT") services for sectors of the federal government. Parent's customer base includes 91 of the 100 largest U.S. industrial and service corporations, as ranked by 1997 revenues in Fortune magazine. Parent's business segments are as follows: . The application management business segment provides solutions for both enterprise-scale application development and information management. Application development solutions include products and services for business modeling through code generation. These solutions provide customers the ability to build component-based applications through model-based code generation using traditional and object-oriented techniques, to reuse what they have built through components and to protect their investment in legacy assets. Information management solutions include products and services that enable customers to facilitate enterprise information access and to extend the life and usefulness of legacy applications. These solutions help enterprises address issues related to complex implementation challenges such as data warehousing, intranets and application management, using technologies that enhance business intelligence, integrate applications and improve information access through web browsers. . The systems management business segment provides solutions that enable customers to simplify the use of multiple computing environments and to increase the productivity of information systems, ultimately ensuring that the systems meet the business needs of the organization. These solutions include enterprise-level network management products, enterprise-level storage management products and comprehensive VM systems management products. . The federal systems business segment provides specialized IT services for sectors of the federal government, as well as state and local governments. At December 31, 1998, Parent employed approximately 3,600 employees in 90 offices worldwide. Parent has direct sales offices in 22 countries and distributors and agents in an additional 38 countries. For certain information concerning the executive officers and directors of Purchaser, Parent and Sterling (U.S. of America) see Schedule I. The principal offices of Parent and Purchaser are located at 300 Crescent Court, Suite 1200, Dallas, Texas 75201. The telephone number of Parent and Purchaser at such location is (214) 981-1000. The principal office of Sterling (U.S. of America) is located at 1800 Alexander Bell Drive, Reston, Virginia 20191. The telephone number of Sterling (U.S. of America) at such location is (703) 264-8000. Except as set forth in this Offer to Purchase, none of Purchaser, Sterling (U.S. of America) or Parent, or, to the best knowledge of Purchaser, Sterling (U.S. of America) or Parent, any of the persons listed on Schedule I, or any associate or majority owned subsidiary of any of the foregoing, beneficially owns or has a right to acquire any Shares, and none of Purchaser, Sterling (U.S. of America) or Parent or, to the best knowledge of Purchaser, Sterling (U.S. of America) or Parent, any of the persons or entities referred to above, or any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transaction in the Shares during the past sixty (60) days. Except as set forth in this Offer to Purchase, neither Purchaser, Sterling (U.S. of America) nor Parent 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, guarantees of loans, guarantees against loss or the giving or withholding of proxies. 19 Except as set forth in this Offer to Purchase, none of Purchaser, Sterling (U.S. of America) or Parent, any of their respective affiliates, nor, to the best knowledge of Purchaser, Sterling (U.S. of America) or Parent, any of the persons listed on Schedule I, has had, since June 30, 1995, any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that would be required to be reported under the rules of the Commission. Except as set forth in this Offer to Purchase, since June 30, 1995 there have been no contacts, negotiations or transactions between Purchaser, Sterling (U.S. of America) or Parent, any of their respective affiliates or, to the best knowledge of Purchaser, Sterling (U.S. of America) or Parent, any of the persons listed on Schedule I, and the Company or its affiliates concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets. Available Information. Parent is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning Parent's directors and officers, their remuneration, options granted to them, the principal holders of Parent's securities and any material interests of such persons in transactions with Parent is required to be disclosed in proxy statements distributed to Parent's stockholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information should be obtainable by mail, upon payment of the Commission's customary charges, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information relating to Parent which have been filed via the EDGAR System. Certain of the materials should also be available at the offices of the New York Stock Exchange ("NYSE"), 20 Broad Street, New York, NY 10005. 10. Sources and Amount of Funds. The Offer is not conditioned upon Purchaser obtaining financing. The total amount of funds required by Purchaser to consummate the Offer and the Merger (assuming the exercise of all outstanding Options and Warrants and the issuance of 71,035 Shares pursuant to the ESPP), and pay the fees and expenses of the Offer and the Merger expected to be incurred by Parent, is estimated to be approximately $73.9 million. Purchaser will obtain all such funds from Parent, either directly or indirectly, in the form of capital contributions and/or loans. Parent will provide such funds, either directly or indirectly, through its cash and cash equivalents on hand. 11. Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements. Background of the Offer. On several occasions during September 1998, representatives of Parent and its financial advisor contacted Mr. Augustus J. Berkeley, President and Chief Executive Officer of the Company, to suggest that the companies set up a meeting to explore the possibility of a potential transaction. In early October 1998, Mr. Ron Hardy, Vice President, Business Development, of Parent's Systems Management Group, met with Mr. Berkeley and Mr. James Barth, Chief Financial Officer of the Company, to explore on a preliminary basis the possibility of an alliance that could take one of several forms, including an acquisition of the Company. None of these discussions led to any agreements or understandings. In early December 1998, representatives of Parent and the Company had several telephone conversations regarding a high level business review of the Company and related logistics for such a review. On December 21, 1998, in anticipation of such business review, Parent and the Company entered into a confidentiality agreement for the purpose of permitting Parent to review certain non-public information relating to the Company in connection with Parent's evaluation of a possible acquisition of the Company. That same day, representatives of Parent and its financial advisor met with senior executives of the Company and representatives of its financial advisor to conduct a high level business review of the Company. 20 In late December 1998, Mr. Geno P. Tolari, Executive Vice President and Chief Operating Officer of Parent, held discussions with Mr. Berkeley about setting up a more intensive two-day business review. At such meeting and subsequently, Mr. Berkeley requested Parent to provide the Company with an indication of the price range that Parent would be willing to offer for the Company. Representatives of Parent advised Mr. Berkeley that Parent would not be in a position to give a price indication until after the two-day business review. On February 5 and 6, 1999, senior executives of Parent and representatives of its financial advisor met with senior executives of the Company and representatives of its financial advisor for the purpose of conducting a more detailed business review of the Company, including a review of the Company's business, operations, technology and prospects, in order to assess the strategic opportunities of a business combination with the Company. From time to time following such meeting, representatives of Parent requested and received certain additional information from the Company. On February 15, 1999, Parent's senior management met internally to consider the results of its preliminary business review of the Company and the strategic opportunities presented by an acquisition of the Company. Parent's senior management decided to pursue an acquisition of the Company but determined that Parent would request the Company to first seek a waiver from Cisco Systems, Inc. ("Cisco") of certain provisions of a Stock Purchase Agreement between the Company and Cisco, dated December 12, 1996 (the "Cisco Agreement"), pursuant to which, among other things, Cisco was entitled to receive 20 days prior notice before the Company could accept an acquisition proposal (the "Acquisition Notice Provision"). On February 16, 1999, representatives of Broadview International LLC, Parent's financial advisor ("Broadview"), contacted Hambrecht & Quist, the Company's financial advisor, to advise Hambrecht & Quist that Parent was interested in pursuing an acquisition of the Company but would require that the Company first obtain a waiver from Cisco of the Acquisition Notice Provision. Broadview also advised Hambrecht & Quist that Parent, although not making a formal offer, would be prepared to discuss a transaction at a price at least equal to $5.50 per Share. During the evening of February 16, 1999, Mr. Mike Harvey, President of Parent's Systems Management Group, had dinner with Mr. Berkeley, conveyed the same message to Mr. Berkeley and encouraged him to seek the waiver from Cisco. Mr. Harvey acknowledged his understanding that management of the Company would not support a transaction unless it was fair to the Company's stockholders and Mr. Berkeley indicated that he would discuss pursuit of the waiver from Cisco with the Company Board. On February 18, 1999, the Company Board met and authorized the Company's management to seek a waiver from Cisco of the Acquisition Notice Provision. Thereafter, the Company sought to obtain such a wavier from Cisco and, on March 3, 1999, the Company and Cisco entered into a letter agreement which terminated certain provisions of the Cisco Agreement, including the Acquisition Notice Provision. On March 6, 1999, Mr. Berkeley telephoned Mr. Tolari and informed him that the Company was not interested in proceeding with a transaction at the $5.50 per Share level. Mr. Berkeley informed Mr. Tolari that the Company's Board had directed him to discuss a price of $7.50 per Share, and that the Company was not presently prepared to consider a price that was lower than $7.50 per Share. Between March 6 and March 10, 1999, Mr. Sterling L. Williams, President and Chief Executive Officer of Parent, and Mr. Tolari had several telephone conversations with Mr. Berkeley in an effort to set up a meeting. Because of scheduling difficulties in setting up the meeting, on March 11, 1999, Mr. Williams telephoned Mr. Berkeley and advised him that Parent was prepared to proceed with an all cash acquisition transaction at a price of $7.00 per Share, subject to satisfactory completion of due diligence and negotiation of other acceptable terms and conditions. Mr. Williams requested that Mr. Berkeley respond by the close of business on March 12, 1999. Mr. Berkeley stated that he would consult with the Company Board. On March 12, 1999, Mr. Berkeley advised Mr. Tolari that the Company Board had authorized the Company's management to engage in discussions with Parent with respect to a potential acquisition of the Company by Parent at a price of $7.00 per Share. Late in the day on March 12, 1999, Parent furnished to the Company, and Broadview furnished to Hambrecht & Quist, a summary proposal outlining the principal terms and conditions of a potential acquisition of the Company by Parent. 21 On March 15, 1999, following its review of the summary proposal, the Company advised Parent that it was prepared to begin negotiations of definitive agreements and that Parent's representatives could conduct a detailed due diligence review of the Company commencing on March 17, 1999. During the afternoon of March 15, 1999, Parent transmitted to representatives of the Company a letter agreement providing that the Company would negotiate exclusively with Parent for a limited period of time (the "Exclusivity Agreement"), a draft Merger Agreement, a draft form of Stockholder Agreement and a due diligence request list. Parent advised the Company that Parent would require Cisco, certain limited partnerships controlled by Advent International Corp. (collectively "Advent") and the executive officers and directors of the Company to sign Stockholder Agreements granting Parent an option to purchase their Shares at a price of $7.00 per Share in cash and grant Parent a proxy with respect to such Shares. Commencing on March 16, 1999, representatives of Parent and the Company and their respective counsel began negotiating the Exclusivity Agreement, the draft Merger Agreement and the form of Stockholder Agreement. On the evening of March 16, 1999, Parent and the Company executed the Exclusivity Agreement which provided, among other things, that until the earlier of 6:00 p.m., California time, on March 25, 1999 and the execution of a definitive agreement relating to a potential acquisition of the Company, the Company and its affiliates and representatives would discontinue any solicitation efforts, discussions or negotiations with respect to an acquisition proposal by any person other than Parent and would not solicit or facilitate other proposals to acquire the Company. In addition, the Company agreed to notify Parent if it received any acquisition proposal providing aggregate consideration for all of the Company's outstanding Shares having a value in excess of $7.00 per Share. Commencing on March 17, 1999, representatives of Parent conducted an intensive due diligence review of the Company. The negotiation of the Merger Agreement and the Stockholder Agreements and Parent's due diligence review continued until March 23, 1999. On March 18, 1999, Cisco and Advent were furnished a draft of the form of Stockholder Agreement and on March 19, 1999 Parent began negotiating the terms of the Stockholder Agreements with representatives of Cisco and Advent, which negotiations continued until March 23, 1999. In the late afternoon of March 23, 1999, Parent was advised that the Company Board had received a fairness opinion from Hambrecht & Quist and had authorized the execution of the Merger Agreement. Late in the evening on March 23, 1999, the Merger Agreement was executed and delivered by Parent, Purchaser and the Company, and Parent, Purchaser and the Stockholders entered into the Stockholder Agreements. On March 24, 1999, Parent and the Company issued a joint press release announcing the execution of the Merger Agreement. On March 30, 1999, pursuant to the terms of the Merger Agreement, Parent and Purchaser commenced the Offer. Purpose of the Offer and the Merger. The purpose of the Offer and the Merger is to enable Parent to acquire control of, and the entire equity interest in, the Company. The Offer is being made pursuant to the Merger Agreement and is intended to increase the likelihood that the Merger will be effected. The purpose of the Merger is to acquire all of the outstanding Shares not purchased pursuant to the Offer. Stockholders of the Company who sell their Shares in the Offer will cease to have any equity interest in the Company or any right to participate in its earnings and future growth. If the Merger is consummated, non-tendering stockholders will no longer have an equity interest in the Company and instead will have only the right to receive cash consideration pursuant to the Merger Agreement or to exercise statutory appraisal rights under Section 262 of the DGCL. See Section 12. Similarly, after selling their Shares in the Offer or the subsequent Merger, stockholders of the Company will not bear the risk of any decrease in the value of the Company. The primary benefits of the Offer and the Merger to the stockholders of the Company are that such stockholders are being afforded an opportunity to sell all of their Shares for cash at a price which represents a premium of approximately 21.7% over the closing sales price of the Shares on March 23, 1999, the last full trading day prior to the initial public announcement that the Company, Purchaser and Parent had executed the Merger Agreement. 22 Merger Agreement The following is a summary of certain provisions of the Merger Agreement. This summary is not a complete description of the terms and conditions of the Merger Agreement and is qualified in its entirety by reference to the full text of the Merger Agreement filed with the Commission as an exhibit to the Schedule 14D-1 and is incorporated herein by reference. Capitalized terms not otherwise defined below shall have the meanings set forth in the Merger Agreement. The Merger Agreement may be examined, and copies obtained, as set forth in Section 9 of this Offer to Purchase. Representations and Warranties. In the Merger Agreement, the Company has made customary representations and warranties to Parent and Purchaser with respect to, among other things, corporate organization, subsidiaries, authority to enter into the Merger Agreement, no conflicts between the Merger Agreement and the certificate of incorporation and bylaws of the Company, certain agreements to which the Company or its assets may be subject and applicable law, required consents, capital stock, options or other rights to acquire Shares, filings with the Commission, financial statements, absence of certain changes or events, undisclosed liabilities, disclosures in proxy statement and tender offer documents, owned and leased real property, software, Year 2000 computer system preparedness, intellectual property, material contracts, litigation, compliance with applicable laws, environmental matters, tax matters, benefit plans, absence of changes in benefit plans, labor matters, brokers' and finders' fees, receipt of the Financial Advisor Opinion, votes required to approve the Merger Agreement, the Rights Agreement, settlement of certain litigation and absence of pending standstill agreements. In the Merger Agreement, each of Parent and Purchaser has made customary representations and warranties to the Company with respect to, among other things, corporate organization, authority to enter into the Merger Agreement, no conflicts between the Merger Agreement and the certificate of incorporation and by-laws of Parent and Purchaser, certain agreements to which Purchaser or Parent or their assets may be subject and applicable law, required consents, disclosures in proxy statements and tender offer documents, financing and Purchaser's operating history. Certain representations and warranties in the Merger Agreement are qualified as to "materiality" or "Material Adverse Effect". For the purposes of the Merger Agreement and this Offer to Purchase, "Material Adverse Effect" with respect to any person means any event, change, occurrence, effect, fact or circumstance having, or which could reasonably be expected to have, a material adverse effect on (i) the ability of such person to perform its obligations under the Merger Agreement or to consummate the transactions contemplated thereby or (ii) the financial condition, results of operations, value or business of such person and its subsidiaries taken as a whole; except for those changes, events and effects that (x) are caused by conditions affecting the United States or world economy as a whole or affecting the industry in which such entity competes as a whole, which conditions do not affect such entity in a materially disproportionate manner, or (y) are related to or result from announcement or pendency of the Merger or the Offer. Conditions to the Merger. The respective obligations of Parent and Purchaser, on the one hand, and the Company, on the other hand, to effect the Merger are subject to the satisfaction of each of the following conditions, any and all of which may be waived in whole or in part by the Company, Parent or Purchaser, as the case may be, to the extent permitted by applicable law: (i) Parent, Purchaser or their affiliates shall have purchased Shares pursuant to the Offer; provided, that the condition contained in this clause (i) shall be deemed to have been satisfied with respect to the obligation of Parent and Purchaser to effect the Merger if Purchaser fails to accept for payment or pay for Shares pursuant to the Offer in violation of the terms of the Offer or of the Merger Agreement; (ii) the Merger Agreement shall have been approved and adopted by the requisite vote of the holders of Shares, if required by applicable law or the Certificate of Incorporation, in order to consummate the Merger; (iii) no temporary restraining order, preliminary or permanent injunction, or other order, legal restraint or prohibition preventing the consummation of the Merger shall be in effect; provided, however, that the parties to the Merger Agreement shall have used commercially reasonable efforts to lift or remove such order, injunction, restraint or prohibition; and (iv) any waiting period applicable to the Merger under the HSR Act shall 23 have expired or been earlier terminated. In addition, the obligation of Parent and/or Purchaser to effect the Merger is subject to the satisfaction or written waiver on or prior to the Closing Date of the following condition: no outstanding Option shall entitle the holder thereof, at the Effective Time or thereafter, to purchase any capital stock of the Company. The Company Board. Promptly after (i) the purchase of and payment for any Shares by Purchaser or any of its affiliates pursuant to the Offer as a result of which Purchaser and its affiliates own beneficially at least a majority of the then outstanding Shares and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall occur later, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board as is equal to the product of the total number of directors on such Board (after giving effect to any increase in the size of such Board) multiplied by the percentage that the number of Shares beneficially owned by Purchaser at such time (including Shares so accepted for payment) bears to the total number of Shares then outstanding. In furtherance thereof, the Company shall, upon request of Parent, use its best efforts promptly either to increase the size of its Board of Directors or to secure the resignations of such number of its incumbent directors, or both, as is necessary to enable such designees of Parent to be so elected or appointed to the Company Board, and the Company shall take all actions available to the Company to cause such designees of Parent to be so elected or appointed. At such time, the Company shall, if requested by Parent, also take all action necessary to cause persons designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as Parent is entitled to designate on the Company Board of (i) each committee of the Company Board, (ii) each board of directors (or similar body) of each subsidiary of the Company and (iii) each committee (or similar body) of each such board. The Merger Agreement provides that the Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under the Merger Agreement, including mailing to stockholders the information required by such Section 14(f) and Rule 14f-1 (or including such information in the Schedule 14D-9 initially filed with the Commission and distributed to the stockholders of the Company) as is necessary to enable Parent's designees to be elected to the Company Board. Parent or Purchaser will supply to the Company in writing and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. The Merger Agreement provides that the foregoing provisions are in addition to and shall not limit any rights which Purchaser, Parent or any of their affiliates may have as a holder or beneficial owner of Shares as a matter of applicable law with respect to the election of directors or otherwise. Notwithstanding the foregoing, the parties to the Merger Agreement shall use their respective reasonable best efforts to ensure that at least two of the members of the Board shall, at all times prior to the Effective Time, be directors of the Company who were directors of the Company on the date of the Merger Agreement (the "Continuing Directors"), provided, that, if the number of Continuing Directors shall be reduced below two for any reason, the remaining Continuing Director may designate a person to fill such vacancy who shall be deemed to be a Continuing Director for all purposes of the Merger Agreement, or if no Continuing Directors then remain, the other directors of the Company then in office shall designate two persons to fill such vacancies who will not be officers or employees or affiliates of the Company, Parent or either of their subsidiaries and such persons shall be deemed to be Continuing Directors for all purposes of the Merger Agreement. From and after the time, if any, that Parent's designees constitute a majority of the Company Board and prior to the Effective Time, any amendment or modification of the Merger Agreement, any amendment to the Company's Certificate of Incorporation or By- Laws inconsistent with the Merger Agreement, any termination of the Merger Agreement by the Company, any extension of time for performance of any of the obligations of Parent or Purchaser under the Merger Agreement, any waiver of any condition to the Company's obligations under the Merger Agreement or any of the Company's rights under the Merger Agreement or other action by the Company under the Merger Agreement may be effected only by the action of a majority of the Continuing Directors of the Company, which action shall be deemed to constitute the action of any committee specifically designated by the Company Board to approve the actions contemplated by the Merger Agreement and the Company Board; provided, that, if there shall be no Continuing Directors, such actions may be effected by majority vote of the entire Company Board. 24 Stockholders' Meeting. The Merger Agreement provides that, if required by applicable law to consummate the Merger, the Company, acting through the Company Board, shall, in accordance with the DGCL, the Exchange Act and other applicable laws, its Certificate of Incorporation and By-Laws: (i) as promptly as practicable following the acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer, take all action necessary to convene and hold a special meeting of its stockholders (the "Special Meeting") for the purposes of considering and voting upon the Merger Agreement and to solicit proxies pursuant to the Proxy Statement (as defined below) in connection therewith; (ii) if requested by Parent, promptly prepare and file with the Commission a proxy statement or information statement relating to the Stockholders Meeting in accordance with the Exchange Act and the rules and regulations thereunder and (x) use its commercially reasonable efforts to respond to all comments made by the Commission with respect to the proxy statement or information statement and, subject to compliance with Commission rules and regulations, cause a proxy statement or information statement, including any amendment or supplement thereto (the "Proxy Statement"), to be mailed to its stockholders at the earliest practicable date, and (y) recommend that the stockholders of the Company vote in favor of the adoption of the Merger Agreement at the Stockholders Meeting and cause such recommendation to be included in the Proxy Statement. Pursuant to the Merger Agreement, Parent and Purchaser have agreed to: (i) cause, at the Stockholders Meeting, all of the Shares owned by them to be voted in favor of the adoption of the Merger Agreement; and (ii) promptly supply to the Company in writing, for inclusion in the Proxy Statement, all information concerning Parent and Purchaser required under the Exchange Act and the rules and regulations thereunder to be included in the Proxy Statement. Options. The Merger Agreement provides that (i) nothing therein shall require Purchaser or Parent to assume any outstanding Options or substitute an option to purchase Parent or Purchaser common stock in respect of such Options, (ii) Options under the Company Option Plans shall be accelerated and otherwise treated in accordance with the terms of the applicable Company Option Plan document and the various agreements evidencing the Options and (iii) the Company shall take all such action as shall be necessary or appropriate to cause all Options under the Company Option Plans to expire no later than the Effective Time. In connection with the Merger Agreement, Parent has agreed to permit the Company Board to amend the Company Option Plan as necessary in order to permit a cash-out of any Options held by optionees who fail or are unable to exercise (conditionally or otherwise) prior to the completion of the Offer. Employee Benefit Matters. From and after the Effective Time, Parent has agreed to honor and provide for payment of all accrued obligations and benefits under all employee benefit plans of the Company and employment or severance agreements disclosed to Parent, all in accordance with their respective terms. Parent has agreed to provide persons who are employees of the Company at or prior to the Effective Time ("Covered Employees") who remain in the employ of the Company or any of its subsidiaries with employee benefits that are reasonably comparable to the employee benefits provided to similarly situated employees of Parent or any such subsidiary who are not Covered Employees. To the extent that Covered Employees are included in any benefit plan of Parent or its subsidiaries, Parent agrees that the Covered Employees will receive credit under such plan (other than any such plan providing for sabbaticals) for service prior to the Effective Time with the Company and its subsidiaries to the same extent such service was counted under similar plans of the Company for purposes of eligibility, vesting, eligibility for retirement (but not for benefit accrual) and, with respect to vacation, disability and severance, benefit accrual. To the extent that Covered Employees are included in any medical, dental or health plan other than the plan or plans they participated in at the Effective Time, Parent has agreed that any such plans shall not include pre-existing condition exclusions, except to the extent such exclusions were applicable under the similar plan of the Company at the Effective Time, and shall provide credit for any deductibles and co-payments applied or made with respect to each Covered Employee in the calendar year of the change. Except as set forth above, nothing in the Merger Agreement shall prevent Parent or the Surviving Corporation from amending or terminating any plan of the Company in accordance with its terms. The Company has agreed that "Offering Periods" (as defined in the ESPP) under the ESPP will terminate on the earlier to occur of (i) April 30, 1999, or (ii) the Expiration Date of the Offer, and no further Offering Period under the ESPP will be created. 25 Interim Operations. The Merger Agreement provides that after the date of the Merger Agreement and prior to the Effective Time, subject to certain exceptions, the Company shall, and shall cause each of its subsidiaries to, act and carry on its business only in the ordinary course of business consistent with past practice and, to the extent consistent therewith, use commercially reasonable efforts to preserve intact its current business organizations, keep available the services of its current key officers and employees and preserve the goodwill of those engaged in material business relationships with the Company, and to that end, without limiting the generality of the foregoing, the Company shall not, and shall not permit any of its subsidiaries to, without the prior consent of Parent: (a) (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, securities or other property) in respect of, any of its outstanding capital stock (other than, with respect to a subsidiary of the Company, to its corporate parent), (ii) split, combine or reclassify any of its outstanding 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 outstanding capital stock, or (iii) purchase, redeem or otherwise acquire any shares of outstanding capital stock or any rights, warrants or options to acquire any such shares, except, in the case of this clause (iii), for the acquisition of Shares from holders of Options in full or partial payment of the exercise price payable by such holder upon exercise of Options; (b) issue, sell, grant, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into or exchangeable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible or exchangeable securities, other than upon the exercise of Options and Warrants outstanding on the date of the Merger Agreement; (c) amend its Certificate of Incorporation, By-Laws or other comparable charter or organizational documents or amend or redeem the Rights Agreement; (d) directly or indirectly acquire, make any investment in, or make any capital contributions to, any person other than in the ordinary course of business consistent with past practice; (e) make any new capital expenditure or expenditures in excess of $50,000 individually, or $250,000 in the aggregate, other than as specified in the Company's budget for capital expenditures made available to Parent or the specific capital expenditures disclosed on a schedule to the Merger Agreement; (f) except for software licenses in the ordinary course of business, enter into, amend or terminate any material contract, or waive, release or assign any material rights or claims; (g) directly or indirectly sell, pledge or otherwise dispose of or encumber any of its properties or assets that are material to its business, except for sales, pledges or other dispositions or encumbrances in the ordinary course of business consistent with past practice; (h) (i) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, other than indebtedness owing to or guarantees of indebtedness owing to the Company or any direct or indirect wholly owned subsidiary of the Company or (ii) make any loans or advances to any other person, other than to the Company or to any direct or indirect wholly owned subsidiary of the Company and other than routine advances to employees consistent with past practice, except, in the case of clause (i), for borrowings, in the ordinary course of business consistent with past practice, under existing credit facilities described in documents filed by the Company with the Commission and publicly available prior to the date of the Merger Agreement; (i) grant or agree to grant to any officer, employee or consultant any increase in wages or bonus, severance, profit sharing, retirement, deferred compensation, insurance or other compensation or benefits, or establish any new compensation or benefit plans or arrangements, or amend or agree to amend any existing Company Option Plans, except as may be required under existing agreements or by law; (j) accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred compensation, stock option, insurance or other compensation or benefits; (k) enter into or amend any employment, consulting, severance or similar agreement with any individual; 26 (l) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or any agreement relating to an Acquisition Proposal (as defined herein), except as provided for in the Merger Agreement; (m) make or rescind any tax election or settle or compromise any income tax liability of the Company or of any of its subsidiaries involving on an individual basis more than $100,000; (n) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (i) of any such claims, liabilities or obligations in the ordinary course of business and consistent with past practice or (ii) of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and its consolidated subsidiaries; (o) except as required by generally accepted accounting principles, make any change in any method of accounting or accounting practice or policy; (p) settle any action, suit, claim, investigation or proceeding (legal, administrative or arbitrative) in an amount in excess of $50,000 except in connection with certain litigation between Selesta Integrazioni (a former distributor of the Company's products) and certain affiliates of Selesta Integrazioni, and the Company; (q) permit any material insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated without notice to Parent, except in the ordinary course of business and consistent with past practice; (r) enter into any agreement, understanding or commitment that restrains, limits or impedes the Company's ability to compete with or conduct any business or line of business, including, but not limited to, geographic limitations on the Company's activities; (s) plan, announce, implement or effect any reduction in force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of the Company or its subsidiaries (excluding routine employee terminations for cause); (t) accelerate the collection of any account receivable or delay the payment of any account payable, or otherwise reduce the assets or increase the liabilities of the Company or any of its subsidiaries otherwise than in the ordinary course of business consistent with past practice, in any such case with the purpose or effect of using the resulting increase in the cash flow of the Company or any of its subsidiaries to reduce the total indebtedness of the Company and its subsidiaries for money borrowed; (u) willfully take any action that would result in (i) any of its representations and warranties set forth in the Merger Agreement that are qualified as to materiality becoming untrue, (ii) any of such representations and warranties that are not so qualified becoming untrue in any material respect or (iii) except to the extent such action is otherwise expressly contemplated by the Merger Agreement, any of the conditions to the Offer not being satisfied; or (v) authorize any of, or commit or agree to take any of, the foregoing actions, except to the extent such action is otherwise expressly contemplated by the Merger Agreement. No Solicitation. The Merger Agreement provides that the Company shall not, nor shall it permit any of its subsidiaries to, nor shall it authorize (and shall use its best efforts not to permit) any officer, director or employee of, or any investment banker, attorney or other advisor or representative of, the Company or any of its subsidiaries to, (i) solicit or initiate, or intentionally encourage, directly or indirectly, any inquiries relating to, or the submission of, any Acquisition Proposal, (ii) participate in any discussions or negotiations regarding any Acquisition Proposal, or, in connection with any Acquisition Proposal, furnish to any person any information or data with respect to or access to the properties of the Company or any of its subsidiaries, or take any other action, to knowingly facilitate the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal or approve or resolve to approve any Acquisition Proposal; provided, that nothing contained in the Merger Agreement shall prohibit the Company or the Company Board from (i) taking and disclosing to the Company's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to the Company's stockholders as, in the 27 good faith judgment of the Company Board, after consultation with outside counsel, is required under, or is necessary to comply with, applicable law; provided, further, that the Company may not, except as otherwise permitted by the Merger Agreement, withdraw or modify, or propose to withdraw or modify, its position with respect to the Offer or the Merger or approve or recommend, or propose to approve or recommend, any Acquisition Proposal, or enter into any agreement with respect to, any Acquisition Proposal. Upon execution of the Merger Agreement, the Company agreed to immediately cease any existing activities, discussions or negotiations with any parties conducted theretofore with respect to any of the foregoing. Notwithstanding the foregoing, prior to the time of acceptance of Shares for payment pursuant to the Offer, the Company may furnish information concerning its and/or its subsidiaries' business, properties or assets to any person or group and may negotiate and participate in discussions and negotiations with such person or group concerning an Acquisition Proposal, provided that such person or group shall have entered into a confidentiality agreement, the confidentiality provisions of which shall be no more favorable to such third party than those provided for in the letter agreement, dated December 21, 1998, between Parent and the Company with respect to confidentiality and other matters, if: (x) such Person or group has submitted a Superior Proposal (as defined herein); and (y) in the opinion of the Company Board such action is required to discharge the Company Board's fiduciary duties to the Company's stockholders under applicable law, determined only after consultation with independent legal counsel to the Company. The Merger Agreement provides that the Company will promptly (but in no case later than 24 hours) notify Parent in writing of the existence of any proposal, discussion, negotiation or inquiry received by the Company regarding any Acquisition Proposal, and the Company will promptly communicate to Parent the terms of any proposal, discussion, negotiation or inquiry which it may receive regarding any Acquisition Proposal (and will promptly provide to Parent copies of any written materials received by the Company in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry or engaging in such discussion or negotiation. The Company will promptly provide to Parent any non-public information concerning the Company provided to any other person in connection with any Acquisition Proposal which was not previously provided to Parent. The Company will keep Parent informed of the status and details of any such Acquisition Proposal and of any amendments or proposed amendments to any Acquisition Proposal and of the status of any discussions or negotiations relating to any Acquisition Proposal and will promptly (but in no case later than 24 hours) notify Parent of any determination by the Company Board that a Superior Proposal has been made. The Merger Agreement provides that, except as set forth in this paragraph, neither the Company Board nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or recommendation by the Company Board of the Offer, the Merger Agreement or the Merger, (ii) approve or recommend, or propose to approve or recommend, any Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal. Notwithstanding the foregoing or anything else in the Merger Agreement, subject to compliance with applicable provisions of the Merger Agreement, prior to the time of acceptance for payment of Shares pursuant to the Offer, the Company Board may withdraw or modify its approval or recommendation of the Offer, the Merger Agreement or the Merger, approve or recommend a Superior Proposal, or enter into an agreement with respect to a Superior Proposal, in each case at any time after the third business day following Parent's receipt of written notice (including by facsimile) from the Company advising Parent that the Company Board has received a Superior Proposal which it intends to accept, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal, but only if the Company shall have caused its financial and legal advisors to negotiate with Parent to make such adjustments to the terms and conditions of the Merger Agreement as would enable the Company to proceed with the transactions contemplated hereby on such adjusted terms. The Merger Agreement provides that nothing contained therein, and no action taken by the Company Board pursuant to the foregoing, will (i) permit the Company to enter into any agreement providing for any transaction contemplated by an Acquisition Proposal for as long as the Merger Agreement remains in effect or (ii) affect in any manner any other obligation of the Company under the Merger Agreement. 28 For purposes of the Merger Agreement, "Acquisition Proposal" means any bona fide offer, proposal or other indication of interest regarding any of the following (other than the transactions provided for in the Merger Agreement involving the Company): (i) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction involving the Company or any of its subsidiaries; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of a significant portion of the assets of the Company and its subsidiaries, taken as a whole, in a single transaction or series of related transactions (other than sales of inventory or used equipment in the ordinary course of business); (iii) any purchase of, or tender offer or exchange offer for, 20% percent or more of the outstanding shares of capital stock of the Company by any person or the filing of a registration statement under the Securities Act in connection therewith; or (iv) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. For purposes of the Merger Agreement, "Superior Proposal" means an unsolicited Acquisition Proposal on terms which the Company Board determines in good faith to be more favorable to the Company's stockholders than the Offer and the Merger (based on advice of the Company's independent financial advisor that the value of the consideration provided for in such proposal is superior to the value of the consideration provided for in the Offer and the Merger) for which financing, to the extent required, is then committed or which, in the good faith reasonable judgment of the Company Board (based on advice from the Company's independent financial advisor) is reasonably capable of being financed by such third party; provided, that the Company Board has also, among other things, duly considered the timing of such Acquisition Proposal and the likelihood that such Acquisition Proposal will be consummated. Termination. The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after approval of matters presented in connection with the Merger by the stockholders of the Company: (a) By the mutual written consent of Parent and the Company; provided, that if Parent shall have a majority of the directors, such consent of the Company may only be given if approved by the Continuing Directors. (b) By either of Parent or the Company if (i) a statute, rule or executive order shall have been enacted, entered or promulgated prohibiting the transactions contemplated by the Merger Agreement on the terms contemplated by the Merger Agreement or (ii) any governmental entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties to the Merger Agreement shall use their commercially reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement and such order, decree, ruling or other action shall have become final and non-appealable. (c) By either of Parent or the Company if the consummation of the Offer shall not have occurred on or before July 31, 1999; provided, that the party seeking to terminate the Merger Agreement shall not have breached in any material respect its obligations under the Merger Agreement. (d) By the Company: (i) if the Company has entered into an agreement with respect to a Superior Proposal or the Company or the Company Board has approved or recommended a Superior Proposal; provided, the Company has complied with all applicable provisions of the Merger Agreement relating to the prohibition on solicitation of Acquisition Proposals, including the notice provisions therein, and that it simultaneously terminates the Merger Agreement and makes simultaneous payment to Parent of the Termination Fee (as defined herein) and the Expenses (as defined herein); or (ii) if Parent or Purchaser shall have terminated the Offer or the Offer expires without Parent or Purchaser, as the case may be, purchasing any Shares in the Offer; provided, that the Company may not terminate the Merger Agreement if the Company is in material breach of the Merger Agreement; or (iii) if Parent, Purchaser or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that the Company may not terminate the Merger Agreement if the Company is in material breach of the Merger Agreement; or (iv) if there shall be a material breach by either Parent or Purchaser of any of their representations, warranties, covenants or agreements contained in the Merger Agreement, except where such breach does not have a material adverse effect on the ability of Parent or Purchaser to consummate the Offer or the Merger. 29 (e) By Parent or Purchaser: (i) (A) if, prior to the purchase of the Shares pursuant to the Offer, the Company Board shall have withdrawn, or modified or changed in a manner adverse to Parent or Purchaser, its approval or recommendation of the Offer, the Merger Agreement or the Merger or shall have recommended or approved, or announced a neutral position with respect to, an Acquisition Proposal or upon request of Parent, shall fail to reaffirm its approval and recommendation of the Offer, the Merger Agreement or the Merger; or (B) if there shall have been a material breach by the Company of any provision of the Merger Agreement relating to the prohibition on solicitation of Acquisition Proposals; or (ii) if the Offer has expired or terminated without Parent or Purchaser purchasing any Shares and, pursuant to the conditions of the Offer and the Merger Agreement, the Purchaser is neither required to accept and pay for the Shares tendered in the Offer nor extend the expiration date of the Offer; provided, that Parent or Purchaser may not terminate the Merger Agreement if Parent or Purchaser is in material breach of the Merger Agreement; or (iii) if, due to an occurrence that if occurring after the commencement of the Offer would result in a failure to satisfy any of the conditions to the Offer which occurrence is incapable of being cured or remediated prior to the initial expiration date of the Offer, Parent, Purchaser or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that Parent or Purchaser may not terminate the Merger Agreement if Parent or Purchaser is in material breach of the Merger Agreement; or (iv) if any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates or any group of which any of them is a member, shall have acquired beneficial ownership (as determined under the Exchange Act) of 20% or more of the Shares; or (v) if there shall be a breach by the Company of any of its representations or warranties contained in the Merger Agreement (without reference to any "Material Adverse Effect" or "materiality" qualifications contained therein) which causes a Material Adverse Effect on the Company and is incapable of being cured prior to the twentieth business day following the initial expiration date of the Offer or there shall be a material breach by the Company of any of its covenants or agreements contained in the Merger Agreement. Termination Fee. If (i) Parent or Purchaser terminates the Merger Agreement pursuant to clauses (e)(i)(A) or (B) under the heading "Termination" above or (ii) the Company terminates the Merger Agreement pursuant to clause (d)(i) under the heading "Termination" above, then in each case, the Company shall pay, or cause to be paid to Parent, at the time of termination, an amount equal to $2,870,000 (the "Termination Fee") plus an amount equal to Parent's and Purchaser's actual and reasonably documented out-of-pocket expenses incurred by Parent or Purchaser in connection with the Offer, the Merger, the Merger Agreement and the consummation of the transactions contemplated thereby up to a maximum expense reimbursement amount of $718,000 (the "Expenses"). In addition, if the Merger Agreement is terminated by Parent or Purchaser pursuant to clause (e)(ii) under the heading "Termination" above solely as a result of the failure of the Minimum Condition or by the Company pursuant to clause (d)(ii) under the heading "Termination" above and, in each case at the time of such termination, Parent is not in material breach of the Merger Agreement, and there has been previously publicly announced, and not withdrawn, an Acquisition Proposal, and, if the Company shall thereafter, within nine months after such termination, enter into an agreement with respect to such Acquisition Proposal, then the Company shall pay the Termination Fee concurrently with entering into any such agreement. If the Merger Agreement is terminated by Parent or Purchaser pursuant to clause (e)(v) under the heading "Termination" above, then the Company shall pay Parent the Expenses. Indemnification. Pursuant to the Merger Agreement, Parent and Purchaser have agreed that, for a period of four years after the Effective Time, the provisions with respect to indemnification set forth in the certificate of incorporation and by-laws of Purchaser as in effect on the date of the Merger Agreement shall not be amended, repealed or otherwise modified in any manner that would adversely affect the rights thereunder of individuals who at any time prior to the Effective Time were directors or officers of the Company in respect of actions or omissions occurring at or prior to the Effective Time (including without limitation the transactions contemplated by the Merger Agreement), unless such modification is required by law. 30 The Merger Agreement also provides that, from and after the Effective Time, Parent shall, or shall cause the Surviving Corporation to, indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date of the Merger Agreement or who becomes prior to the Effective Time, an officer or director of the Company (the "Indemnified Parties") against all losses, claims, damages, costs, expenses (including reasonable attorneys' fees and expenses), liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) incurred in connection with any threatened or actual action, suit or proceeding based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company ("Indemnified Liabilities"), including all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, the Merger Agreement or the transactions contemplated thereby, in each case, to the full extent that a corporation is permitted under the DGCL to indemnify its own directors or officers, as the case may be. In the event any such claim, action, suit, proceeding or investigation is brought against any Indemnified Party, the indemnifying party shall assume and direct all aspects of the defense thereof, including settlement, and the Indemnified Party shall cooperate in the vigorous defense of any such matter. The Indemnified Party shall have a right to participate in (but not control) the defense of any such matter with its own counsel and at its own expense. The indemnifying party shall not settle any such matter unless (i) the Indemnified Party gives prior written consent, which shall not be unreasonably withheld, or (ii) the terms of the settlement provide that the Indemnified Party shall have no responsibility for the discharge of any settlement amount and impose no other obligations or duties on the Indemnified Party and the settlement discharges all rights against the Indemnified Party with respect to such matter. In no event shall the indemnifying party be liable for any settlement effected without its prior written consent. Any Indemnified Party wishing to claim indemnification under the Merger Agreement, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Parent and the Surviving Corporation (but the failure so to notify shall not relieve the indemnifying party from any liability which it may have under the Merger Agreement except to the extent such failure prejudices such indemnifying party), and shall deliver to Parent and the Surviving Corporation the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group will be represented by a single law firm with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. The rights to indemnification under the Merger Agreement shall continue in full force and effect for a period of four years from the Effective Time; provided, however, that all rights to indemnification in respect of any Indemnified Liabilities asserted or made within such period shall continue until the disposition of such Indemnified Liabilities. The Merger Agreement provides that, for a period of two years after the Effective Time, Parent shall cause to be maintained in effect policies of directors' and officers' liability insurance, for the benefit of those persons who are covered by the Company's directors' and officers' liability insurance policies at the Effective Time, providing coverage with respect to matters occurring prior to the Effective Time that is at least equal to the coverage provided under the Company's current directors' and officers' liability insurance policies, to the extent that such liability insurance can be maintained at an annual cost to Parent not greater than 150 percent of the premium for the current Company directors' and officers' liability insurance; provided that if such insurance cannot be so maintained at such cost, Parent shall maintain as much of such insurance as can be so maintained at a cost equal to 150 percent of the current annual premiums of the Company for such insurance. Stockholder Agreements The following is a summary of certain provisions of the Stockholder Agreements. This summary is not a complete description of the terms and conditions of the Stockholder Agreements and is qualified in its entirety by reference to the full text of the Stockholder Agreement with respect to Cisco, the Stockholder Agreement with respect to Advent, and the form of Stockholder Agreement with respect to directors and executive officers of the Company, each as filed with the Commission as an exhibit to the Schedule 14D-1 and incorporated herein by reference. Capitalized terms not otherwise defined below shall have the meanings set forth in the Merger Agreement or the Stockholder Agreements, as the context may require. The Stockholder Agreements may be examined, and copies obtained, as set forth in Section 9 of this Offer to Purchase. 31 As a condition and inducement to Parent's entering into the Merger Agreement and incurring the liabilities therein, the Stockholders, who collectively have voting power and dispositive power with respect to an aggregate of 1,171,068 Shares and hold Options to acquire 854,050 Shares, concurrently with the execution and delivery of the Merger Agreement entered into the Stockholder Agreements with Parent. Pursuant to the Stockholder Agreements, the Stockholders have agreed, among other things, to grant Parent an irrevocable proxy with respect to the voting of their Shares in favor of the Merger and against any other Acquisition Proposal with respect to such Shares upon the terms and subject to the conditions set forth therein. The Stockholders have also granted to Parent an option to purchase the Shares subject to the Stockholder Agreements, at an option price of $7.00 per Share (or any higher price offered by Parent or a subsidiary of Parent to the stockholders of the Company generally), during the period commencing on March 23, 1999 and continuing for varying periods (each an "Option Period"). With respect to the options granted to Parent by the directors and executive officers of the Company, "Option Period" means the period between March 23, 1999 and the earlier of (i) 120 days after the purchase of Shares pursuant to the Offer or (ii) the date that the Merger Agreement is terminated for any reason, provided, however, that such options shall terminate with respect to any Shares that are tendered pursuant to the Offer and purchased by Purchaser. With respect to the options granted by Advent, "Option Period" means the period between March 23, 1999 and the earlier of (i) 120 days after the purchase of Shares pursuant to the Offer or (ii) 120 days after the date on which the Merger Agreement is terminated for any reason, provided, however, that such option shall terminate, (x) with respect to any Shares that are tendered pursuant to the Offer and purchased by Purchaser, (y) if the Merger Agreement is terminated by the Company because of a material breach by Parent or Purchaser and at the time of such termination the Company is not in breach of the Merger Agreement, and (z) if the Merger Agreement is terminated because the condition requiring termination of all necessary waiting periods under the HSR Act is incapable of being fulfilled. With respect to the option granted by Cisco, "Option Period" means the period between March 23, 1999 and the earlier of (i) 120 days after the purchase of Shares pursuant to the Offer or (ii) 120 days after the date on which the Merger Agreement is terminated (A) by the Company because the Company has entered into an agreement with respect to (or the Company or the Company Board has approved or recommended) a Superior Proposal in compliance with the applicable provisions in the Merger Agreement, including notice provisions and the payment to Parent of the termination fee and expenses or (B) by Parent or Purchaser if, prior to the purchase of the Shares pursuant to the Offer, the Company Board shall have withdrawn, or modified or changed in a manner adverse to Parent or Purchaser its approval or recommendation of the Offer, the Merger Agreement or the Merger or shall have recommended or approved, or announced a neutral position with respect to, an Acquisition Proposal or, upon request of Parent, shall fail to reaffirm its approval and recommendation of the Offer, the Merger Agreement or the Merger, or if there shall have been a material breach by the Company of certain provisions of the Merger Agreement relating to solicitation of Acquisition Proposals by the Company, or (iii) 30 days after the date on which the Merger Agreement is terminated by Parent or Purchaser because of a breach by the Company of any of its representations or warranties contained in the Merger Agreement which breach causes a material adverse effect on the Company and is incapable of being cured prior to the twentieth business day following the initial expiration date of the Offer or because of a material breach by the Company of any of its covenants or agreements contained in the Merger Agreement, or (iv) the date on which the Merger Agreement is terminated other than for reasons described in clauses (ii) or (iii) of this sentence, provided, however, that such option shall terminate with respect to any Shares that are tendered pursuant to the Offer and purchased by Purchaser. The Stockholders have advised Parent that they intend to tender their Shares pursuant to the Offer. If Purchaser purchases Shares pursuant to the Offer, Purchaser intends to exercise its option pursuant to the Stockholder Agreements to purchase all Shares that are not tendered by any Stockholder. During the period (the "Restricted Period") from March 23, 1999 through and including the earlier of (i) the Effective Time and (ii) the end of the applicable Option Period, each Stockholder has agreed not to: (A) except pursuant to the terms of the Stockholder Agreement and except for the tender of Shares in the Offer, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement to do so; (B) except pursuant to the terms of the Stockholder Agreement, grant any proxies (other than proxies relating to the election of management's slate of directors at an annual meeting of Company's stockholders, and other routine matters which would not require the filing of a preliminary proxy statement under 32 Rule 14a-6(a) of the Exchange Act), or powers of attorney, deposit any of their Shares into a voting trust or enter into a voting agreement with respect to any of their Shares; or (C) take any action that would make any representation or warranty contained in the Stockholder Agreement untrue or incorrect or have the effect of impairing the ability of the Stockholder to perform the Stockholder's obligations under the applicable Stockholder Agreement or preventing or delaying the consummation of any of the transactions contemplated by the applicable Stockholder Agreement and the Merger Agreement. Notwithstanding the foregoing, Advent will have the right (i) to transfer Shares subject to the option to an affiliate, as long as, before any such transfer, such affiliate enters into a written agreement (an "Acknowledgment Agreement") with Parent whereby such affiliate agrees to be bound by all of the terms and provisions of Advent's Stockholder Agreement with respect to the Shares received by such affiliate, (ii) prior to the exercise by Parent of its option and following the termination of the Merger Agreement (other than a termination which requires the payment of the Termination Fee), to sell Shares subject to the option in open market transactions, provided that any such sale shall not limit or relieve Advent of its obligation to deliver Shares to Parent in the event Parent exercises the option to purchase such Shares, and (iii) transfer or sell Shares subject to the option to one or more third parties in privately-negotiated transactions as long as each such third party enters into an Acknowledgment Agreement with Parent. Each of the directors and executive officers of the Company entering into a Stockholder Agreement has agreed to unconditionally release, as of the Effective Time, any and all claims and causes of action that such directors and officers may have against the Company or any of its subsidiaries or any present or former director, officer, employee or agent of the Company or any of its subsidiaries (collectively, the "Released Parties") resulting from any act, omission or occurrence prior to the Effective Time; provided, however, that such release shall not apply to any claim or cause of action insofar as it relates to any entitlement to indemnification or to compensation or benefits earned or accrued by or for the benefit of such directors and officers prior to the Effective Time in respect of services performed by such directors and officers to the Company as a director, officer, consultant or employee of the Company. Advent has agreed to unconditionally release, as of the Effective Time, any and all claims and causes of action that Advent may have against the Released Parties resulting from any act, omission or occurrence prior to the Effective Time. Cisco has agreed to unconditionally release, as of the Effective Time, any and all claims and causes of action that Cisco may have against the Released Parties resulting from any alleged breach of fiduciary duty by any officer or director of the Company occurring prior to the Effective Time; provided, however, that such release will not apply to any currently effective contract or agreement between Cisco and the Company or any claim or cause of action arising therefrom. Each Stockholder has agreed that, in the capacity as a stockholder, it will not respond to any inquiries or the making of any proposal by any person or entity (other than Parent or any affiliate of Parent) concerning any business combination, merger, tender offer, exchange offer, sale of assets, sale of shares of capital stock or debt securities or similar transactions involving the Company or any subsidiary, division or operating or principal business unit of the Company. If any Stockholder, in the capacity as a stockholder, receives any such inquiry or proposal, then the Stockholder has agreed to promptly inform Parent of the existence thereof. Each Stockholder, in the capacity as a stockholder, has agreed to immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties previously conducted with respect to any of the foregoing. Exclusivity Agreement The following is a summary of certain provisions of the Exclusivity Agreement. This summary is not a complete description of the terms and conditions of the Exclusivity Agreement and is qualified in its entirety by reference to the full text of the Exclusivity Agreement filed with the Commission as an exhibit to the Schedule 14D-1 and incorporated herein by reference. Capitalized terms not otherwise defined below shall have the meanings set forth in the Exclusivity Agreement. The Exclusivity Agreement may be examined, and copies obtained, as set forth in Section 9 of this Offer to Purchase. In connection with the negotiation of the Merger Agreement, on March 16, 1999, Parent and the Company entered into a letter agreement (the "Exclusivity Agreement") in order to induce Parent to continue negotiations with the Company with respect to the terms of a potential acquisition transaction. The Exclusivity Agreement provided that until the earlier of 6:00 p.m., California time, on March 25, 1999 and the execution of a definitive 33 agreement relating to a potential acquisition of the Company (the "Exclusivity Period"), the Company and its affiliates and representatives will discontinue any solicitation efforts, discussions or negotiations with respect to, and will not solicit, intentionally encourage or facilitate, an acquisition proposal with any person other than Parent. The Company also agreed during the Exclusivity Period not to enter into discussions or negotiations with any other person concerning an acquisition proposal or to endorse such other proposal. The Company also agreed to provide Parent with notice if it received certain acquisition proposals. Pursuant to the Exclusivity Agreement, Parent agreed that for a period of one year from the date of the Exclusivity Agreement, it will not, directly or indirectly, solicit for employment or attempt to hire or recruit any employee of the Company (or any subsidiary thereof) with whom Parent has had contact or who became known to Parent in connection with Parent's consideration of a potential acquisition. However, Parent will not breach such restriction solely (a) as a result of generic employment advertising by Parent (including, without limitation, "open position" and similar listings in Parent's various World Wide Web pages), (b) as a result of the efforts of an executive recruitment or similar firm generally engaged to recruit employees for Parent (without targeting of the Company or its specific employees) or (c) if any employee of Company (or any subsidiary thereof) approaches and obtains employment with Parent after the date of the Exclusivity Agreement solely as a result of any advertising or recruitment effort contemplated in clause (a) or (b) above. 12. Plans for the Company; Other Matters. Plans for the Company Parent is conducting a detailed review of the Company and its business, operations, assets, corporate structure, capitalization, properties, policies, management and personnel with a view towards determining how to optimally realize the potential synergies that exist between the operations of the Company and those of Parent's Network Management Division. In that regard, Parent plans to combine the Company's business with Parent's worldwide network management business. Such review may not be completed until after the consummation of the Merger. Following such review, Parent will consider what, if any, changes would be desirable in light of the circumstances then existing. Such changes could include, among other things, changes in the Company's business, corporate structure (including a merger of the Company with Sterling (U.S. of America)), certificate of incorporation, by-laws, capitalization or management. Assuming the Minimum Condition is satisfied and Purchaser purchases Shares pursuant to the Offer, Parent intends to exercise promptly its rights under the Merger Agreement to obtain majority representation on, and control of, the Company Board. See "Section 11-Merger Agreement-The Company Board" above. Parent will exercise such rights by causing the Company to elect to the Company Board Geno P. Tolari, R. Logan Wray and Don J. McDermett, Jr. Information with respect to such directors is contained in Schedule I hereto and in Schedule I to the Schedule 14D-9. The Merger Agreement provides that, upon the purchase of and payment for any Shares by Parent or any of its subsidiaries pursuant to the Offer, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board such that the percentage of its designees on the Company Board shall equal the percentage of the outstanding Shares beneficially owned by Parent and its affiliates at such time. See Section 11. The Merger Agreement provides that the directors of Purchaser and the officers of the Company at the Effective Time of the Merger will, from and after the Effective Time, be the initial directors and officers, respectively, of the Surviving Corporation. Purchaser or an affiliate of Purchaser may, following the consummation or termination of the Offer, seek to acquire additional Shares through open market purchases, privately negotiated transactions, a tender offer or exchange offer or otherwise, upon such terms and at such prices as it shall determine, which may be more or less than the price to be paid pursuant to the Offer. Purchaser and its affiliates also reserve the right to dispose of any or all Shares acquired by them, subject to the terms of the Merger Agreement. Except as disclosed in this Offer to Purchase, and except as may be effected in connection with the integration of operations referred to above, none of Parent, Sterling (U.S. of America) or Purchaser has any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, relocation of operations, or sale or transfer of a material amount of assets, involving the Company or any of its subsidiaries, or any material changes in the Company's capitalization, corporate structure, business or composition of its management or the Company Board. 34 Other Matters Stockholder Approval. Under the DGCL, the approval of the Company Board and the affirmative vote of the holders of a majority of the outstanding Shares are required to adopt and approve the Merger Agreement and transactions contemplated thereby. The Company has represented in the Merger Agreement that the execution and delivery of the Merger Agreement by the Company and the consummation by the Company of the transactions contemplated by the Merger Agreement have been duly authorized by all necessary corporate action on the part of the Company, subject to the approval of the Merger by the Company's stockholders in accordance with the DGCL. The Company has also approved the Merger Agreement and the Stockholder Agreements for purposes of Section 203 of the DGCL and has represented to Parent and Purchaser that the restrictions on certain business combinations contained in Section 203 of the DGCL are not applicable to the Merger Agreement, the Stockholder Agreements and the transactions contemplated thereby. In addition, the Company has represented that the affirmative vote of the holders of a majority of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock which is necessary to approve the Merger Agreement and the transactions contemplated thereby, including the Merger. Therefore, unless the Merger is consummated pursuant to the short-form merger provisions under the DGCL described below (in which case no further corporate action by the stockholders of the Company will be required to complete the Merger), the only remaining required corporate action of the Company will be the approval of the Merger Agreement and the transactions contemplated thereby by the affirmative vote of the holders of a majority of the Shares. The Merger Agreement provides that Parent will vote, or cause to be voted, all of the Shares then owned by Parent, Purchaser or any of Parent's other subsidiaries and affiliates in favor of the approval of the Merger and the adoption of the Merger Agreement. In the event that Parent, Purchaser and Parent's other subsidiaries acquire in the aggregate at least a majority of the Shares entitled to vote on the approval of the Merger and the Merger Agreement, they would have the ability to effect the Merger without the affirmative votes of any other stockholders. Short-Form Merger. Section 253 of the DGCL provides that, if a corporation owns at least 90% of the outstanding shares of each class of another corporation, the corporation holding such stock may merge itself into such corporation without any action or vote on the part of the board of directors or the stockholders of such other corporation (a "short-form merger"). In the event that Parent, Purchaser and any other subsidiaries of Parent acquire in the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or otherwise, then, at the election of Parent, a short-form merger could be effected without any approval of the Company Board or the stockholders of the Company, subject to compliance with the provisions of Section 253 of the DGCL. Additionally, if, immediately prior to the Expiration Date of the Offer (as it may be extended), the Shares tendered and not withdrawn pursuant to the Offer constitute more than 75% and less than 90% of the outstanding Shares, Purchaser may extend the Offer for one or more periods not to exceed an aggregate of 10 business days, notwithstanding that all conditions to the Offer are satisfied as of such Expiration Date of the Offer, in order to obtain tenders of a sufficient number of additional Shares to allow it to effect a short-form merger. Even if Parent and Purchaser do not own 90% of the outstanding Shares following consummation of the Offer, Parent and Purchaser could seek to purchase additional Shares in the open market or otherwise in order to reach the 90% threshold and employ a short-form merger. The per Share consideration paid for any Shares so acquired may be greater or less than that paid in the Offer. Parent presently intends to effect a short-form merger if permitted to do so under the DGCL. Appraisal Rights. Holders of the Shares do not have appraisal rights in connection with the Offer. However, if the Merger is consummated, holders of the Shares at the Effective Time will have certain rights pursuant to the provisions of Section 262 of the DGCL including the right to dissent and demand appraisal of, and to receive payment in cash of the fair value of, their Shares. Under Section 262 of the DGCL, dissenting stockholders of the Company who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest thereon, if any. Any such judicial determination of the fair value of the Shares could be based upon factors other than, or in addition to, the price per Share to be paid in the Merger or the market value of the Shares. The value so determined could be more or less than the price per Share to be paid in the Merger. 35 THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser believes, however, that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger would be effected within one year following consummation of the Offer and in the Merger stockholders would receive the same price per Share as paid in the Offer. If Rule 13e-3 were applicable to the Merger, it 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 disclosed to minority stockholders prior to consummation of the transaction. 13. Dividends and Distributions. As described above, the Merger Agreement provides that during the period from the date of the Merger Agreement to the Effective Time, the Company shall not, and shall not permit any of its subsidiaries to, without the prior consent of Parent, (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, securities or other property) in respect of, any of its outstanding capital stock (other than, with respect to a subsidiary of the Company, to its corporate parent), (B) split, combine or reclassify any of its outstanding 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 outstanding capital stock, or (C) purchase, redeem or otherwise acquire any shares of outstanding capital stock or any rights, warrants or options to acquire any such shares, except, in the case of this clause (C), for the acquisition of Shares from holders of Options in full or partial payment of the exercise price payable by such holder upon exercise of Options. 14. Conditions to the Offer. Notwithstanding any other provision of the Offer and subject to the terms of the Merger Agreement, Purchaser 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 Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may amend the Offer consistent with the terms of the Merger Agreement or terminate the Offer and not accept for payment any tendered Shares, if (i) the Minimum Condition is not satisfied by the Expiration Date, (ii) any applicable waiting period under the HSR Act has not expired or been terminated, or (iii) at any time on or after the date of the Merger Agreement and prior to the Expiration Date, any of the following events shall occur and be continuing and shall not have resulted from the breach by Parent or Purchaser of any of their obligations under the Merger Agreement: (a) there shall be pending any suit, action or proceeding brought by any third party that has a high likelihood of success on the merits or by any governmental entity before any court of competent jurisdiction (i) seeking to prohibit or impose any material limitations on Parent's or Purchaser's ownership or operation (or that of any of their respective subsidiaries or affiliates) of all or a material portion of their or the Company's businesses or assets, (ii) seeking to compel Parent or Purchaser or their respective subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or 36 Parent and their respective subsidiaries, in each case taken as a whole, as a result of the Merger Agreement, (iii) challenging the acquisition by Parent or Purchaser of any Shares pursuant to the Offer, (iv) seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the transactions contemplated by the Merger Agreement, (v) seeking to obtain from the Company any damages (including damages against the Company's directors or officers for which they may seek indemnification from the Company) that would be reasonably likely to have a material adverse effect on the Company, (vi) seeking to impose material limitations on the ability of Purchaser, or rendering Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, or (vii) seeking to impose material limitations on the ability of Purchaser or Parent effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Purchaser or Parent on all matters properly presented to the Company's stockholders; or (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger, or any other action shall be taken by any governmental entity, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (vii) of paragraph (a) above; or (c) (i) the representations and warranties of the Company contained in Sections 4.1(b) (authority), 4.1(u) (opinion of financial advisor), 4.1(v) (voting requirements), 4.1(w) (Rights Agreement), 4.1(x) (settlement of certain litigation) and the first five sentences of Section 4.1(d) (capitalization) of the Merger Agreement shall not be true and correct in all material respects as of the date of consummation of the Offer as though made on or as of such date (other than any such representations and warranties that by their terms address only matters as of another specified date, which shall be true and correct only as of such other specified date) and (ii) all other representations and warranties of the Company contained in the Merger Agreement, which representations and warranties shall be deemed for purposes of this condition not to include any qualification or limitation with respect to materiality (whether by reference to "Material Adverse Effect" or otherwise), shall not be true and correct as of the date of consummation of the Offer as though made on or as of such date (other than representations and warranties that by their terms address matters only as of another specified date, which shall be true and correct only as of such other specified date), except in the case of this clause (ii) where the matters in respect of which such representations and warranties are not true and correct, in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect on the Company, with the same effect as though such representations and warranties were made as of the date of consummation of the Offer; or (d) there shall have occurred a Material Adverse Effect on the Company; or (e) the Company Board (i) shall have withdrawn, or modified or changed in a manner adverse to Parent or Purchaser (including by amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement or the Merger, (ii) shall have recommended or announced a neutral position with respect to an Acquisition Proposal, (iii) shall have adopted any resolution to effect any of the foregoing, or (iv) upon request of Parent, shall fail to reaffirm its approval or recommendation of the Offer, the Merger Agreement or the Merger; or (f) any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates or any group of which any of them is a member, shall have acquired or announced its intention to acquire (including by commencement of a tender or exchange offer) beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Shares; or (g) the Merger Agreement shall have been terminated in accordance with its terms; which in the sole good faith judgment of Parent or Purchaser, in any such case, and regardless of the circumstances (including any action or inaction by Parent or Purchaser) giving rise to such condition makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payments for Shares. 37 The foregoing conditions are for the sole benefit of Parent and Purchaser and may (except for the Minimum Condition) be waived by Parent or Purchaser, in whole or in part, at any time and from time to time, in the sole discretion of Parent or Purchaser. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 15. Certain Legal Matters. General. Except as described in this Section 15, based on information provided by the Company, none of the Company, Purchaser or Parent is aware of (i) any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the acquisition of Shares by Parent or Purchaser pursuant to the Offer, the Merger or otherwise, or (ii) except as set forth herein, any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required prior to the acquisition of Shares by Purchaser pursuant to the Offer, the Merger or otherwise. Should any such approval or other action be required, Purchaser and Parent presently contemplate that such approval or other action will be sought, except as described below under "State Antitakeover Statutes." While, except as otherwise described in this Offer to Purchase, Purchaser does not presently intend to delay the acceptance for payment of, or payment for, 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 failure to obtain any such approval or other action might not result in consequences adverse to the Company's business or that certain parts of the Company's business might not have to be disposed of, or other substantial conditions complied with, in the event that such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, Purchaser could decline to accept for payment, or pay for, any Shares tendered. See Section 14 for certain conditions to the Offer, including conditions with respect to governmental actions. State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits a Delaware corporation, such as the Company, from engaging in a "Business Combination" (defined as a variety of transactions, including mergers) with an "Interested Stockholder" (defined generally as a person that is the beneficial owner of 15% or more of the outstanding voting stock of the subject corporation) for a period of three years following the date that such person became an Interested Stockholder unless, prior to the date such person became an Interested Stockholder, the board of directors of the corporation approved either the Business Combination or the transaction that resulted in the stockholder becoming an Interested Stockholder. The provisions of Section 203 of the DGCL are not applicable to any of the transactions contemplated by the Merger Agreement or the Stockholder Agreements, because the Merger Agreement, the Stockholder Agreements and the transactions contemplated thereby were approved by the Company Board prior to the execution thereof. A number of states have adopted laws and regulations that purport to apply to attempts to acquire corporations that are incorporated in such states, or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, employees, principal executive offices or principal places of business in such states. In Edgar v. MITE Corp., the Supreme Court of the United States (the "Supreme Court") invalidated on constitutional grounds the Illinois Business Takeover statute, which, as a matter of state securities law, made certain corporate acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana may, as a matter of corporate law and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquirer from voting on the affairs of a target corporation without the prior approval of the remaining stockholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated there. Parent and Purchaser do not believe that the antitakeover laws and regulations of any state other than the State of Delaware will by their terms apply to the Offer, and, except as set forth above with respect to Section 203 of the DGCL, neither Parent nor Purchaser has attempted to comply with any state antitakeover statute or 38 regulation. Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer and nothing in this Offer to Purchase or any action taken in connection with the Offer is intended as a waiver of such right. If it is asserted that any state antitakeover statute is applicable to the Offer and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer or may be delayed in consummating the Offer. In such case, Purchaser may not be obligated to accept for payment, or pay for, any Shares tendered pursuant to the Offer. See Section 14. Antitrust. The Offer and the Merger are subject to the HSR Act, which provides that certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC") and certain waiting period requirements have been satisfied. Parent filed its Notification and Report Form with respect to the Offer under the HSR Act on March 24, 1999. The waiting period under the HSR Act with respect to the Offer will expire at 11:59 p.m., New York City time, on April 8, 1999, the fifteenth day after the date Parent's form was filed, unless early termination of the waiting period is granted. However, the DOJ or the FTC may extend the waiting period by requesting additional information or documentary material from Parent or the Company. If such a request is made, such waiting period will expire at 11:59 p.m., New York City time, on the tenth day after substantial compliance by Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of Parent. In practice, complying with a request for additional information or material can take a significant amount of time. In addition, if the DOJ or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay consummation of the transaction while such negotiations continue. Purchaser will not accept for payment Shares tendered pursuant to the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. See Section 14. The FTC and the DOJ frequently scrutinize the legality under the Antitrust Laws (as defined below) of transactions such as Purchaser's acquisition of Shares pursuant to the Offer and the Merger. At any time before or after Purchaser's acquisition of Shares, the DOJ 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 acquisition of Shares pursuant to the Offer or otherwise seeking divestiture of Shares acquired by Purchaser or divestiture of substantial assets of Parent or its subsidiaries. Private parties, as well as state governments, may also bring legal action under the Antitrust Laws under certain circumstances. Based upon an examination of information provided by the Company relating to the businesses in which Parent and the Company are engaged, Parent and Purchaser believe that the acquisition of Shares by Purchaser will not violate the Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the Offer or other acquisition of Shares by Purchaser on antitrust grounds will not be made or, if such a challenge is made, of the result. See Section 14 for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. As used in this Offer to Purchase, "Antitrust Laws" shall mean and include the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other Federal and state statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade. Federal Reserve Board Regulations. Regulations G, U and X (the "Margin Regulations") of the Federal Reserve Board restrict the extension or maintenance of credit for the purpose of buying or carrying margin stock, including the Shares, if the credit is secured directly or indirectly by margin stock. Such secured credit may not be extended or maintained in an amount that exceeds the maximum loan value of all the direct and indirect collateral securing the credit, including margin stock and other collateral. 39 16. Fees and Expenses. Parent has engaged Broadview International LLC ("Broadview") to act as its financial advisor in connection with the Offer and the Merger. Parent will pay Broadview customary compensation for its financial advisory services in connection with the Offer and the Merger. Parent has agreed to reimburse Broadview for all reasonable out-of-pocket fees, expenses and costs, including reasonable fees and expenses of legal counsel, and to indemnify Broadview and certain related persons against certain liabilities and expenses in connection with the Offer and the Merger, including certain liabilities under the federal securities laws. Broadview has from time to time provided financial advisory services to Parent. Purchaser and Parent have retained Georgeson & Company Inc. to serve as the Information Agent and BankBoston, N.A. to serve as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by personal interview, mail, telephone, telex, telegraph and other methods of electronic communication and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer materials to beneficial holders. The Information Agent and the Depositary will each receive reasonable and customary compensation for their services, be reimbursed for certain reasonable out-of-pocket expenses and be indemnified against certain liabilities in connection with their services, including certain liabilities and expenses under the federal securities laws. Except as set forth above, neither Parent nor Purchaser will pay any fees or commissions to any broker or dealer or other person or entity in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust companies will be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding the Offer materials to their customers. 17. Miscellaneous. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, Purchaser shall make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. Purchaser and Parent have filed with the Commission the Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain additional information with respect to the Offer. In addition, the Company has filed with the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, setting forth its recommendation with respect to the Offer and the reasons for its recommendation and furnishing certain additional related information. Such Schedules and any amendments thereto, including exhibits, should be available for inspection and copies should be obtainable in the same manner set forth in Section 9 of this Offer to Purchase (except that such material will not be available at the regional offices of the Commission). Sterling Software (Southwest), Inc. March 30, 1999 40 SCHEDULE I INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, STERLING (U.S. OF AMERICA) AND PURCHASER 1. Directors and Executive Officers of Parent. The following table sets forth the name 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 Parent. Unless otherwise indicated, each such person is a citizen of the United States of America and the business address of each such person is c/o Sterling Software, Inc., 300 Crescent Court, Suite 1200, Dallas, Texas 75201. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Parent. Unless otherwise indicated, each such person has held his or her present occupation as set forth below, or has been an executive officer at Parent for the past five years. Present Principal Occupation or Employment; NameMaterial Positions Held During the Past Five Years ------------------------------------------------------ Mr. Wyly has served as Chairman of the Board of Directors of Parent since co-founding Parent in 1981. Mr. Wyly currently serves as a director of Sterling Commerce, Inc., a provider of electronic commerce SAM WYLY............... software and network services ("Sterling Commerce"), as Chairman of the Board of Directors of Michael Stores, Inc., a specialty retail chain ("Michaels"), as Chairman of the Board of Directors of Scottish Annuity & Life Holdings, Ltd., a variable life insurance and reinsurance company ("Scottish Annuity"), and as a partner of the general partner of Maverick Capital. Ltd., an investment fund management company founded by Mr. Wyly ("Maverick"). Mr. Wyly is a member of both the Executive Committee and the 1996 Stock Option Committee of the Board of Directors of Parent. CHARLES J. WYLY, JR.... Mr.Wyly has served as a director of Parent since co- founding Parent in 1981, and as Vice Chairman of the Board of Directors of Parent since 1984. Mr. Wyly currently serves as Vice Chairman of the Board of Directors of Michaels, as a director of Scottish Annuity and as a director of Sterling Commerce. Mr. Wyly is a member of both the Executive Committee and the 1996 Stock Option Committee of the Board of Directors of Parent. STERLING L. WILLIAMS... Mr. Williams has served as President, Chief Executive Officer and a director of Parent since co-founding Parent in 1981. Mr. Williams has served as Chairman of the Board of Directors of Sterling Commerce since December 1995. Mr. Williams served as Chief Executive Officer of Sterling Commerce from December 1995 to October 1996. Mr. Williams is a member of both the Executive Committee and the 1996 Stock Option Committee of the Board of Directors of Parent. GENO P. TOLARI......... Mr. Tolari has served as an Executive Vice President of Parent since March 1990 and as Chief Operating Officer of Parent since April 1996. Mr. Tolari served as President of Parent's Systems Management Group from December 1994 to February 1997 and as President of Parent's Federal Systems Group from October 1985 to December 1994. M. GENE KONOPIK........ Mr. Konopik has served as an Executive Vice President of Parent and as President of Parent's Federal Systems Group since December 1994. Mr. Konopik served as President of Parent's Information Technology Division from July 1993 to December 1994. I-1 JOHN R. COOK........... Mr. Cook has served as Senior Vice President, Business Development of Parent since December 1997. Mr. Cook served as Vice President, Business Development of Parent's former Applications Management Group from July 1997 to December 1997. Mr. Cook served as Vice President and General Manager-The Americas of the Software Division ("TI Software") of Texas Instruments Incorporated, an electronics company ("Texas Instruments"), from January 1997 to July 1997 and as Vice President-Strategy and New Business Creation of TI Software from June 1995 to December 1996. Mr. Cook served as the Chief Executive Officer of the BankA Enterprise of Andersen Consulting from October 1993 to June 1995. F.L. "MIKE" HARVEY..... Mr. Harvey has served as a Senior Vice President of Parent since June 1997 and as President of Parent's Systems Management Group since October 1998. Mr. Harvey served as President of Parent's former Applications Management Group from October 1996 to October 1998. Mr. Harvey served as President of Omega Consulting Group Inc., a software consulting company, from March 1993 to June 1997. DON J. MCDERMETT, Mr. McDermett has served as Senior Vice President and JR. ................... General Counsel of Parent since May 1997 and as Secretary of Parent since October 1998. Mr. McDermett served as Vice President, Legal of Parent from July 1996 to May 1997. Prior to that time Mr. McDermett was employed by Thompson & Knight, P.C., a Dallas- based law firm, having been a senior shareholder in that firm's corporate practice group since 1993. B. CAROLE MORTON....... Ms. Morton has served as a Senior Vice President of Parent since October 1996, as President of Parent's Information Management Group since October 1998 and as President of Parent's Information Management Division since October 1995. Ms. Morton served as President of Parent's former Information Management Group from October 1996 to June 1997. Ms. Morton served as President of Parent's former Applications Engineering Division from December 1994 to October 1995 and as President of Parent's former Applications Management Division from July 1993 to November 1994. MARK A. THEEL.......... Mr. Theel has served as a Senior Vice President of Parent since November 1998, as President of Parent's Application Development Group since October 1998 and as President of Parent's Application Development Division since January 1996. Mr. Theel served as Vice President, Labs of Parent's Application Development Division from December 1994 to December 1995 and as Vice President, Labs of Parent's former Applications Management Division from July 1993 to November 1994. R. LOGAN WRAY.......... Mr. Wray has served as Senior Vice President and Chief Financial Officer of Parent since May 1997. Prior to that time Mr. Wray was employed by Ernst & Young LLP, a national accounting firm, having been a partner in that firm since 1994. I-2 ROBERT J. DONACHIE..... Mr. Donachie has served as a director of Parent since May 1983. Mr. Donachie has been principally employed as a private business consultant since March 1981. Mr. Donachie is Chairman of the Audit Committee and a member of the 1996 Special Stock Option Committee of the Board of Directors of Parent. Mr. Donachie's business address is: c/o The Donachie Company, 4925 Greenville Avenue, Suite 730, Dallas, Texas 75206. MICHAEL C. FRENCH...... Mr. French has served as a director of Parent since July 1992. Mr. French currently serves as Chief Executive Officer, President and a director of Scottish Annuity. Mr. French is also a partner of Maverick and a consultant to the international law firm of Jones, Day, Reavis & Pogue. Mr. French was a partner of the law firm of Jackson & Walker, L.L.P. from 1976 to 1995. Mr. French's business address is: 300 Crescent Court, Suite 1000, Dallas, Texas 75201. DONALD R. MILLER, Mr. Miller has served as a director of Parent since JR. ................... September 1993. Mr. Miller has served as Vice President-Market Development of Michaels since November 1990 and also serves as a member of the Board of Directors of Michaels. Mr. Miller's business address is: c/o Michael's Stores, 8000 Bent Branch Drive, Irving, Texas 75063. PHILLIP A. MOORE....... Mr. Moore has served as a director of Parent since co-founding Parent in 1981. Mr. Moore served as Executive Vice President of Parent from July 1993 to September 1997, serving also as Chief Technology Officer of Parent from October 1995 to April 1996. ALAN W. STEELMAN....... Mr. Steelman has served as a director of Parent since February 1997. Mr. Steelman has been a senior principal of Monitor Company, a leading international management and consulting firm, since 1993. Mr. Steelman also currently serves as a director of Aristocrat Leisure Ltd., a software and machine manufacturing firm based in Sydney, Australia, on the Advisory Board of Richmont-Parly Investment Company, a Dallas- and Hong Kong- based private investment trust devoted to investments in listed Asian companies and on the Advisory Board of Asia Information Services, a Beijing-based information technology company. Mr. Steelman is a member of the Audit Committee and the 1996 Special Stock Option Committee of the Board of Directors of Parent. Mr. Steelman's business address is: 7112 Round Hill Road, McKinney, Texas 75070. EVAN A. WYLY........... Mr. Wyly has served as a director of Parent since July 1992. Mr. Wyly has served as the managing partner of Maverick since 1991. Mr. Wyly also serves as a director and officer of Michaels and as a director of Sterling Commerce. Mr. Wyly's business address is: 300 Crescent Court, Suite 1000, Dallas, Texas 75201. I-3 2. Directors and Executive Officers of Sterling (U.S. of America). The following table sets forth the name 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 Sterling (U.S. of America). Unless otherwise indicated, each such person is a citizen of the United States of America, and the business address of each such person is c/o Sterling Software (U.S. of America), Inc., 1800 Alexander Bell Drive, Reston, Virginia 20191 or, if applicable, as set forth in Part 1 of this Schedule I. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Sterling (U.S. of America). Unless otherwise indicated, each such person has held his or her present occupation as set forth below, or has been an executive officer of Sterling (U.S. of America), or the organization indicated, for the past five years.
Present Principal Occupation or Employment; Name Material Positions Held During the Past Five Years ---- -------------------------------------------------- RANDALL K. DAVIS.. Mr. Davis has served as President of Sterling (U.S. of America) since April 1997. Mr. Davis served as Vice President, Labs of Sterling (U.S. of America) from October 1995 to March 1997 and as Vice President, Labs of Parent's VM Software Division from April 1994 to September 1995. LEE McELRATH...... Mr. McElrath has served as Vice President, Finance of Sterling (U.S. of America) since November 1998. Mr. McElrath served as Vice President, Finance of the Europe Division of Parent's Systems Management Group from July 1997 to November 1998. Mr. McElrath served as Controller of the Federal Systems Business Unit of TI Software from November 1995 to June 1997 and as Controller of the Management Information Systems Business Unit of Texas Instruments from October 1993 to November 1995. DAN BECKETT....... Mr. Beckett has served as Vice President, North American Sales of Sterling (U.S. of America) since October 1995. Mr. Beckett served as Vice President, Sales of Parent's VM Software Division from October 1994 to September 1995. DOUG BERTINSHAW... Mr. Bertinshaw has served as Vice President, Labs of Sterling (U.S. of America) since April 1997. Mr. Bertinshaw served as Director of Development of Sterling (U.S. of America) from December 1994 to April 1997 and as Director of Marketing of Sterling (U.S. of America) from July 1992 to December 1994. DAVID HODGSON..... Mr. Hodgson has served as Vice President, Customer Services of Sterling (U.S. of America) since May 1995. Mr. Hodgson served as Director of Customer Services of Sterling (U.S. of America) from October 1994 to May 1995. Mr. Hodgson served as Customer Services Manager of Sterling (U.S. of America) from July 1993 to October 1994.
I-4
Present Principal Occupation or Employment; Name Material Positions Held During the Past Five Years ---- -------------------------------------------------- GUY DALEY............... Mr. Daley has served as Vice President, Business Development of Sterling (U.S. of America) since April 1998. Mr. Daley served as Director of International Marketing of Sterling (U.S. of America) from October 1997 to March 1998 and as International Marketing Manager of Sterling (U.S. of America) from May 1996 to October 1997. Mr. Daley served as General Manager, Professional Services of GEC Alsthon Information Technology, a network systems integrator ("GEC"), from January 1996 to May 1996 and as Strategic Marketing Manager of GEC from September 1994 to January 1996. GENO P. TOLARI.......... Vice President of Sterling (U.S. of America). See Part 1 of this Schedule I. DON J. McDERMETT, JR. .. Director, Vice President and Secretary of Sterling (U.S. of America). See Part 1 of this Schedule I. R. LOGAN WRAY........... Director, Vice President and Assistant Secretary of Sterling (U.S. of America). See Part 1 of this Schedule I.
3. Directors and Executive Officers of Purchaser. The following table sets forth the name 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 Purchaser. Unless otherwise indicated, each such person is a citizen of the United States of America, and the business address of each such person is c/o Sterling Software, Inc., 300 Crescent Court, Suite 1200, Dallas, Texas 75201. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Parent. Unless otherwise indicated, each such person has held his or her present occupation as set forth below, or has been an executive officer at Parent, or the organization indicated, for the past five years.
Present Principal Occupation or Employment; Name Material Positions Held During the Past Five Years ---- -------------------------------------------------- GENO P. TOLARI.......... President of the Purchaser. See Part I of this Schedule I. DON J. McDERMETT, JR. .. Director, Vice President and Secretary of the Purchaser. See Part 1 of this Schedule I. R. LOGAN WRAY........... Director, Vice President and Treasurer of the Purchaser. See Part 1 of this Schedule I.
I-5 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary, at the applicable address set forth below: The Depositary for the Offer is: BANKBOSTON, N.A. By Mail: By Hand: By Overnight, Certified BankBoston, N.A. Securities Transfer & or Express Mail Delivery: Attention: Reporting BankBoston, N.A. Corporate Actions Services, Inc. Attention: P.O. Box 8029 c/o Boston EquiServe L.P. Corporate Actions Boston, MA 02266-8029 100 William Street, 150 Royall Street Galleria Canton, MA 02021 New York, NY 10038 By Facsimile Transmission: (781) 575-2233 or (781) 575-2232 (For Eligible Institutions Only) Confirm Facsimile by Telephone: (781) 575-3120 Any questions or requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the other tender offer materials may be directed to the Information Agent at its address and telephone number set forth below. Stockholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: GEROGESON & COMPANY INC. Wall Street Plaza New York, New York 10005 Banks and Brokers Call Collect: (212) 440-9800 All Others Call Toll Free: (800) 223-2064 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS) OF INTERLINK COMPUTER SCIENCES, INC. PURSUANT TO THE OFFER TO PURCHASE DATED MARCH 30, 1999 OF STERLING SOFTWARE (SOUTHWEST), INC. AN INDIRECT WHOLLY OWNED SUBSIDIARY OF STERLING SOFTWARE, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: BANKBOSTON, N.A. By Mail: By Hand: By Overnight, Certified BankBoston, N.A. or Express Mail Delivery: Securities Transfer & Reporting Services, Inc. Attention: c/o Boston EquiServe L.P. Corporate Actions 100 William Street, Galleria BankBoston, N.A. P.O. Box 8029 New York, NY 10038 Attention: Boston, MA 02266-8029 Corporate Actions 150 Royall Street Canton, MA 02021 By Facsimile Transmission: (781) 575-2233 or (781) 575-2232 (For Eligible Institutions Only) Confirm Facsimile by Telephone: (781) 575-3120 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used by stockholders of Interlink Computer Sciences, Inc. if certificates for Shares (as such term is defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Instruction 2 below) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by the Depositary at the Book- Entry Transfer Facility (as defined in, and pursuant to the procedures set forth in, Section 3 of the Offer to Purchase). Stockholders who deliver Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders" and other stockholders who deliver Shares are referred to herein as "Certificate Stockholders." Stockholders whose certificates for Shares are not immediately available or who cannot deliver either the certificates for, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) with respect to, their Shares and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. [_] 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 (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution ______________________________________________ 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) _____________________________________________ Window Ticket Number (if any) ______________________________________________ Date of Execution of Notice of Guaranteed Delivery _________________________ Name of Institution that Guaranteed Delivery _______________________________ If delivered by Book-Entry Transfer, check box: [_] Account Number _____________________________________________________________ Transaction Code Number ____________________________________________________ DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as name(s) Shares Tendered appear(s) on Share certificate(s)) (Attach additional signed list if necessary) - ----------------------------------------------------------------------------------------- Total Number of Number Certificate Shares Represented of Shares Number(s)(1) by Certificate(s)(1) Tendered(2) ----------------------------------------------------- ----------------------------------------------------- ----------------------------------------------------- ----------------------------------------------------- ----------------------------------------------------- ----------------------------------------------------- Total Shares - -----------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders. (2) Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered to the Depositary are being tendered hereby. See Instruction 4. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation ("Parent"), the above- described shares of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), pursuant to Purchaser's offer to purchase all of the outstanding Shares at a price of $7.00 per Share, net to the seller in cash, without interest thereon (the "Offer Price") upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 30, 1999 and in this Letter of Transmittal (which, together with any amendments or supplements thereto or hereto, collectively constitute the "Offer"). The undersigned understands that Purchaser reserves the right to transfer or assign, in whole at any time, or in part from time to time, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged. The Company has distributed one Right for each outstanding Share pursuant to the Rights Agreement (as defined in the Offer to Purchase). The Rights are currently evidenced by and trade with certificates evidencing the Common Stock. The Company has taken such action so as to make the Rights Agreement inapplicable to Parent, Purchaser and their respective affiliates and associates in connection with the transactions contemplated by the Merger Agreement and the Stockholder Agreements (as such terms are defined in the Offer to Purchase). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 23, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. Upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms of any such extension or amendment), subject to, and effective upon, acceptance for payment of, and payment for, the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect thereof on or after March 23, 1999 (collectively, "Distributions")) 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 Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares (and any and all Distributions), or transfer ownership of such Shares (and any and all Distributions) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, (ii) present such Shares (and any and all Distributions) for transfer on the books of the Company, and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any and all Distributions), all in accordance with the terms of the Offer. By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints R. Logan Wray and Don J. McDermett, Jr. in their respective capacities as officers of Purchaser, and any individual who shall thereafter succeed to any such office of Purchaser, and each of them, as the attorneys- in-fact and proxies of the undersigned, each with full power of substitution and resubstitution, to vote at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof or otherwise in such manner as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper with respect to, to execute any written consent concerning any matter as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper with respect to, and to otherwise act as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper with respect to, all of the Shares (and any and all Distributions) tendered hereby and accepted for payment by Purchaser. This appointment will be effective if and when, and only to the extent that, Purchaser accepts such Shares for payment pursuant to the Offer. This power of attorney and proxy are irrevocable and are granted in consideration of the acceptance for payment of such Shares in accordance with 3 the terms of the Offer. Such acceptance for payment shall, without further action, revoke any prior powers of attorney and proxies granted by the undersigned at any time with respect to such Shares (and any and all Distributions), and no subsequent powers of attorney, proxies, consents or revocations may be given by the undersigned with respect thereto (and, if given, will not be deemed effective). Purchaser reserves the right to require that, in order for Shares (or other Distributions) to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any and all Distributions), including voting at any meeting of the Company's stockholders. 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 all Distributions, that the undersigned owns 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 the tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when the same are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby or deduct from such purchase price, the amount or value of such Distribution as determined by Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, successors and assigns of the undersigned. Except as stated in the Offer to Purchase this tender is irrevocable. The undersigned understands that the valid tender 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 Purchaser upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms or conditions of any such extension or amendment). Without limiting the foregoing, if the price to be paid in the Offer is amended in accordance with the Merger Agreement, the price to be paid to the undersigned will be the amended price notwithstanding the fact that a different price is stated in this Letter of Transmittal. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and/or return any certificates for Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and/or return any certificates evidencing Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) in the name(s) of, and deliver such check and/or return any such certificates (and any accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that Purchaser has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder thereof if Purchaser does not accept for payment any of the Shares so tendered. 4 [_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11. Number of Shares represented by lost, destroyed or stolen certificates: _______ SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7) To be completed ONLY if the To be completed ONLY if certifi- check for the purchase price of cates for Shares not tendered or Shares accepted for payment is to not accepted for payment and/or be issued in name of someone the check for the purchase price other than the undersigned, if of Shares accepted for payment is certificates for Shares not ten- to be sent to someone other than dered or not accepted for payment the undersigned or to the under- are to be issued in the name of signed at an address other than someone other than the under- that shown under "Description of signed or if Shares tendered Shares Tendered." hereby and delivered by book-en- try transfer that are not ac- Mail check and/or Share certifi- cepted for payment are to be re- cates to: turned by credit to an account maintained at a Book-Entry Trans- Name _____________________________ fer Facility other than the ac- (Please Print) count indicated above. Address __________________________ Issue check and/or Share certifi- cate(s) to: __________________________________ (Include Zip Code) Name _____________________________ (Please Print) __________________________________ (Taxpayer Identification or Address __________________________ Social Security Number) (See Substitute Form W-9) __________________________________ (Include Zip Code) __________________________________ (Taxpayer Identification or Social Security Number) (See Substitute Form W-9) Credit Shares delivered by book- entry transfer and not purchased to the Book-Entry Transfer Facil- ity account: __________________________________ (Account Number) 5 SIGN HERE (Also Complete Substitute Form W-9 Below) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Signature(s) of Stockholder(s)) Dated: ______________ , 1999 (Must be signed by registered holder(s) exactly as name(s) appear(s) on the Share 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 trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s) ____________________________________________________________________ ---------------------------------------------------------------------------- (Please Print) Name of Firm _______________________________________________________________ Capacity (full title) ______________________________________________________ (see Instruction 5) Address ____________________________________________________________________ ---------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number _____________________________________________ Taxpayer Identification or Social Security Number __________________________ (See Substitute Form W-9) GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5) Authorized Signature _______________________________________________________ Name(s) ____________________________________________________________________ ---------------------------------------------------------------------------- (Please Print) Title ______________________________________________________________________ Name of Firm _______________________________________________________________ Address ____________________________________________________________________ ---------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number _____________________________________________ 6 INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Instruction 1, includes any participant in any of the Book-Entry Transfer Facility's systems whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith, unless such registered holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, 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; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by stockholders of the Company either if Share 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 procedures set forth herein and in Section 3 of the Offer to Purchase. For a stockholder to validly tender Shares pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees or an Agent's Message (in connection with book-entry transfer) and any other required documents, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date and either (i) certificates for tendered Shares must be received by the Depositary at one of such addresses prior to the Expiration Date or (ii) Shares must be delivered pursuant to the procedures for book-entry transfer set forth herein and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be received by the Depositary prior to the Expiration Date or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth herein and in Section 3 of the Offer to Purchase. Stockholders whose certificates for Shares are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot comply with the book- entry transfer procedures on a timely basis may tender their Shares by properly completing and duly executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth herein and in Section 3 of the Offer to Purchase. Pursuant to such guaranteed delivery procedures, (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, must be received by the Depositary prior to the Expiration Date and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to all tendered Shares), together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents must be received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the NASDAQ National Market is open for business. 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 such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against the participant. The signatures on this Letter of Transmittal cover the Shares tendered hereby. THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS 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. All tendering stockholders, by executing this Letter of Transmittal (or facsimile thereof), waive any right to receive any notice of acceptance of their Shares for payment. 7 3. Inadequate Space. If the space provided herein under "Description of Shares Tendered" is inadequate, the number of Shares tendered and the Share certificate numbers with respect to such Shares should be listed on a separate signed schedule attached hereto. 4. Partial Tenders. (Not applicable to stockholders who tender by book-entry transfer). If fewer than all the Shares evidenced by any Share certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In any such case, new certificate(s) for the remainder of the Shares that were evidenced by the old certificates will be sent to the registered holder, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date or the 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 certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are held of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several 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 or any Share 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 Purchaser of the authority of such person so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of Share certificates or separate stock powers are required unless payment or certificates for Shares not tendered or not accepted for payment are to be issued in the name of a person other than the registered holder(s). Signatures on any such Share 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 evidenced by certificates listed and transmitted hereby, the Share 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 Share certificates. Signature(s) on any such Share certificates or stock powers must be guaranteed by an Eligible Institution. 6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, Purchaser will pay all stock transfer taxes with respect to the transfer and sale of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or if certificates for Shares not tendered or not accepted for payment 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) or such other person) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share certificates evidencing the Shares tendered hereby. 7. Special Payment and Delivery Instructions. If a check for the purchase price of any Shares accepted for payment is to be issued in the name of, and/or Share certificates for Shares not accepted for payment or not tendered are to be issued in the name of and/or returned to, a person other than the signer of this Letter of Transmittal or if a check is to be sent, and/or such certificates are to be returned, to a person other than the signer of this Letter of Transmittal, or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Any stockholder(s) delivering Shares by book-entry transfer may request that Shares not purchased be credited to such account maintained at the Book-Entry Transfer Facility as such stockholder(s) may designate in the box entitled "Special Payment Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book- Entry Transfer Facility designated above as the account from which such Shares were delivered. 8 8. Requests for Assistance or Additional Copies. Questions and requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be directed to the Information Agent at its address and phone numbers set forth below, or from brokers, dealers, commercial banks or trust companies. 9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser reserves the absolute right in its sole discretion to waive, at any time or from time to time, 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. 10. Backup Withholding. In order to avoid "backup withholding" of federal income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify, under penalties of perjury, that such TIN is correct and that such stockholder is not subject to backup withholding. Backup withholding is not an additional income tax. Rather, the amount of the backup withholding can be credited against the federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return. The stockholder is required to give the Depositary the TIN (i.e., social security number or employer identification number) of the record owner of the Shares. If the Shares are held in more than one 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. 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 TIN is provided to the Depositary. However, such amounts will be refunded to such stockholder if a TIN is provided to the Depositary within 60 days. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. 11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s) representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary by checking the box immediately preceding the special payment/special delivery instructions and indicating the number of Shares lost. The stockholder will then be instructed as to the steps that must be taken in order to replace the Share certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Share certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY. 9 IMPORTANT TAX INFORMATION Under federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with such stockholder's correct taxpayer identification number on Substitute Form W-9 below. If such stockholder is an individual, the taxpayer identification number is his or her social security number. If a tendering stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification box on the Substitute Form W-9. If the Depositary is not provided with the correct taxpayer identification number, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to 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, that stockholder must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. Exempt stockholders, other than foreign individuals, should furnish their TIN, write "Exempt" on the face of the Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder. 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. Purpose of Substitute Form W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct taxpayer identification number by completing the form contained herein certifying that the taxpayer identification number provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a taxpayer identification number). What Number to Give the Depositary The stockholder is required to give the Depositary the social security number or employer identification number of the record owner of the Shares. If the Shares are in more than one 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. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should write "Applied For" in the space provided for in the TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price until a TIN is provided to the Depositary. 10 PAYOR'S NAME: BANKBOSTON, N.A. - ------------------------------------------------------------------------------- Part 1--PLEASE PROVIDE YOUR SUBSTITUTE TIN IN THE BOX AT RIGHT AND ---------------------- Form W-9 CERTIFY BY SIGNING AND Social Security DATING BELOW. Number(If awaiting TIN Department of the write""Applied For") Treasury Internal OR Revenue Service ---------------------- Employer Identification Number(If awaiting TIN write "Applied For") Payer's Request for Taxpayer Identification Number ("TIN") -------------------------------------------------------- Part 2--Certificate--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 for 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 no- tified 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 witholding because of under reporting interest or dividends on your tax returns. However, if after being notified by the IRS that you are subject to backup withholding, you receive another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2). (Also see instructions in the enclosed Guidelines). -------------------------------------------------------- SIGNATURE: _____________ DATE: _____ , Part 3-- 1999 Awaiting TIN [_] NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH 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 THE 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 to the Depositary by the time of payment, 31% of all reportable payments made to me thereafter will be withheld, but that such amounts will be refunded to me if I provide a certified Taxpayer Identification Number to the Depositary within sixty (60) days. Signature ___________________________________ Date ________________ , 1999 11 Questions and requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal and other tender offer materials may be directed to the Information Agent at its address and telephone numbers set forth below: The Information Agent for the Offer is: GEORGESON & COMPANY INC. Wall Street Plaza New York, NY 10005 BANKS AND BROKERS CALL COLLECT (212) 440-9800 ALL OTHERS CALL TOLL FREE (800) 223-2064 12 EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY EXHIBIT (A)(3) NOTICE OF GUARANTEED DELIVERY for Tender of Shares of Common Stock (Including the Associated Preferred Share Purchase Rights) of Interlink Computer Sciences, Inc. to Sterling Software (Southwest), Inc. an indirect wholly owned subsidiary of Sterling Software, Inc. (Not to Be Used for Signature Guarantees) This Notice of Guaranteed Delivery, or a form substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates representing shares of Common Stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation, are not immediately available, if the procedure for book-entry transfer cannot be completed prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or if time will not permit all required documents to reach the Depositary prior to the Expiration Date. Such form may be delivered by hand, transmitted by facsimile transmission or mailed to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: BANKBOSTON, N.A. By Hand: Securities Transfer & Reporting Services, Inc. c/o Boston EquiServe L.P. 100 William Street, Galleria New York, NY 10038 By Mail: Facsimile Transmission: By Overnight, Certified BankBoston, N.A. (781) 575-2233 or Express Mail Delivery: Attention: (781) 575-2232 BankBoston, N.A. Corporate Actions (For Eligible Attention: P.O. Box 8029 Institutions Only) Corporate Actions Boston, MA 02266-8029 Confirm Facsimile by Telephone: 150 Royall Street (781) 575-3120 Canton, MA 02021 Delivery of this Notice of Guaranteed Delivery to an address other than as set forth above or transmission of instructions via facsimile number 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 Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to Sterling Software (Southwest), Inc., a Delaware corporation and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in Purchaser's Offer to Purchase dated March 30, 1999 and the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares set forth below of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation, pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares: ________________ Name(s) of Record Holder(s): Certificate Nos. (if available): __________________________________ __________________________________ __________________________________ Please Print __________________________________ Address(es): _____________________ Check box if Shares will be ten- dered by book-entry transfer: [_] __________________________________ Account Number: __________________ __________________________________ Zip Code Dated: _____________________, 1999 Area Code and Tel. No.: __________________________________ __________________________________ Signature(s): ____________________ __________________________________ GUARANTEE (Not to Be Used for Signature Guarantees) The undersigned, a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, guarantees to deliver to the Depositary either certificates representing the Shares tendered hereby, in proper form for transfer, or confirmation of book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, in each case with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal, within three trading days (as defined in the Offer to Purchase) after the date hereof. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. Name of Firm: ______________________ _____________________________________ Authorized Signature Address: ___________________________ _____________________________________ Please Print ____________________________________ _____________________________________ Zip Code Area Code and Tel. No.: ____________ Dated: ________________________, 1999 NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL. 2 EX-99.(A)(4) 5 BROKER/DEALER LETTER EXHIBIT (A)(4) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Preferred Share Purchase Rights) of Interlink Computer Sciences, Inc. at $7.00 Net per Share by Sterling Software (Southwest), Inc. an indirect wholly owned subsidiary of Sterling Software, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED. March 30, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees: We have been appointed by Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation ("Parent"), to act as Information Agent in connection with Purchaser's offer to purchase all outstanding shares of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), at $7.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 30, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the Expiration Date (as defined in the Offer to Purchase) that number of Shares which, when added to the Shares beneficially owned by Parent, Purchaser or any subsidiary of Parent, represents at least a majority of the Shares outstanding (on a fully diluted basis) on the date Shares are accepted for payment. The Offer is also subject to other conditions set forth in the Offer to Purchase. 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 dated March 30, 1999; 2. Letter of Transmittal for your use in accepting the Offer and tendering Shares and for the information of your clients; 3. Notice of Guaranteed Delivery to be used to accept the Offer if certificates for Shares and all other required documents cannot be delivered to the Depositary, or if the procedures for book-entry transfer cannot be completed, by the Expiration Date (as defined in the Offer to Purchase); 4. A 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. A letter to stockholders of the Company from Augustus J. Berkeley, Chief Executive Officer and Chairman of the Board of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 dated March 30, 1999, which has been filed by the Company with the Securities and Exchange Commission; 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. A return envelope addressed to BankBoston, N.A. (the "Depositary"). Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment and pay for Shares which are validly tendered prior to the Expiration Date and not theretofore properly withdrawn when, as and if Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance of such Shares for payment pursuant to the Offer. Payment for Shares purchased pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates for such Shares, or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, pursuant to the procedures described in Section 3 of the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or a properly completed and manually signed facsimile thereof) or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer and (iii) all other documents required by the Letter of Transmittal. Purchaser 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. Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling costs incurred by them in forwarding the enclosed materials to their customers. Purchaser will pay or cause to be paid all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. 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 MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer of Shares, and any other required documents, should be sent to the Depositary, and certificates representing the tendered Shares should be delivered or such Shares should be tendered by book-entry transfer, all in accordance with the Instructions set forth in the Letter of Transmittal and in the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their certificates or other required documents or to complete the procedures for delivery by book-entry transfer prior to the expiration of the Offer, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. 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 its address and telephone number set forth on the back cover of the Offer to Purchase. Very truly yours, Georgeson & Company Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, 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 DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 CLIENT LETTER EXHIBIT (A)(5) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Preferred Share Purchase Rights) of Interlink Computer Sciences, Inc. at $7.00 Net per Share by Sterling Software (Southwest), Inc. an indirect wholly owned subsidiary of Sterling Software, Inc. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED. March 30, 1999 To Our Clients: Enclosed for your consideration are the Offer to Purchase dated March 30, 1999 and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") in connection with the offer by Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser"), and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation ("Parent"), to purchase for cash all outstanding shares of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"). 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 enclosed 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 Offer. Your attention is invited to the following: 1. The offer price is $7.00 per Share, net to you in cash without interest. 2. The Offer is being made for all outstanding Shares. 3. The Board of Directors of the Company has unanimously approved the Merger Agreement (as defined in the Offer to Purchase) and the transactions contemplated thereby, including the Offer and the Merger (as defined in the Offer to Purchase), and has unanimously determined that the Offer and the Merger are fair to, and in the best interests of, the Company's stockholders and unanimously recommends that stockholders accept the Offer and tender their Shares pursuant to the Offer. 4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Monday, April 26, 1999, unless the Offer is extended. 5. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the Expiration Date (as defined in the Offer to Purchase) that number of Shares which, when added to the Shares beneficially owned by Parent, Purchaser or any other subsidiary of Parent (if any), represents at least a majority of the Shares outstanding (on a fully diluted basis) on the date Shares are accepted for payment. The Offer is also subject to other conditions set forth in the Offer to Purchase. 6. Any stock transfer taxes applicable to the sale of Shares to Purchaser pursuant to the Offer will be paid by Purchaser, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Except as disclosed in the Offer to Purchase, Purchaser is not aware of any state in which the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instruction form set forth on the reverse side of this letter. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the reverse side of this letter. Your instructions should be forwarded to us in sufficient time to permit us to submit a tender on your behalf prior to the expiration of the Offer. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF INTERLINK COMPUTER SCIENCES, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated March 30, 1999 and the related Letter of Transmittal in connection with the Offer by Sterling Software (Southwest), Inc., a Delaware corporation and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation, to purchase all outstanding shares of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights (the "Rights" and together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation. This will instruct you to tender the number of Shares indicated below (or if no number is indicated below, all Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered:* Shares Dated: , 1999 _____________________________________ _____________________________________ Signature(s) ____________________________________, Print Name(s) ____________________________________, ____________________________________, Address(es) ____________________________________, Area Code and Telephone Number ____________________________________, Tax ID or Social Security Number - -------- * 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 W-9 GUIDELINES EXHIBIT (A)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen, i.e. 00-0000000. The table below will help determine the number to give the payer. - ----------------------------------- -----------------------------------
Give the SOCIAL SECURITY For this type of account: number of-- - -------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner account) of the account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if account) the minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, guardian or committee or incompetent for a designated ward, person(3) minor, or incompetent person 7.a. The usual revocable The grantor- savings trust account trustee(1) (grantor is also trustee) b. So-called trust account The actual that is not a legal or owner(1) valid trust under State law 8. Sole proprietorship The owner(4) account - --------------------------------------------
Give the EMPLOYER IDENTIFICATION For this type of account: number of-- - ---------------------------------------------- 9. A valid trust, estate, The legal entity or pension trust (do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(5) 10. Corporate account The corporation 11. Religious, charitable, The organization or educational organization account 12. Partnership account The partnership held in the name of the business 13. Association, club, or The organization other tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the The public Department of entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments - --------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's Social Security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your Social Security number or employer identification number (if you have one). (5) List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) 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 TIN or you don't know your number, obtain Internal Revenue Service Form SS-5, Application for Social Security Number Card or Form SS-4, Application for Employer Identification Number at your 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. . 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. 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 made to a nominee. 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 nonresident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments made to a nominee. Exempt payees described above should file Substitute 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 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 the IRS. The 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) Failure to Report Certain Dividend and Interest Payments.--If you fail to properly include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an underpayment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) 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. (4) 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)(7) 8 JOINT PRESS RELEASE EXHIBIT (A)(7) [LOGO OF STERLING SOFTWARE APPEARS HERE] NEWS RELEASE - -------------------------------------------------------------------------------- STERLING SOFTWARE TO ACQUIRE INTERLINK COMPUTER SCIENCES DALLAS, TX and FREMONT, CA, March 24, 1999 - Sterling Software, Inc. (SSW- NYSE), one of the 20 largest independent software companies in the world, today announced that it had entered into a definitive agreement to acquire Interlink Computer Sciences, Inc. (INLK-NASDAQ), a leading supplier of high-performance solutions for enterprise systems networking, headquartered in Fremont, California. The transaction is valued at approximately $64 million (net of exercise proceeds from outstanding options and warrants) and will be structured as a $7.00 per share first-step cash tender offer, followed by a second-step merger at the same price per share. The companies anticipate closing the acquisition in late April or early May 1999 and at that time combining Interlink's business with Sterling Software's worldwide network management business. Interlink's software solutions allow enterprise servers to inter-operate with TCP/IP networks and enable customers to provide secure, managed access to their enterprise applications and data over public and private connections. These offerings are in direct support of growing customer requirements to allow internal and external access to their enterprise servers, where most enterprise- scale applications continue to reside, for e-commerce and other network-centric business strategies. "This acquisition brings us tremendous opportunities to strengthen our strategic position in the marketplace and capitalize on the explosive growth of the Internet as a cost-effective, open network for enterprise computing," said Sterling L. Williams, president and chief executive officer of Sterling Software. "With the addition of Interlink's network management technology, we will be able to extend our lead in OS/390 TCP/IP management and enhance our ability to manage specific applications running on TCP/IP networks. This acquisition also gives us a significant customer base and an excellent opportunity to leverage our SOLVE family of network management products." Mr. Williams noted that, when completed, this will be Sterling Software's 33rd acquisition -- and the second systems management acquisition announced in less than three weeks. Earlier this month, the company announced it was acquiring the storage management software business of Spectra Logic Corporation. He added the acquisition of Interlink would be accretive to earnings per share. A.J. Berkeley, president and chief executive officer of Interlink, said: "Interlink's software solutions are a perfect fit with Sterling Software's network management products. Sterling Software will be able to broaden its TCP/IP network management solutions, and Interlink's products will now reach the very large corporations that need the performance and reliability that our products provide. With our common heritage and focus, I think this union will produce one of the best network management teams in the world. I am excited for our customers and employees." Under the merger agreement, Sterling Software will commence a first-step tender offer to purchase all outstanding shares of Interlink for $7.00 per share in cash. Following completion of the tender offer, Interlink would be merged with a wholly-owned subsidiary of Sterling Software and the remaining Interlink shares would be converted into the right to receive $7.00 per share. The tender offer and merger were unanimously approved by Interlink's Board of Directors. The tender offer is scheduled to commence on or prior to March 30, 1999. In connection with the merger agreement, Sterling Software has entered into Stockholder Agreements with certain major stockholders of Interlink owning an aggregate of approximately 19.7% of Interlink's shares, calculated on a fully- diluted basis, under which such stockholders have, among other things, granted Sterling Software an option to purchase their shares at a price of $7.00 per share. The tender offer will be conditioned, among other things, on the valid tender of Interlink shares which, together with shares subject to the Stockholder Agreements or owned by Sterling Software, represent a majority of Interlink's outstanding shares on a fully diluted basis, and the expiration or termination of the Hart-Scott-Rodino Act's waiting period. Interlink Computer Sciences, Inc. is an international supplier of solutions that enable its customers to securely manage and control their business environments over intranets and public networks. The company's products and services focus on TCP/IP-centric operations in the data center that enable customers to securely use their IBM and IBM- compatible OS/390 mainframes as "enterprise servers" in distributed, heterogeneous client/server network environments. For the fiscal year ended June 30, 1998, Interlink reported revenues of $29 million. For more information, you can visit the company's Web site at www.interlink.com. Sterling Software is a leading provider of software and services for the application development, information management, systems management and federal systems markets. The company is ranked among Business Week's 1998 "Info Tech 100" as one of the world's best performing information technology companies. Headquartered in Dallas, Sterling Software has a worldwide installed base of more than 20,000 customer sites and 3,600 employees in 90 offices worldwide. For more information on Sterling Software, visit the company's Web site at www.sterling.com. This news release contains certain forward-looking statements that reflect the current views and expectations of Sterling Software and Interlink with respect to future events. Such statements are subject to a number of risks, uncertainties and assumptions, including those mentioned in the two companies' periodic reports filed with the Securities and Exchange Commission. Actual results may vary significantly. CONTACTS: Julie Kupp A.J. Berkeley Cindy Foor VP, Investor Relations President & CEO Director, Corporate Communications Sterling Software, Inc. Interlink Computer Sciences, Inc. Sterling Software, Inc. (214) 981-1000 (510) 657-9800 (214) 981-1000 julie.kupp@sterling.com aberkeley@interlink.com cindy.foor@sterling.com EX-99.(A)(8) 9 PRESS RELEASE EXHIBIT (A)(8) [LOGO] STERLING SOFTWARE NEWS RELEASE - ------------------------------------------------------------------------------- STERLING SOFTWARE COMMENCES PREVIOUSLY ANNOUNCED CASH TENDER OFFER FOR INTERLINK COMPUTER SCIENCES AT $7 PER SHARE Dallas, TX, March 30, 1999 - Sterling Software, Inc. (SSW-NYSE) announced today that Sterling Software (Southwest), Inc., its indirect wholly owned subsidiary, has commenced a cash tender offer for all outstanding shares of common stock of Interlink Computer Sciences, Inc. (INLK-NASDAQ) at $7.00 per share. The offer is being made pursuant to the previously announced Merger Agreement between Sterling Software and Interlink. The offer is conditioned upon, among other things, the valid tender of a number of Interlink shares which, together with the shares beneficially owned by Sterling Software, represent a majority of Interlink's outstanding shares on a fully diluted basis, and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The offer and withdrawal rights are scheduled to expire at midnight on Monday, April 26, 1999. Georgeson & Company Inc. is acting as the Information Agent for the offer. Sterling Software is a leading provider of software and services for the application development, information management, systems management and federal systems markets. The company is ranked among Business Week's 1998 "Info Tech 100" as one of the world's best performing information technology companies. Headquartered in Dallas, Sterling Software has a worldwide installed base of more than 20,000 customer sites and 3,600 employees in 90 offices worldwide. For more information on Sterling Software, visit the company's Web site at www.sterling.com. Contact: Julie Kupp VP, Investor Relations Sterling Software, Inc. (214) 981-1000 julie.kupp@sterling.com 1 EX-99.(A)(9) 10 SUMMARY ADVERTISEMENT EXHIBIT (A)(9) 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 March 30, 1999 and the related Letter of Transmittal, and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statue prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto. Purchaser shall make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. Notice of Offer to Purchase for Cash All of the Outstanding Shares of Common Stock (Including the Associated Preferred Share Purchase Rights) of Interlink Computer Sciences, Inc. at $7.00 Net Per Share by Sterling Software (Southwest), Inc. an indirect wholly owned subsidiary of Sterling Software, Inc. Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware corporation ("Parent"), is offering to purchase all of the outstanding shares of common stock, par value $.001 per share (the "Common Stock"), including the associated preferred share purchase rights issued pursuant to the Rights Agreement (as defined in the Offer to Purchase) (the "Rights" and, together with the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the "Company"), at a price of $7.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 30, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:000 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the Expiration Date (as defined below) that number of Shares which, together with the Shares beneficially owned by Parent and Purchaser, constitutes at least a majority of the Shares outstanding on a fully diluted basis and (ii) the expiration or termination of any applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Offer is not subject to a financing condition. See Section 14 of the Offer to Purchase. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of March 23, 1999 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. The Merger Agreement provides that, following the completion of the Offer and satisfaction or waiver, if permissible, of all conditions contained in the Merger Agreement, and in accordance with the General Corporation Law of the State of Delaware (the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"). Following the consummation of the Merger, the Company will continue as the surviving corporation and will be an indirect wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares held by any subsidiary of the Company or in the treasury of the Company, or by Parent, Purchaser or any other subsidiary of Parent, which Shares will be cancelled, and other than Shares, if any, held by stockholders who perfect their appraisal rights under the DGCL) will be converted into the right to receive $7.00 in cash (or any higher price paid pursuant to the Offer), without interest thereon. The Board of Directors of the Company has unanimously determined that the Offer and the Merger are fair to, and in the best interests of, the Company and its stockholders, has unanimously approved each of the Merger Agreement, the Offer and the Merger and unanimously recommends that stockholders accept the Offer and tender their Shares pursuant to the Offer. As a condition and inducement to Parent's entering into the Merger Agreement and incurring the liabilities therein, certain stockholders of the Company (each, a "Stockholder"), who together have voting power and dispositive power with respect to an aggregate of 1,171,068 Shares and own options to acquire 854,050 Shares, concurrently with the execution and delivery of the Merger Agreement entered into separate Stockholder Agreements (the "Stockholder Agreements"), dated as of March 23, 1999, with Parent and Purchaser. Pursuant to the Stockholder Agreements, the Stockholders have agreed, among other things, to grant Parent and Purchaser a proxy with respect to the voting of the Shares subject to the Stockholder Agreements in favor of the Merger upon the terms and subject to the conditions set forth therein. The Stockholders have also granted to Parent an option to purchase the Shares subject to the Stockholder Agreements, at an option price of $7.00 per Share (or any higher price offered by Parent or any subsidiary of Parent to the stockholders of the Company generally). Tendering stockholders of record who tender Shares directly will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a bank or broker should check with such institution as to whether they charge any service fees. Purchaser will pay all fees and expenses of BankBoston, N.A., which is acting as the Depositary (in such capacity, the "Depositary") and Georgeson & Company Inc., which is acting as the Information Agent (in such capacity, the "Information Agent"), incurred in connection with the Offer and in accordance with the terms of the agreements entered into between Purchaser and/or Parent and each such person. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to Purchaser and not withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of its acceptance for payment of such Shares. 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 therefor with the Depositary, which will act as agent for tenant pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from Purchaser and transmitting payment 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 a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase)), (ii) a Letter of Transmittal (or 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 (as defined in the Offer to Purchase), and (iii) any other documents required by the Letter of Transmittal. The per Share consideration paid to any stockholder pursuant to the Offer will be the highest per Share consideration paid to any other stockholder pursuant to the Offer. Under no circumstances will interest be paid on the purchase price to be paid by Purchaser for such Shares, regardless of any extension of the Offer or any delay in making such payment. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Monday, April 26, 1999, unless and until Purchaser (in accordance with the terms of the Merger Agreement), shall have extended the period of time during 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 Purchaser, shall expire. Subject to the applicable rules and regulations of the Securities and Exchange Commission and to applicable law, Purchaser expressly reserves the right, in its sole discretion (subject to the terms of the Merger Agreement), at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including the occurrence of any of the events specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary; provided, however, that Purchaser cannot extend the Offer beyond July 31, 1999 without the consent of the Company. Any such extension will be followed by a public announcement thereof by no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. Without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such announcement other than by issuing a press release to the Dow Jones News Service or otherwise as may be required by applicable law. Except as otherwise provided below, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment pursuant to the Offer, may also be withdrawn at any time after May 29, 1999, or such later time as may apply if the Offer is extended. For a withdrawal to be effective, a written, telegraphic 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. Any such notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certificates evidencing such Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered for the account of an Eligible Institution (as defined in the Offer to Purchase), the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been delivered pursuant to the procedures for book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly 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 of the Offer to Purchase at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchase, in its sole discretion, whose determination will be final and binding. The Company has provided Purchaser 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, the related Letter of Transmittal and other relevant documents will be mailed to record holders of Shares whose names appear on the stockholder list, and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder lists, 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 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 Offer to Purchase and the related Letter of Transmittal contain important information and should be read carefully before any decision is made with respect to the Offer. Questions and requests for assistance or additional copies of the Offer to Purchase, Letter of Transmittal and other tender offer documents may be directed to the Information Agent, at the address and telephone number set forth below, and copies will be furnished promptly at Purchaser's expense. Neither Parent nor Purchaser will pay any fees or commissions to any broker or dealer or other person (other than the Information Agent and the Depositary) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: [GEORGESON & COMPANY INC.] Wall Street Plaza New York, New York 10005 Bank and Brokers Call Collect: (212) 440-9800 All Others Call Toll-Free: (800) 223-2064 March 30, 1999 ================================================================================ DRAFT F766-0326991303141-B-CITN.QXP Friday, March 26, 1999 4:42:12 PM Citigate Albert Frank for New York Times EX-99.(C)(1) 11 AGREEMENT AND PLAN OF MERGER EXHIBIT (C)(1) - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER among STERLING SOFTWARE, INC. STERLING SOFTWARE (SOUTHWEST), INC. and INTERLINK COMPUTER SCIENCES, INC. dated as of March 23, 1999 - --------------------------------------------------------------------------------
TABLE OF CONTENTS Page ARTICLE I THE OFFER....................................................................... 2 Section 1.1 The Offer..................................................... 2 --------- Section 1.2 Offer Documents.................................................3 --------------- Section 1.3 Company Actions.................................................4 --------------- Section 1.4 Directors.......................................................6 --------- ARTICLE II THE MERGER........................................................................8 Section 2.1 The Merger......................................................8 ---------- Section 2.2 Closing.........................................................8 ------- Section 2.3 Effective Time..................................................8 -------------- Section 2.4 Effects of the Merger...........................................9 --------------------- Section 2.5 Certificate of Incorporation; Bylaws............................9 ------------------------------------ Section 2.6 Directors; Officers.............................................9 ------------------- ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES...................................................................9 Section 3.1 Effect on Capital Stock.........................................9 ----------------------- Section 3.2 Stock Options and Warrants.....................................11 -------------------------- Section 3.3 Payment for Shares.............................................11 ------------------ ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................................13 Section 4.1 Representations and Warranties of Company......................13 ----------------------------------------- Section 4.2 Representations and Warranties of Parent and -------------------------------------------- Purchaser......................................................33 --------- ARTICLE V CONDUCT OF BUSINESS OF COMPANY...................................................36 Section 5.1 Conduct of Business of Company.................................36 ------------------------------ ARTICLE VI ADDITIONAL COVENANTS.............................................................40 Section 6.1 Company Stockholders Meeting; Preparation of -------------------------------------------- the Proxy Statement; Short-Form Merger.........................40 -------------------------------------- Section 6.2 Access to Information; Confidentiality.........................41 -------------------------------------- Section 6.3 Commercially Reasonable Efforts................................41 -------------------------------
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Section 6.4 Public Announcements...........................................42 -------------------- Section 6.5 No Solicitation; Acquisition Proposals.........................42 -------------------------------------- Section 6.6 Consents, Approvals and Filings................................45 ------------------------------- Section 6.7 Employee Benefit Matters.......................................45 ------------------------ Section 6.8 Indemnification; Directors' and Officers' Insur- ------------------------------------------------ ance...........................................................46 ---- ARTICLE VII CONDITIONS PRECEDENT.............................................................48 Section 7.1 Conditions to Each Party's Obligation to Effect ----------------------------------------------- the Merger.....................................................48 ---------- Section 7.2 Conditions to Parent's or Purchaser's Obligation ------------------------------------------------ to Effect the Merger...........................................49 -------------------- ARTICLE VIII TERMINATION......................................................................49 Section 8.1 Termination....................................................49 ----------- Section 8.2 Effect of Termination..........................................52 --------------------- ARTICLE IX GENERAL PROVISIONS...............................................................52 Section 9.1 Nonsurvival of Representations and Warranties..................52 --------------------------------------------- Section 9.2 Fees and Expenses..............................................52 ----------------- Section 9.3 Definitions....................................................53 ----------- Section 9.4 Amendment and Modification.....................................55 --------------------------- Section 9.5 Extension; Waiver..............................................55 ----------------- Section 9.6 Notices........................................................55 ------- Section 9.7 Interpretation.................................................56 -------------- Section 9.8 Entire Agreement; No Third-Party Beneficia- ------------------------------------------- ries...........................................................56 ---- Section 9.9 Governing Law..................................................57 ------------- Section 9.10 Assignment.....................................................57 ---------- Section 9.11 Enforcement....................................................57 ----------- Section 9.12 Severability...................................................58 ------------ Section 9.13 Counterparts...................................................58 ------------
EXHIBIT A - Conditions to the Offer ii AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN OF MERGER, dated as of March 23, 1999 (this "Agreement"), is made and entered into among Sterling Software, Inc., a Delaware corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and Interlink Computer Sciences, Inc., a Delaware corporation ("Company"). RECITALS: A. The Executive Committee of the Board of Directors of Parent and the respective Boards of Directors of Purchaser and Company have determined that it would be advisable and in the best interests of their respective stockholders for Parent to acquire Company by means of a merger of the Purchaser with and into Company (the "Merger"), on the terms and subject to the conditions set forth in this Agreement. B. To effectuate the acquisition, Parent and Company each desire that Parent cause Purchaser to commence a cash tender offer to purchase all of the outstanding shares of common stock, par value $.001 per share, of Company (the "Shares") (including the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Preferred Shares Rights Agreement between Company and BANKBOSTON, N.A., dated as of February 25, 1998 (the "Company Rights Agreement")) on the terms and subject to the conditions set forth in this Agreement and the Offer Documents (as defined in Section 1.2) and the Board of Directors of Company has unanimously approved such tender offer and is recommending (subject to the limitations contained herein) that Company's stockholders accept the tender offer and tender their Shares pursuant thereto. C. Concurrently with the execution and delivery of this Agreement and as a condition to Parent's and Purchaser's willingness to enter into this Agreement, Parent and Purchaser have entered into separate Stockholder Agreements, dated as of the date hereof (the "Stockholder Agreements"), with each of the Principal Stockholders (as defined in Section 9.3), pursuant to which each Principal Stockholder has (x) agreed, among other things, to vote all Shares owned by such Principal Stockholder in favor of the Merger and (y) granted to Parent an option to purchase all Shares owned by such Principal Stockholder. D. Parent, Purchaser and Company desire to make certain representations and warranties and to enter into certain covenants in connection with the Offer (as defined in Section 1.1) and the Merger and also to prescribe various conditions to the consummation thereof. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and covenants contained in this Agreement, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I THE OFFER Section 1.1 The Offer. (a) Provided that none of the events set forth in --------- Exhibit A hereto shall have occurred and be continuing, as promptly as practicable (but in any event not later than five business days after the public announcement of the execution and delivery of this Agreement), Parent shall cause Purchaser to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer") all outstanding Shares at a price of $7.00 per share, net to the seller in cash (as paid pursuant to the Offer, the "Offer Consideration"). The obligation of Parent and Purchaser to commence the Offer, to consummate the Offer and to accept for payment and to pay for Shares validly tendered in the Offer and not withdrawn shall be subject only to those conditions set forth in Exhibit A hereto. (b) Without the prior written consent of Company, Purchaser shall not (and Parent shall cause Purchaser not to) (i) decrease or change the form of the Offer Consideration or decrease the number of Shares sought pursuant to the Offer, (ii) impose additional conditions to the Offer, (iii) extend the expiration date of the Offer beyond the initial expiration date of the Offer (which shall be the 20th business day after commencement of the Offer), except (A) as required by applicable law, (B) that if, immediately prior to the expiration date of the Offer (as it may be extended), the Shares tendered and not withdrawn pursuant to the Offer constitute more than 75% and less than 90% of the outstanding Shares, Purchaser may extend the Offer for one or more periods not to exceed an aggregate of ten business days, notwithstanding that all conditions to the Offer are satisfied as of such expiration date of the Offer and (C) that if any condition to the Offer has not been satisfied or waived, Purchaser may, in its sole discretion, extend the expiration date of the Offer 2 for one or more periods provided, that the expiration date of the Offer may not be extended beyond July 31, 1999, (iv) waive the condition (the "Minimum Condition") that there shall be validly tendered and not withdrawn prior to the time the Offer expires a number of Shares which, when added to the number of Shares which Parent, Purchaser or any other Subsidiary of Parent "beneficially owns" (within the meaning of Rule 13d-3 under the Exchange Act), constitutes at least a majority of the Shares outstanding on a fully-diluted basis on the date of purchase ("on a fully-diluted basis" meaning, as of any date, the number of Shares outstanding, together with the Shares which Company may be required to issue pursuant to warrants, options or obligations outstanding at that date under employee stock or similar benefit plans or otherwise whether or not vested or then exercisable), or (v) amend any term or other condition of the Offer in any manner materially adverse to holders of Shares; provided, however, that, except as set forth above and subject to applicable legal requirements, Purchaser may waive any condition to the Offer other than the Minimum Condition in its sole discretion; and provided further that the Offer may be extended in connection with an increase in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Purchaser shall, on the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, accept for payment, and pay for, in accordance with the terms and subject to the conditions of the Offer, all Shares validly tendered and not withdrawn pursuant to the Offer as soon as practicable after the expiration date thereof. Notwithstanding the foregoing, if all the conditions to the Offer have not been satisfied or waived at the initial expiration date of the Offer and all such conditions are reasonably capable of being satisfied within the applicable period set forth below, the Purchaser shall (i) extend the Offer for 10 business days from the initial expiration date of the Offer or (ii) extend the Offer for 20 business days from the initial expiration date of the Offer if the condition contained in Section 7.1(d) hereof has not been satisfied and is reasonably capable of being satisfied. Section 1.2 Offer Documents. (a) On the date of commencement of the Offer, --------------- Parent and Purchaser shall file or cause to be filed with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer which shall contain the offer to purchase and related letter of transmittal and other ancillary Offer documents and instruments pursuant to which the Offer will be made (collectively, and with any supplements or amendments thereto, the "Offer Documents"). Company will promptly supply to Parent and Purchaser in writing, for inclusion in the Offer Documents, all information concerning Company required 3 under the Exchange Act and the rules and regulations thereunder to be included in the Offer Documents. (b) The Offer Documents will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and on the date first published, sent or given to Company's shareholders, shall not 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 therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by Parent or the Purchaser with respect to information supplied by Company in writing for inclusion in the Offer Documents. Each of Parent and the Purchaser further agrees to take all steps necessary to cause the Offer Documents 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. Each of Parent, Purchaser and Company shall promptly correct any information provided by them for use in the Offer Documents if and to the extent that such information shall be or have become false or misleading in any material respect, and Parent and Purchaser shall take all lawful action necessary to cause the Offer Documents as so corrected to be filed promptly with the SEC and to be disseminated to holders of Shares as and to the extent required by applicable law. Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents and any amendments thereto prior to the filing thereof with the SEC. Parent and Purchaser agree to provide the Company and its counsel any comments Parent, Purchaser or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments. (c) Parent shall provide or cause to be provided to Purchaser on a timely basis the funds necessary to accept for payment and pay for any Shares that the Purchaser becomes obligated to accept for payment and pay for pursuant to the Offer. Section 1.3 Company Actions. (a) Company hereby approves of and consents --------------- to the Offer and represents and warrants that (i) its Board of Directors (at a meeting duly called and held) has (A) unanimously determined that each of this Agreement, the Stockholder Agreements, the Offer and the Merger are fair to and in the best interests of Company and its stockholders, (B) unanimously approved this Agreement, the Stockholder Agreements and the transactions contemplated hereby, including the Offer and the Merger, and such approval is sufficient to render Section 203 of the Delaware General Corporation Law (the "DGCL") inapplicable to this 4 Agreement and the transactions contemplated hereby, including the Offer and the Merger, and (C) resolved (subject to the limitations herein contained) to recommend acceptance of the Offer and adoption of this Agreement by the holders of Shares, and (ii) Hambrecht & Quist has delivered to the Board of Directors of Company its opinion that the Offer Consideration to be received by the holders of Shares in the Offer is fair, from a financial point of view, to such holders. (b) Company shall file with the SEC, simultaneously with the filing by Parent and Purchaser of the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any supplements or amendments thereto, the "Schedule 14D-9") containing, subject to the terms of Section 6.5, such recommendations of the Board of Directors of Company in favor of the Offer and the adoption of this Agreement. Each of Parent and Purchaser will promptly supply to Company in writing, for inclusion in the Schedule 14D-9, all information concerning Parent's Designees (as such term is defined in Section 1.4 hereof), as required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, and Company shall include such information in the Schedule 14D-9. Parent will promptly supply to the Company in writing, for inclusion in the Schedule 14D-9, any information concerning Parent or Purchaser required under the Exchange Act and the rules and regulations thereunder to be included in the Schedule 14D-9. The Schedule 14D-9 will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and on the date first published, sent or given to Company's shareholders, shall not 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 therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by Company with respect to information supplied by Parent or the Purchaser in writing for inclusion in the Schedule 14D-9. Company further agrees to take all steps necessary to cause the Schedule 14D-9 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. Each of Company, Parent and Purchaser shall promptly correct any information provided by them for use in the Schedule 14D-9 if and to the extent that such information shall be or have become false or misleading in any material respect and Company shall take all lawful action necessary to cause the Schedule 14D-9 as so corrected to be filed promptly with the SEC and disseminated to the holders of Shares as and to the extent required by applicable law. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 and any amendments thereto prior to the filing thereof with the SEC. Company agrees to provide the Parent and its counsel any comments Company or its counsel receive 5 from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments. (c) In connection with the Offer, Company shall promptly furnish Parent and Purchaser with mailing labels, security position listings and all available listings or computer files containing the names and addresses of the record holders of Shares as of the latest practicable date and shall furnish Parent and Purchaser with such information and assistance (including updated lists of stockholders, mailing labels and lists of security positions) as Parent and Purchaser or their agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of applicable law, and except for such actions as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, Parent and Purchaser shall, and shall use commercially reasonable efforts to cause each of their affiliates, associates, partners, employees, agents and advisors to, hold in confidence the information contained in such labels, lists and files, and all other information delivered pursuant to this Section 1.3(c), shall use such information only in connection with the Offer and the Merger and, if this Agreement is terminated in accordance with its terms, shall deliver promptly to Company all copies of such information (and any copies, compilations or extracts thereof or based thereon) then in their possession or under their control. Section 1.4 Directors. (a) Promptly after (i) the purchase of and payment --------- for any Shares by Purchaser or any of its affiliates pursuant to the Offer as a result of which Purchaser and its affiliates own beneficially at least a majority of then outstanding Shares and (ii) compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall occur later, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, on Company's Board of Directors as is equal to the product of the total number of directors on such Board (after giving effect to any increase in the size of such Board pursuant to this Section 1.4) multiplied by the percentage that the number of Shares beneficially owned by Purchaser at such time (including Shares so accepted for payment) bears to the total number of Shares then outstanding. In furtherance thereof, Company shall, upon request of Parent, use its best efforts promptly either to increase the size of its Board of Directors or to secure the resignations of such number of its incumbent directors, or both, as is necessary to enable such designees of Parent to be so elected or appointed to Company's Board of Directors, and Company shall take all actions available to Company to cause such designees of Parent to be so elected or appointed. At such time, Company shall, if requested by 6 Parent, also take all action necessary to cause persons designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as is on Company's Board of Directors of (i) each committee of Company's Board of Directors, (ii) each board of directors (or similar body) of each Subsidiary (as defined in Section 9.3) of Company and (iii) each committee (or similar body) of each such board. (b) Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under Section 1.4(a), including mailing to stockholders the information required by such Section 14(f) and Rule 14f-1 (or including such information in the Schedule 14D-9 initially filed with the SEC and distributed to the stockholders of Company) as is necessary to enable Parent's designees to be elected to Company's Board of Directors. Parent or Purchaser will supply to Company in writing and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. The provisions of this Section 1.4 are in addition to and shall not limit any rights which Purchaser, Parent or any of their affiliates may have as a holder or beneficial owner of Shares as a matter of applicable law with respect to the election of directors or otherwise. (c) Notwithstanding the provisions of this Section 1.4, the parties hereto shall use their respective reasonable best efforts to ensure that at least two of the members of the Board shall, at all times prior to the Effective Time (as defined in Section 1.6 hereof) be, directors of the Company who were directors of the Company on the date hereof (the "Continuing Directors"), provided that, if the number of Continuing Directors shall be reduced below two for any reason, the remaining Continuing Director may designate a person to fill such vacancy who shall be deemed to be a Continuing Director for all purposes of this Agreement, or if no Continuing Directors then remain, the other directors of Company then in office shall designate two persons to fill such vacancies who will not be officers or employees or affiliates of Company, Parent or either of their subsidiaries and such persons shall be deemed to be Continuing Directors for all purposes of this Agreement. From and after the time, if any, that Parent's designees constitute a majority of Company's Board of Directors and prior to the Effective Time, any amendment or modification of this Agreement, any amendment to Company's Certificate of Incorporation or By-Laws inconsistent with this Agreement, any termination of this Agreement by Company, any extension of time for performance of any of the obligations of Parent or Purchaser hereunder, any waiver of any condition to Company's obligations 7 hereunder or any of Company's rights hereunder or other action by Company hereunder may be effected only by the action of a majority of the Continuing Directors of Company, which action shall be deemed to constitute the action of any committee specifically designated by the Board of Directors of Company to approve the actions contemplated hereby and the full Board of Directors of Company; provided, that, if there shall be no Continuing Directors, such actions -------- ---- may be effected by majority vote of the entire Board of Directors of Company. ARTICLE II THE MERGER Section 2.1 The Merger. On the terms and subject to the conditions set ---------- forth in this Agreement, and in accordance with the DGCL, the Merger shall be effected and the Purchaser shall be merged with and into Company at the Effective Time. At the Effective Time, the separate existence of Purchaser shall cease and Company shall continue as the surviving corporation (as such, the "Surviving Corporation") and shall continue to be governed by the laws of the State of Delaware. Section 2.2 Closing. Unless this Agreement shall have been terminated and ------- the transactions contemplated hereby shall have been abandoned pursuant to Article VIII, and subject to the satisfaction or waiver of all of the conditions set forth in Article VII, the closing of the Merger (the "Closing") will take place as soon as practicable, but in no event later than 10:00 a.m. on the tenth business day (the "Closing Date") following satisfaction or waiver of all of the conditions set forth in Article VII, other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York, 10022, unless another date, time or place is agreed to in writing by the parties hereto. Section 2.3 Effective Time. On the Closing Date (or on such other date as -------------- Parent and Company may agree), the parties hereto shall file with the Secretary of State of the State of Delaware (the "Delaware State Secretary") a certificate of merger and any other appropriate documents, executed in accordance with the relevant provisions of the DGCL, and shall make all other filings or recordings required under the DGCL and other applicable law in connection with the Merger. The Merger shall become effective upon the filing of the certificate of merger with the Delaware State Secretary, or at such later time as is specified in the certificate of 8 merger (the "Effective Time"). Section 2.4 Effects of the Merger. The Merger shall have the effects set --------------------- forth in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all property of Company and Purchaser shall vest in the Surviving Corporation, and all liabilities and obligations of Company and Purchaser shall become liabilities and obligations of the Surviving Corporation. Section 2.5 Certificate of Incorporation; Bylaws. At the Effective Time, ------------------------------------ (a) the certificate of incorporation of Company as in effect at the Effective Time shall, from and after the Effective Time, be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof and applicable law and (b) the bylaws of Purchaser as in effect at the Effective Time shall, from and after the Effective Time, be the bylaws of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof and applicable law. Section 2.6 Directors; Officers. From and after the Effective Time, (a) ------------------- the directors of Purchaser shall be the directors of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be, and (b) the officers of Company shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of ----------------------- the Merger and without any action on the part of any holder of Shares or any other shares of capital stock of Company or Purchaser: (a) Common Stock of Purchaser. Each share of common stock, par ------------------------- value $0.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and 9 nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. (b) Cancellation of Treasury Shares and Parent-Owned Shares. Each ------------------------------------------------------- Share issued and outstanding immediately prior to the Effective Time that is owned by Company or any Subsidiary (as defined in Section 9.3) of Company or by Parent, Purchaser or any other Subsidiary of Parent (other than shares in trust accounts, managed accounts, custodial accounts and the like that are beneficially owned by third parties) shall automatically be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor. (c) Conversion of Shares. Each share of Company Common Stock -------------------- (including the associated Rights) issued and outstanding immediately prior to the Effective Time (other than Shares to be canceled and retired in accordance with Section 3.1(b) and any Dissenting Shares (as defined in Section 3.1(d)) shall be converted into the right to receive the Offer Consideration, payable to the holder thereof, without any interest thereon (the "Merger Consideration"), less any required withholding taxes, upon surrender and exchange of a Certificate (as defined in Section 3.3). (d) Dissenting Shares. Notwithstanding anything in this Agreement to ----------------- the contrary, Shares issued and outstanding immediately prior to the Effective Time held by any person who has the right to demand, and who properly demands, an appraisal of such Shares ("Dissenting Shares") in accordance with Section 262 of the DGCL (or any successor provision) shall not be converted into a right to receive the Merger Consideration unless such holder fails to perfect or otherwise loses such holder's right to such appraisal, if any. If, after the Effective Time, such holder fails to perfect or loses any such right to appraisal, each such Share of such holder shall be treated as a Share that had been converted as of the Effective Time into the right to receive the Merger Consideration in accordance with Section 3.1(c). At the Effective Time, any holder of Dissenting Shares shall cease to have any rights with respect thereto, except the rights provided in Section 262 of the DGCL (or any successor provision) and as provided in the immediately preceding sentence. Company shall give prompt notice to Parent of any demands received by Company for appraisal of Shares, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. 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. 10 Section 3.2 Stock Options and Warrants. -------------------------- (a) The parties hereby agree that (i) neither Purchaser nor Parent shall assume the outstanding options to purchase shares of Company Common Stock (collectively, the "Options") under Company's 1992 Stock Option Plan and 1996 Director Stock Option Plan (collectively, the "Stock Option Plans") or substitute an option to purchase Parent or Purchaser common stock in respect of such Options, (ii) Options under the Stock Option Plans shall be accelerated and otherwise treated in accordance with the terms of the applicable Stock Option Plan document and the various agreements evidencing the Options and (iii) Company shall take all such action as shall be necessary or appropriate to cause all Options under the Stock Option Plans to expire no later than the Effective Time. (b) Parent and Purchaser shall not assume or continue any outstanding warrants to purchase shares of Company Common Stock (the "Warrants"). The parties hereto shall take all appropriate action to provide that, in accordance with the respective terms of the Warrants, at or prior to the Effective Time, each holder of an outstanding Warrant shall be entitled to receive an amount in cash equal to the product of (i) the excess, if any, of the Offer Consideration over the per share exercise price of such Warrant and (ii) the number of shares subject to such Warrant. Section 3.3 Payment for Shares. ------------------ (a) Payment Fund. Concurrently with the Effective Time, ------------ Parent shall deposit, or shall cause to be deposited, with or for the account of a bank or trust company having net capital of not less than $100,000,000 designated by Parent, which shall be reasonably satisfactory to Company (the "Paying Agent"), for the benefit of the holders of Shares, cash in an amount sufficient to pay the aggregate Merger Consideration payable upon the conversion of Shares pursuant to Section 3.1(c) (the "Payment Fund"). (b) Letters of Transmittal; Surrender of Certificates. ------------------------------------------------- As soon as reasonably practicable after the Effective Time, Parent shall instruct the Paying Agent to mail to each holder of record (other than Company or any of its Subsidiaries or Parent, Purchaser or any other Subsidiary of Parent) of a certificate or certificates that, immediately prior to the Effective Time, evidenced outstanding Shares (the "Certificates"), (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent, and shall be in such form 11 and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent together with such letter of transmittal, duly executed, and such other customary documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor cash in an amount equal to the product of (i) the number of Shares theretofore represented by such Certificate and (ii) the Merger Consideration, and the Certificate so surrendered shall forthwith be canceled. No interest shall be paid or accrued on any cash payable upon the surrender of any Certificate. If payment is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the surrendered Certificate or established to the satisfaction of Parent and the Surviving Corporation that such taxes have been paid or are not applicable. (c) Cancellation and Retirement of Shares; No Further Rights. As of -------------------------------------------------------- the Effective Time, all Shares (other than Shares to be canceled in accordance with Section 3.1(b)) issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of any such Shares shall cease to have any rights with respect thereto or arising therefrom (including without limitation the right to vote), except the right to receive the Merger Consideration, without interest, upon surrender of such Certificate in accordance with Section 3.3(b), and until so surrendered, each such Certificate shall represent for all purposes only the right to receive the Merger Consideration, without interest. The Merger Consideration paid upon the surrender for exchange of Certificates in accordance with the terms of this Section 3.3 shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares theretofore represented by such Certificates. (d) Investment of Payment Fund. The Paying Agent shall invest the --------------------------- Payment Fund, as directed by Parent, in (i) direct obligations of the United States of America, (ii) obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iii) commercial paper rated the highest quality by either Moody's Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates of deposit, bank repurchase agreements or bankers' acceptances of commercial banks with capital exceeding 12 $500 million. Any net earnings with respect to the Payment Fund shall be the property of and paid over to Parent as and when requested by Parent. (e) Termination of Payment Fund. Any portion of the Payment Fund --------------------------- which remains undistributed to the holders of Certificates for 180 days after the Effective Time shall be delivered to Parent, upon demand, and any holders of Certificates that have not theretofore complied with this Section 3.3 shall thereafter look only to Parent, and only as general creditors thereof, for payment of their claim for any Merger Consideration. (f) No Liability. None of Parent, Purchaser, the Surviving ------------ Corporation or the Paying Agent shall be liable to any person in respect of any payments or distributions payable from the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any Governmental Entity (as defined in Section 4.1(c)), any amounts payable in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. (g) Withholding Rights. Parent shall be entitled to deduct and ------------------ withhold, or cause to be deducted or withheld, from the consideration otherwise payable pursuant to this Agreement to any holder of Shares, Options or Certificates such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of applicable state, local or foreign tax law. To the extent that amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to such holders in respect of which such deduction and withholding was made. ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.1 Representations and Warranties of Company. Except as set ----------------------------------------- forth in the Disclosure Schedule, Company represents and warrants to Parent and Purchaser that all of the statements contained in this Article IV are true and correct as 13 of the date of this Agreement (or, if made as of a specified date, as of such date). Each exception set forth in the Disclosure Schedule and each other response to this Agreement set forth in the Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual Section of this Agreement and relates only to such Section, except to the extent that one section of the Disclosure Schedule specifically refers to another section thereof. (a) Organization, Standing and Corporate Power. Each of Company and ------------------------------------------ each Subsidiary of Company 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 Company and each Subsidiary of Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (as defined in Section 9.3) on Company. Company has delivered or made available to Parent true, complete and correct copies of the certificate of incorporation and bylaws or comparable governing documents of Company and each material Subsidiary of Company, in each case as amended to the date of this Agreement. Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 sets forth a true, correct and complete list of all material Subsidiaries of Company. Except as set forth in Section 4.1(a) of the Disclosure Schedule and except for directors' qualifying shares, all Subsidiaries of the Company are wholly owned directly or indirectly by the Company. (b) Authority; Noncontravention. Company has the requisite corporate --------------------------- power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Company and the consummation by Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Company, subject, in the case of the Merger, to the adoption of this Agreement by its stockholders as contemplated by Section 6.1(a). This Agreement has been duly executed and delivered by Company and, assuming that this Agreement constitutes a valid and binding obligation of Parent and Purchaser, constitutes a valid and binding obligation of Company, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to 14 general principles of equity. Except as specified in Section 4.1(b) of the Disclosure Schedule, the execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not, (i) conflict with any of the provisions of the certificate of incorporation or bylaws of Company or the comparable governing documents of any Subsidiary of Company, in each case as amended to the date of this Agreement, (ii) subject to the governmental filings and other matters referred to in Section 4.1(c), conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, or give rise to a material obligation, a right of termination, cancellation or acceleration of any obligation or a loss of a material benefit under, or require the consent of any person under, any indenture or other agreement, permit, concession, franchise, license or similar instrument or undertaking to which Company or any of its Subsidiaries is a party or by which Company or any of its Subsidiaries or any of their respective assets is bound or affected, or (iii) subject to the governmental filings and other matters referred to in Section 4.1(c), contravene any domestic or foreign law, rule or regulation or any order, writ, judgment, injunction, decree, determination or award currently in effect, which, in the case of clauses (ii) and (iii) above could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company. (c) Consents and Approvals. No consent, approval or authorization of, ---------------------- or declaration or filing with, or notice to, any domestic or foreign governmental agency or regulatory authority (a "Governmental Entity"), which has not been received or made is required by or with respect to Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by Company or the consummation by Company of the transactions contemplated hereby, except for (i) the filing of premerger notification and report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9 and, if required by applicable law, the Proxy Statement (as defined in Section 6.1(b)), (B) such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby, (iii) the filing of the certificate of merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which Company is qualified to do business, and (iv) any other consents, approvals, authorizations, filings or notices the failure to make or obtain which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company. (d) Capital Structure. The authorized capital stock of Company ----------------- 15 consists solely of (i) 20,000,000 Shares and (ii) 5,000,000 shares of preferred stock, par value $.001 per share, ("Preferred Shares"). At the close of business on March 22, 1999: (i) 8,308,107 Shares were issued and outstanding, (ii) no Preferred Shares were issued and outstanding, (iii) 1,614,896 Shares were reserved for issuance pursuant to outstanding Options granted under the Stock Option Plans, (iv) 260,706 Shares were reserved for issuance upon exercise of the Warrants, (v) no Shares were held by Company in its treasury, (vi) 100,000 shares of Series A Participating Preferred Stock were reserved for issuance pursuant to the Company Rights Agreement and (vii) 600,000 Shares have been reserved for issuance under the 1996 Employee Stock Purchase Plan, of which no more than an additional 80,000 Shares will be issued prior to April 30, 1999. Except as set forth in the immediately preceding sentence, at the close of business on March 22, 1999, no shares of capital stock or other equity securities of Company were issued, reserved for issuance or outstanding. All outstanding shares of capital stock of Company are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. Except as specified above or in Section 4.1(d) of the Disclosure Schedule, neither Company nor any Subsidiary of Company has or is subject to or bound by or, at or after the Effective Time will have or be subject to or bound by, any outstanding option, warrant, call, subscription or other right (including any preemptive right), agreement or commitment which (i) obligates Company or any material Subsidiary of Company to issue, sell or transfer, or repurchase, redeem or otherwise acquire, any shares of the capital stock of Company or any Subsidiary of Company, (ii) restricts the transfer of any shares of capital stock of Company or any of its Subsidiaries, or (iii) relates to the voting of any shares of capital stock of Company or any of its Subsidiaries. No bonds, debentures, notes or other indebtedness of Company or any Subsidiary of Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which the stockholders of Company or any Subsidiary of Company may vote are issued or outstanding. Section 4.1(d) of the Disclosure Schedule accurately sets forth information as of the date hereof regarding the exercise price, date of grant and number of granted Options for each holder of Options pursuant to any Stock Option Plan. Except as specified in Section 4.1(d) of the Disclosure Schedule, all of the outstanding shares of capital stock of each Subsidiary of Company have been duly authorized, validly issued, fully paid and nonassessable and are owned by Company, by one or more Subsidiaries of Company or by Company and one or more such Subsidiaries, free and clear of Liens (as defined in Section 9.3). (e) SEC Documents. Company has filed all required reports, schedules, ------------- forms, statements and other documents with the SEC since June 5, 1996 16 (such reports, schedules, forms, statements and other documents being hereinafter referred to as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC Documents as of such dates, contained any untrue statements 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 consolidated financial statements of 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 consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may otherwise be indicated in the notes thereto) and fairly present the consolidated financial position of 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 quarterly statements, to normal year-end audit adjustments). (f) Absence of Certain Changes or Events; No Undisclosed Material ------------------------------------------------------------- Liabilities. - ----------- (i) Except as disclosed in the SEC Documents filed and publicly available prior to the date of this Agreement (the "Filed SEC Documents") or specified in Section 4.1(f) of the Disclosure Schedule, since the date of the most recent financial statements included in the Filed SEC Documents, Company and its Subsidiaries have conducted their businesses only in the ordinary course, and there has not been: (A) a Material Adverse Effect on Company; (B) any declaration, setting aside or payment of any dividend or other distribution in respect of shares of Company's capital stock, or any redemption or other acquisition by Company of any shares of its capital stock; (C) any increase in the rate or terms of compensation payable or to become payable by Company or its Subsidiaries to their directors, officers or key employees, except increases occurring in the ordinary course of business consistent with past practice; (D) any entry into, or increase in the rate or terms of, or amendment or modification to, any bonus, insurance, severance, pension or other employee or retiree benefit plan, payment, agreement or arrangement made to, for or with any such directors, officers or key employees, except increases occurring in the ordinary course of business consistent with past practices or as 17 required by applicable law; (E) any entry into any agreement, commitment or transaction by Company or any of its material Subsidiaries which is material to Company and its Subsidiaries taken as a whole, except for agreements, commitments or transactions entered into in the ordinary course of business consistent with past practice; (F) any change by Company in accounting methods, principles or practices, except as required or permitted by generally accepted accounting principles; (G) any write-off or write-down of, or any determination to write-off or write-down, any asset of Company or any of its Subsidiaries or any portion thereof which write-off, write-down or determination exceeds $75,000 individually or $250,000 in the aggregate; (H) any announcement or implementation of any reduction in force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of Company or its Subsidiaries; or (I) any announcement of or entry into any agreement, commitment or transaction by Company or any of its Subsidiaries to do any of the things described in the preceding clauses (A) through (H) otherwise than as expressly provided for herein. (ii) Except as disclosed in the Filed SEC Documents or specified in Section 4.1(f) of the Disclosure Schedule and liabilities incurred in the ordinary course of business consistent with past practice since the date of the most recent financial statements included in the Filed SEC Documents, there are no liabilities of Company or its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, due, to become due, determined, determinable or otherwise, having or which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company. (g) Certain Information. Subject to Parent's and Purchaser's ------------------- fulfillment of their respective obligations with respect thereto, the Schedule 14D-9 and the Proxy Statement will contain (or will be amended in a timely manner so as to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law and will conform in all material respects with the requirements of the Exchange Act and any other applicable law, and neither the Schedule 14D-9 nor the Proxy Statement will, at the respective times they are filed with the SEC or published, sent or given to Company's stockholders, 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 therein, in light of the circumstances under which they are made, not misleading; provided, however, that no representation or warranty is hereby made by Company with respect to any information supplied by Parent or Purchaser in writing for inclusion in, or with respect to Parent or Purchaser informa- 18 tion derived from Parent's public SEC filings which is included or incorporated by reference in, the Schedule 14D-9 or the Proxy Statement. None of the information supplied or to be supplied by Company for inclusion or incorporation by reference in, or which may be deemed to be incorporated by reference in, any of the Offer Documents will, at the respective times the Offer Documents are filed with the SEC or published, sent or given to Company's stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event with respect to Company, or with respect to any information supplied by Company for inclusion in any of the Offer Documents, shall occur which is required to be described in an amendment of, or a supplement to, any of the Offer Documents, Company shall so describe the event to Parent. (h) Real Property; Other Assets. (i) Section 4.1(h)(i) of the --------------------------- Disclosure Schedule sets forth all of the real property owned in fee by Company and its Subsidiaries (the "Owned Real Property"). (ii) Company or one of its Subsidiaries has good and marketable title to each parcel of Owned Real Property and to each other asset reflected in the latest balance sheet of Company included in the Filed SEC Documents (other than any such other asset disposed of or consumed in the ordinary course of business or as specified in Section 4.1(h)(ii) of the Disclosure Schedule) free and clear of all Liens except (A) those reflected or reserved against in the latest balance sheet of Company included in the Filed SEC Documents, (B) taxes and general and special assessments not in default and payable without penalty and interest, and (C) other Liens that individually or in the aggregate would not have a Material Adverse Effect on Company. (iii) Company has heretofore made available to Parent true, correct and complete copies of all leases, subleases and other agreements requiring annual payments of $50,000 or more (the "Real Property Leases"), under which Company or any of its material Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any real property or facility (the "Leased Real Property"), including all modifications, amendments and supplements thereto. Except in each case where the failure could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company: (A) Company or one of its Subsidiaries has a valid and subsisting leasehold interest in each parcel of Leased Real Property free and clear of all Liens and each Real 19 Property Lease is in full force and effect, (B) all rent and other sums and charges payable by Company or its Subsidiaries as tenants thereunder are current in all material respects, (C) no termination event or condition or uncured default of a material nature on the part of Company or any such Subsidiary or, to Company's knowledge, the landlord, exists under any Real Property Lease, and (D) Company or one of its Subsidiaries is the sole undisputed lessee of each Leased Real Property, is in actual possession thereof and is entitled to quiet enjoyment thereof in accordance with the terms of the applicable Real Property Lease. (i) Software. -------- (i) Section 4.1(i)(i) of the Disclosure Schedule sets forth under the caption "Owned Software" a true, correct and complete list of all computer programs (source code or object code) owned by Company or any Subsidiary of Company, including without limitation any computer programs in the development or testing phase (collectively, the "Owned Software"), and Section 4.1(i)(i) of the Disclosure Schedule sets forth under the caption "Licensed Software" a true, correct and complete list of all computer programs (source code or object code) licensed to Company or any Subsidiary of Company by any third party (other than any off-the-shelf computer program that is so licensed under a shrink wrap license) (collectively, the "Licensed Software" and, together with the Owned Software, the "Software"). (ii) Except as specified in Section 4.1(i)(ii) of the Disclosure Schedule, Company, directly or through its Subsidiaries, has good, marketable and exclusive title to, and the valid and enforceable power and unqualified right to sell, license, lease, transfer, use or otherwise exploit, all versions and releases of the Owned Software and all copyrights thereof, free and clear of all Liens. Company, directly or through its Subsidiaries, is in actual possession of the source code and object code for each computer program included in the Owned Software, and Company, directly or through its Subsidiaries, is in possession of all other documentation (including without limitation all related engineering specifications, program flow charts, installation and user manuals) and know-how required for the effective use of the Software as currently used in Company's business or as offered or represented to Company's customers or potential customers. Company, directly or through its Subsidiaries, is in actual possession of the object code and user manuals for each computer program included in the Licensed Software, and of the source code when applicable. The Software constitutes all of the computer programs necessary to conduct Company's business as now conducted, and includes all of the computer programs used in the development, marketing, licensing, sale or support of the 20 products and the services presently offered by Company. Except as specified in Section 4.1(i)(ii) of the Disclosure Schedule, no person other than Company and its Subsidiaries has any right or interest of any kind or nature in or with respect to the Owned Software or any portion thereof or any rights to sell, license, lease, transfer, use or otherwise exploit the Owned Software or any portion thereof. (iii) Section 4.1(i)(iii) of the Disclosure Schedule sets forth a true, correct and complete list, by computer program, of (A) all persons other than Company and its Subsidiaries that have been provided with the source code or have a right to be provided with the source code (including any such right that may arise after the occurrence of any specified event or circumstance, either with or without the giving of notice or passage of time or both) for any of the Owned Software, and (B) all source code escrow agreements relating to any of the Owned Software (setting forth as to any such escrow agreement the source code subject thereto and the names of the escrow agent and all other persons who are actual or potential beneficiaries of such escrow agreement), and lists all agreements and arrangements pursuant to which the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby would entitle any third party or parties to receive possession of the source code for any of the Owned Software or any related technical documentation. Except as specified in Section 4.1(i)(iii) of the Disclosure Schedule, no person (other than Company and its Subsidiaries and any person that is a party to a contract referred to in clause (v) of the first sentence of Section 4.1(l) that restricts such person from disclosing any information concerning such source code) is in possession of, or has or has had access to, any source code for any computer program included in the Owned Software. (iv) There are no defects in any computer program included in the Software that would adversely affect the functioning thereof in accordance with any published specifications therefor or which would cause the Software to fail to be Year 2000 compliant. Without limiting the generality of the foregoing, all of the Software has the following properties and capabilities: (A) the capability to correctly recognize and accurately process dates expressed as a four-digit number (or the binary equivalent or other machine readable iteration thereof) (collectively, the "Four-Digit Dates"); (B) the capability to accurately execute calculations using Four-Digit Dates; (C) the functionality (both on-line and batch), including entry, inquiry, maintenance and update, to support processing involving Four-Digit Dates; (D) the capability to generate interfaces and reports that support processing involving Four-Digit Dates; (E) the capability to generate and successfully transition, without human intervention, into the year 2000 using the correct system date and to thereafter 21 continue processing with Four-Digit Dates; and (F) the capability to provide correct results in forward and backward data calculations spanning century boundaries, including the conversion of pre-2000 dates currently stored as two- digit dates; provided, however, that no representation or warranty is made as to the effect that defects in computer programs, hardware or systems provided by third parties (or the inability of any such programs, hardware or systems, other than those contemplated by the documentation for the Software to be used in conjunction with the Software, to properly exchange date data with the Software) may, when used in conjunction with the Software, have on the foregoing capabilities. Each computer program included in the Software is in machine readable form and contains all current revisions. Section 4.1(i)(iv) of the Disclosure Schedule sets forth a true, correct and complete list of any current developments or maintenance efforts with respect to the Owned Software, including without limitation the development of new computer programs, enhancements or revisions to existing computer programs included in the Owned Software and software fixes in progress for any person to whom or to which Company or a Subsidiary of Company has sold, licensed, leased, transferred or otherwise furnished Software or related products or services. (v) Except as specified in Section 4.1(i)(v) of the Disclosure Schedule, none of the sale, license, lease, transfer, use, reproduction, distribution, modification or other exploitation by Company, any Subsidiary of Company or any of their respective successors or assigns of any version or release of any computer program included in the Software obligates or will obligate Company, any Subsidiary of Company or any of their respective successors or assigns to pay any royalty, fee or other compensation to any other person. (vi) Neither Company nor any of its Subsidiaries markets, or has marketed, and none of them has supported or is obligated to support, any Licensed Software. (vii) Except as specified in Section 4.1(i)(vii) of the Disclosure Schedule, no agreement, license or other arrangement pertaining to any of the Software (including without limitation any development, distribution, marketing, user or maintenance agreement, license or arrangement) to which Company or any Subsidiary of Company is a party will terminate or become terminable by any party thereto as a result of the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. 22 (j) Intellectual Property. --------------------- (i) Section 4.1(j)(i) of the Disclosure Schedule sets forth a true, correct and complete list (including, to the extent applicable, registration, application or file numbers) of all patents, trademarks, trade names, service marks, domain names and registered copyrights and material non- registered copyrights used by Company or any Subsidiary of Company which are material to the conduct of Company's business, and all registrations of or applications for registration of any of the foregoing, including any additions thereto or extensions, continuations, renewals or divisions thereof (setting forth the registration, issue or serial number and a description of the same) (collectively, together with all trade dress, trade secrets, processes, formulae, designs, know-how and other intellectual property rights that are so used, the "Intellectual Property"). Parent has heretofore been furnished with true, correct and complete copies of each registration or application for registration covering any of the Intellectual Property which is registered with, or in respect of which any application for registration has been filed with, any Governmental Entity. (ii) The Intellectual Property includes all of the intellectual property rights owned or licensed by Company and its Subsidiaries that are reasonably necessary to conduct Company's business as it is now conducted or is expected to be conducted, and includes all of the intellectual property rights owned by or licensed to Company and its Subsidiaries that are used in the development, marketing, licensing or support of the Software. Except as specified in Section 4.1(j)(ii) of the Disclosure Schedule, (A) Company, directly or through its Subsidiaries, has good, marketable and exclusive title to, and the valid and enforceable power and unqualified right to use, the Intellectual Property free and clear of all Liens and (B) no person or entity other than Company and its Subsidiaries has any right or interest of any kind or nature in or with respect to the Intellectual Property or any portion thereof or any rights to use, market or exploit the Intellectual Property or any portion thereof. (k) No Infringement. Except as specified in Section 4.1(k) of --------------- the Disclosure Schedule, neither the existence nor the sale, license, lease, transfer, use, reproduction, distribution, modification or other exploitation by Company, any Subsidiary of Company or any of their respective successors or assigns of any Software or Intellectual Property, as such Software or Intellectual Property, as the case may be, is or was, or is currently contemplated to be, sold, licensed, leased, transferred, used or otherwise exploited by such persons, does, did or will (i) infringe on any patent, trademark, copyright or other right of any other person, (ii) constitute 23 a misuse or misappropriation of any trade secret, know-how, process, proprietary information or other right of any other person, or (iii) entitle any other person to any interest therein, or right to compensation from Company, any Subsidiary of Company or any of their respective successors or assigns, by reason thereof (it being understood and agreed that, insofar as the foregoing representation and warranty relates to Software and Intellectual Property that is licensed to Company or any Subsidiary of Company by any third party, such representation and warranty is made only to Company's knowledge). Except as specified in Section 4.1(k) of the Disclosure Schedule, neither Company nor any of its Subsidiaries has received any complaint, assertion, threat or allegation or otherwise has notice of any lawsuit, claim, demand, proceeding or investigation involving matters of the type contemplated by the immediately preceding sentence or is aware of any facts or circumstances that could reasonably be expected to give rise to any such lawsuit, claim, demand, proceeding or investigation. Except as specified in Section 4.1(k) of the Disclosure Schedule, there are no restrictions on the ability of Company, any Subsidiary of Company or any of their respective successors or assigns to sell, license, lease, transfer, use, reproduce, distribute, modify or otherwise exploit any Software or Intellectual Property. (l) Material Contracts. There have been made available to Parent ------------------ and its representatives true, correct and complete copies of all of the following contracts to which Company or any of its Subsidiaries is a party or by which any of them is bound (collectively, the "Material Contracts"): (i) contracts with any current officer or director of Company; (ii) contracts involving an initial fee of $100,000 or more pursuant to which Company or any of its Subsidiaries licenses other persons to use the Software and pursuant to which other persons license Company or any of its Subsidiaries to use the Licensed Software; (iii) contracts (A) for the sale of any of the assets of Company or any of its Subsidiaries, other than contracts entered into in the ordinary course of business or (B) for the grant to any person of any preferential rights to purchase any of its assets; (iv) contracts which restrict Company or any of its Subsidiaries from competing in any line of business or with any person in any geographical area or which restrict any other person from competing with Company or any of its Subsidiaries in any line of business or in any geographical area; (v) contracts which are material to Company and which restrict Company or any of its Subsidiaries from disclosing any information concerning or obtained from any other person or which restrict any other person from disclosing any information concerning or obtained from Company or any of its Subsidiaries; (vi) contracts with any stockholders of Company; (vii) acquisition, merger, asset purchase or sale agreements involving aggregate consideration of $500,000 or more; (viii) agreements, arrange- 24 ments, transactions or understandings with any Affiliate that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act; and (ix) contracts which contain a "change in control" or similar provision. Except as specified in Section 4.1(l) of the Disclosure Schedule, all of the Material Contracts are in full force and effect and are the legal, valid and binding obligation of Company and/or its Subsidiaries, enforceable against them in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). Except as specified in Section 4.1(l) of the Disclosure Schedule, neither Company nor any of its Subsidiaries is in breach or default in any material respect under any Material Contract nor, to the knowledge of Company, is any other party to any Material Contract in breach or default thereunder in any material respect. (m) Litigation, etc. Except as specified in Section 4.1(m) of --------------- the Disclosure Schedule or the Filed SEC Documents, (i) there is no suit, claim, action, proceeding (at law or in equity) or investigation pending or, to the knowledge of Company, threatened against Company or any of its Subsidiaries before any court or other Governmental Entity, and (ii) neither Company nor any of its Subsidiaries is subject to any outstanding order, writ, judgement, injunction, decree or arbitration order or award that, in any such case described in clauses (i) and (ii), has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company. As of the date hereof, there are no suits, claims, actions, proceedings or investigations pending or, to the knowledge of Company, threatened, seeking to prevent, hinder, modify or challenge the transactions contemplated by this Agreement. (n) Compliance with Applicable Laws. All federal, state, local ------------------------------- and foreign governmental approvals, authorizations, certificates, filings, franchises, licenses, notices, permits and rights ("Permits") necessary for each of Company and its Subsidiaries to own, lease or operate its properties and assets and to carry on its business as now conducted have been obtained or made, and there has occurred no default under any such Permit, except for the lack of Permits and for defaults under Permits which lack or default could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company. To the Company's knowledge, Company and its Subsidiaries are in compliance with all applicable statutes, laws, ordinances, rules, orders and regulations of any Governmental Entity, and neither Company nor any of its Subsidiaries has received notification of any 25 asserted present or past failure to so comply. (o) Environmental Laws. Except as specified in Section 4.1(o) of ------------------ the Disclosure Schedule and as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company: (A) neither Company nor any of its Subsidiaries has violated or is in violation of any Environmental Law (as defined in Section 9.3); (B) to the knowledge of Company, neither Company nor any of its Subsidiaries is liable for any off-site contamination; (C) to the knowledge of Company, neither Company nor any of its Subsidiaries has any liability or remediation obligation under any Environmental Law; (D) no assets of Company or any of its Subsidiaries are subject to pending or threatened Liens under any Environmental Law; (E) to the knowledge of Company, Company and its Subsidiaries have all Permits required under any Environmental Law ("Environmental Permits"); and (F) Company and its Subsidiaries are in compliance with their respective Environmental Permits. (p) Taxes. Except as specified in Section 4.1(p) of the ----- Disclosure Schedule, as of the date hereof and as of the Effective Time: (i) Except where the failure to do so could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company, each of Company and each Subsidiary of Company (and any affiliated or unitary group of which any such person was a member) has (A) timely filed all federal, state, local and foreign returns, declarations, reports, estimates, information returns and statements, including combined unitary or consolidated returns for any group of entities ("Returns") required to be filed by or for it in respect of any Taxes (as hereinafter defined) and has caused such Returns as so filed to be true, correct and complete, (B) established reserves that are reflected in Company's most recent financial statements included in the Filed SEC Documents and that as so reflected are adequate for the payment of all Taxes not yet due and payable with respect to the results of operations of Company and its Subsidiaries through the date hereof, and (C) timely withheld and paid over to the proper taxing authorities all Taxes and other amounts required to be so withheld and paid over. Each of Company and each Subsidiary of Company (and any affiliated or unitary group of which any such person was a member) has timely paid all Taxes currently due and payable except for those contested in good faith and for which adequate reserves have been provided for in Company's financial statements. 26 (ii) (A) The Returns of Company, each of its Subsidiaries and any affiliated, consolidated, combined or unitary group that includes Company or any of its Subsidiaries either have been examined and settled with the appropriate Tax authority or closed by virtue of the expiration of the applicable statute of limitations and (B) except for alleged deficiencies which have been finally and irrevocably resolved, neither Company nor any of its Subsidiaries have received formal or informal notification that any deficiency for any Taxes, the amount of which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company, has been or will be proposed, asserted or assessed against Company or any of its Subsidiaries by any federal, state, local or foreign taxing authority or court with respect to any period. (iii) Neither Company nor any of its Subsidiaries has (A) executed or entered into with the IRS or any other taxing authority any agreement or other document that continues in force and effect beyond the Effective Time and that extends or has the effect of extending the period for assessments or collection of any federal, state, local or foreign Taxes, (B) executed or entered into with the IRS or any other taxing authority any closing agreement or other similar agreement (nor has Company or any of its Subsidiaries received any ruling, technical advice memorandum or similar determination) affecting the determination of Taxes required to be shown on any Return not yet filed, or (C) requested any extension of time to be granted to file after the Effective Time any Return required by applicable law to be filed by it. (iv) Neither Company nor any of its Subsidiaries has made an election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by Company or any of its Subsidiaries. (v) Neither Company nor any of its Subsidiaries is a party to, is bound by or has any obligation under any tax sharing agreement or similar agreement or arrangement. (vi) Neither Company nor any of its Subsidiaries has agreed to make, nor is required to make, any material adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise and, to the knowledge of Company, the IRS has not proposed any such adjustment or change in accounting method. 27 (vii) Neither Company nor any of its Subsidiaries is, or has been, a United States Real Property Holding Corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. (viii) Except for the group of which Company is presently a member, Company has never been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, other than as a common parent corporation, and each of Company's Subsidiaries has never been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, except where Company was the common parent of such affiliated group. (ix) Neither Company nor any Subsidiary is a party to any agreement, contract, arrangement or plan that has resulted, or would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. (x) There are no Tax liens upon any asset of Company or any of its Subsidiaries except liens for Taxes not yet due. (xi) No power of attorney currently in force has been granted by Company or any of its Subsidiaries concerning any Tax matter. (xii) Neither Company nor any of its Subsidiaries has made a disclosure on a Return pursuant to Section 6662 of the Code. For purposes of this Agreement, "Taxes" shall mean all federal, state, local, foreign income, property, sales, excise, employment, payroll, franchise, withholding and other taxes, tariffs, charges, fees, levies, imposts, duties, licenses or other assessments of every kind and description, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority. (q) Benefit Plans. Section 4.1(q) of the Disclosure Schedule ------------- sets forth a true, correct and complete list of all the material "employee benefit plans" (as that phrase is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) in each case, that is sponsored, maintained or contributed to or required to be contributed to by Company or by any trade or business, whether or not incorporated (an "ERISA Affiliate"), that together with 28 Company would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA, or to which Company or an ERISA Affiliate is party, whether written or oral, for the benefit of any current or former employee, officer or director of Company or any of its Subsidiaries ("Company ERISA Plans") and any other material benefit or compensation plan, program or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by Company or an ERISA Affiliate, whether written or oral, for the benefit of any current or former employee, officer or director of Company or any of its Subsidiaries (Company ERISA Plans and such other plans being referred to as "Company Plans"). Company has furnished or made available to Parent and its representatives a true, correct and complete copy of every document pursuant to which each Company Plan is established or operated (including any summary plan descriptions), a written description of any Company Plan for which there is no written document, and the three most recent annual reports, financial statements and actuarial valuations with respect to each Company Plan. Except as specified in Section 4.1(q) of the Disclosure Schedule: (i) none of the Company ERISA Plans is a "multiemployer plan" within the meaning of ERISA; (ii) none of the Company Plans promises or provides retiree health benefits or retiree life insurance benefits to any person; (iii) none of the Company Plans provides for payment of a benefit, the increase of a benefit amount, the payment of a contingent benefit or the acceleration of the payment or vesting of a benefit determined or occasioned, in whole or in part, by reason of the execution of this Agreement or the consummation of the transactions contemplated by this Agreement; (iv) neither Company nor any of its Subsidiaries has an obligation to adopt, or is considering the adoption of, any new benefit or compensation plan, program or arrangement or, except as required by law, the amendment of an existing Company Plan; (v) each Company ERISA Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination notification, advisory and/or opinion letter, as applicable, from the IRS that it is so qualified or still has remaining a period of time under applicable Treasury Regulations or Internal Revenue Service pronouncements in which to apply for such a letter and to make any 29 amendments necessary to obtain a favorable determination and nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such Company ERISA Plan; (vi) each Company Plan has been operated in accordance with its terms and the requirements of all applicable law, and no prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code has occurred with respect to any Company ERISA Plan; (vii) neither Company nor any of its Subsidiaries or members of their "controlled group" has incurred any direct or indirect liability under ERISA or the Code in connection with the termination of, withdrawal from or failure to fund, any Company ERISA Plan or other retirement plan or arrangement, and no fact or event exists that could reasonably be expected to give rise to any such liability; (viii) the aggregate accumulated benefit obligations of each Company ERISA Plan subject to Title IV of ERISA (as of the date of the most recent actuarial valuation prepared for such Company ERISA Plan and based on the discount rate and other actuarial assumptions used in such valuation) do not exceed the fair market value of the assets of such Company ERISA Plan (as of the date of such valuation); (ix) Company is not aware of any claims relating to the Company Plans, other than routine claims for benefits; (x) None of the Company Plans provides for benefits or other participation therein, and Company has received no claims or demands for participation in or benefits under any Company Plan, by any individual classified or treated by Company as an independent contractor; and (xi) no Right (as such term is defined in the Company's 1992 Stock Option Plan) that has been granted by the Company or any of its Subsidiaries is outstanding; provided, however, that the failure of the representations set forth in clauses (v), (vi), (vii), (ix) and (x) to be true and correct shall not be deemed to be a breach of any such representation unless such failures could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Company. 30 (r) Absence of Changes in Benefit Plans. Except as disclosed in ----------------------------------- the Filed SEC Documents or in Section 4.1(r) of the Disclosure Schedule, since the date of the most recent audited financial statements included in the Filed SEC Documents, neither Company nor any of its material Subsidiaries has adopted or agreed to adopt any collective bargaining agreement or any Company Plan. (s) Labor Matters. ------------- (i) Except as specified in Section 4.1(s)(i) of the Disclosure Schedule, neither Company nor any of its Subsidiaries is a party to any employment, labor or collective bargaining agreement, and there are no employment, labor or collective bargaining agreements which pertain to employees of Company or any of its Subsidiaries. Company has heretofore made available to Parent true, complete and correct copies of the agreements set forth in Section 4.1(s)(i) of the Disclosure Schedule, together with all amendments, modifications, supplements or side letters affecting the duties, rights and obligations of any party thereunder. (ii) No employees of Company or any of its Subsidiaries are represented by any labor organization and, to the knowledge of Company, no labor organization or group of employees of Company or any of its Subsidiaries has made a pending demand for recognition or certification. There are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority and, to the knowledge of Company, there are no organizing activities involving Company or any of its Subsidiaries pending with any labor organization or group of employees of Company or any of its Subsidiaries. (iii) Except as specified in Section 4.1(s)(iii) of the Disclosure Schedule, there are no (A) unfair labor practice charges, grievances or complaints pending or threatened in writing by or on behalf of any employee or group of employees of Company or any of its material Subsidiaries, or (B) complaints, charges or claims against Company or any of its material Subsidiaries pending, or, to the knowledge of Company, threatened in writing to be brought or filed, with any Governmental Entity or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any individual by Company or any of its Subsidiaries. (t) Brokers. No broker, investment banker, financial advisor or ------- 31 other person, other than Hambrecht & Quist, the fees and expenses of which will be paid by Company, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Company. (u) Written Opinion of Financial Advisor. Company has received ------------------------------------ the written opinion of Hambrecht & Quist, dated March 23, 1999 (a true, correct and complete copy of which has been delivered to Parent by Company), to the effect that, based upon and subject to the matters set forth therein and as of the date thereof, the Offer Consideration and the Merger Consideration to be received by the holders of Shares in the Offer and the Merger, respectively, is fair, from a financial point of view, to such holders and such opinion has not been withdrawn or modified. (v) Voting Requirements. In the event that Section 253 of the ------------------- DGCL is inapplicable and unavailable to effectuate the Merger, the affirmative vote of the holders of a majority of the outstanding Shares entitled to vote at the Stockholders Meeting (as defined in Section 6.1(a)) with respect to the adoption of this Agreement is the only vote of the holders of any class or series of Company's capital stock or other securities required in connection with the consummation by Company of the Merger and the other transactions contemplated hereby to be consummated by Company. The restrictions contained in Section 203 of the DGCL are not applicable to this Agreement, the Stockholder Agreements and the transactions contemplated hereby and thereby, including the Offer, the Merger and the acquisition of Shares pursuant to the Stockholder Agreements. No other state takeover statute or similar statute applies or purports to apply to the Offer, the Merger or the other transactions contemplated hereby. (w) Company Rights Agreement. Company and its Board of Directors ------------------------ have taken all action to amend the Company Rights Agreement (the "Rights Amendment") which may be necessary under the Company Rights Agreement so that the Offer and the execution and delivery of this Agreement (and any amendments thereto by the parties hereto) and the Stockholder Agreements, and the consummation of the Merger and the transactions contemplated hereby and by the Stockholder Agreements, will not cause (i) Parent or Purchaser to constitute an "Acquiring Person" (as defined in the Company Rights Agreement), (ii) a "Distribution Date," "Section 13 Event," "Triggering Event," or "Shares Acquisition Date" (each as defined in the Company Rights Agreement) to occur or (iii) the Rights (as defined in the Company Rights Agreement) to become exercisable pursuant to Section 11(a)(ii) thereof or otherwise. The Rights Amendment is sufficient to render 32 the Rights inoperative with respect to the acquisition of Shares by Parent, Purchaser or their affiliates pursuant this Agreement, the Offer and/or the Stockholder Agreements. As a result of the Rights Amendment, the Rights shall not be exercisable upon or at any time after the acceptance for payment of Shares pursuant to the Offer and/or the purchase of, or right to acquire, Shares pursuant to the Stockholder Agreements. A true and correct copy of the Rights Amendment has been delivered to Parent. (x) Selesta Litigation. The Settlement Agreement, dated ------------------ February, 1999, by and among Selesta Integrazioni, Selesta Gestione Centri and Gruppo Selesta (including, without limitation, Selesta Auditing, Selesta Gestione Centri Operations, Selesta Gestione Centri Applications, Selesta Technologie and Selesta Gestion Centros) (collectively "Selesta"), on the one hand; and the Company and Interlink France S.A.R.L., Franco Rasello and RASCA s.a.s. di Ing. Franco Rasello & C., and Marco Spinetti and Integrazione Sistemi s.a.s. di Ing. Marco Spinetti & C., on the other hand (the "Selesta Settlement Agreement"), is a valid and binding obligation of the parties thereto, enforceable in accordance with its terms. Neither the Company nor Selesta has breached any provision of, or is in default in any respect under, and no condition exists which, with the passage of time, the giving of notice of, or both would result in a default by the Company or Selesta under, the terms of the Selesta Settlement Agreement. The Company has provided to Parent a true, correct and complete copy of the Selesta Settlement Agreement. (y) Except as specified in Section 4.1(y) of the Disclosure Schedule, Company is not a party to any confidentiality, nondisclosure or similar agreement which contains any "standstill" provisions or similar restrictions on Acquisition Proposals (as defined in Section 6.5) by any third party. Section 4.2 Representations and Warranties of Parent and Purchaser. ------------------------------------------------------ Parent and Purchaser represent and warrant to Company as follows: (a) Organization, Standing and Corporate Power. Each of Parent ------------------------------------------ and Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has all requisite corporate power and authority to carry on its business. Parent has delivered or made available to the Company complete and correct copies of the Certificate of Incorporation and By-laws (or similar charter documents) of Parent and Purchaser, in each case as amended to the date hereof. 33 (b) Authority; Noncontravention. Parent and Purchaser have the --------------------------- requisite corporate power and authority to enter into this Agreement. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the transactions contemplated hereby have been duly authorized by the Executive Committee of the Board of Directors of Parent and the Board of Directors of Purchaser and have been duly approved by Parent as sole stockholder of Purchaser, and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Purchaser and, assuming this Agreement constitutes a valid and binding obligation of Company, constitutes a valid and binding obligation of each of Parent and Purchaser, enforceable against each such party in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement will not (i) conflict with any of the provisions of the certificate of incorporation or bylaws of Parent or Purchaser, in each case as amended to the date of this Agreement, (ii) subject to the governmental filings and other matters referred to in Section 4.2(c), conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, or give rise to a material obligation, a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under, or require the consent of any person under, any indenture, or other agreement, permit, concession, franchise, license or similar instrument or undertaking to which Parent or Purchaser is a party or by which Parent or Purchaser or any of their respective assets is bound or affected, or (iii) subject to the governmental filings and other matters referred to in Section 4.2(c), contravene any law, rule or regulation, or any order, writ, judgment, injunction, decree, determination or award currently in effect, which, in the case of clauses (ii) and (iii) above, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. (c) Consents and Approvals. No consent, approval or ---------------------- authorization of, or declaration or filing with, or notice to, any Governmental Entity which has not been received or made is required by or with respect to Parent or Purchaser in connection with the execution and delivery of this Agreement by Parent or Purchaser or the consummation by Parent or Purchaser, as the case may be, of any of the transactions contemplated hereby, except for (i) the filing of premerger notification and report forms under the HSR Act, (ii) the filing with the SEC of (A) the Schedule 34 14D-1 and (B) such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby, (iii) the filing of the certificate of merger with the Delaware State Secretary and appropriate documents with the relevant authorities of other states in which Company is qualified to do business, and (iv) any other consents, approvals, authorizations, filings or notices the failure to make or obtain which could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. (d) Certain Information. Subject to Company's fulfillment of ------------------- its obligations hereunder with respect thereto, the Offer Documents will contain (or will be amended in a timely manner so as to contain) all information which is required to be included therein in accordance with the Exchange Act and the rules and regulations thereunder and any other applicable law and will conform in all material respects with the requirements of the Exchange Act and any other applicable law, and the Offer Documents will not, at the respective times they are filed with the SEC or published, sent or given to Company's stockholders, 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 therein, in light of the circumstances under which they are made, not misleading; provided, however, that no representation or warranty is hereby made by Parent or Purchaser with respect to any information supplied by Company in writing for inclusion in, or with respect to Company information derived from Company's public SEC filings which is included or incorporated by reference in the Offer Documents. None of the information supplied or to be supplied by Parent or Purchaser for inclusion or incorporation by reference in, or which may be deemed to be incorporated by reference in, the Schedule 14D-9 or the Proxy Statement will, at the respective times the Schedule 14D-9 and the Proxy Statement are filed with the SEC or published, sent or given to Company's stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time any event with respect to Parent or Purchaser, or with respect to any information supplied by Parent or Purchaser for inclusion in the Schedule 14D-9 or the Proxy Statement, shall occur which is required to be described in an amendment of, or a supplement to, such document, Parent or Purchaser shall so describe the event to Company. (e) Financing. Parent and Purchaser collectively have cash on --------- hand or financing commitments from financially responsible third parties, or a combination thereof, in an aggregate amount sufficient to enable Parent and Pur- 35 chaser to pay in full (i) the Offer Consideration, (ii) the Merger Consideration, and (iii) all fees and expenses payable by Parent and Purchaser in connection with this Agreement and the transactions contemplated hereby. (f) Interim Operations of the Purchaser. The Purchaser has ----------------------------------- engaged in no significant business activities prior to the date hereof. ARTICLE V CONDUCT OF BUSINESS OF COMPANY Section 5.1 Conduct of Business of Company. Except as expressly ------------------------------ provided for herein or in the Disclosure Schedule, during the period from the date of this Agreement to the Effective Time, Company shall, and shall cause each of its Subsidiaries to, act and carry on its business only in the ordinary course of business consistent with past practice and, to the extent consistent therewith, use commercially reasonable efforts to preserve intact its current business organizations, keep available the services of its current key officers and employees and preserve the goodwill of those engaged in material business relationships with Company, and to that end, without limiting the generality of the foregoing, Company shall not, and shall not permit any of its Subsidiaries to, without the prior consent of Parent: (i) (A) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, securities or other property) in respect of, any of its outstanding capital stock (other than, with respect to a Subsidiary of Company, to its corporate parent), (B) split, combine or reclassify any of its outstanding 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 outstanding capital stock, or (C) purchase, redeem or otherwise acquire any shares of outstanding capital stock or any rights, warrants or options to acquire any such shares, except, in the case of this clause (C), for the acquisition of Shares from holders of Options in full or partial payment of the exercise price payable by such holder upon exercise of Options; (ii) issue, sell, grant, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into or exchangeable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible or exchangeable securities, other than upon the exercise of Options and Warrants outstanding on the date of this Agreement; 36 (iii) amend its certificate of incorporation, bylaws or other comparable charter or organizational documents or amend or redeem the Company Rights Agreement; (iv) directly or indirectly acquire, make any investment in, or make any capital contributions to, any person other than in the ordinary course of business consistent with past practice; (v) make any new capital expenditure or expenditures in excess of $50,000 individually, or $250,000 in the aggregate, other than as specified in the Company's budget for capital expenditures made available to Parent or the specific capital expenditures disclosed and set forth on Schedule 5.1 of the Disclosure Schedule; (vi) except for software licenses in the ordinary course of business, enter into, amend or terminate any Material Contract, or waive, release or assign any material rights or claims; (vii) directly or indirectly sell, pledge or otherwise dispose of or encumber any of its properties or assets that are material to its business, except for sales, pledges or other dispositions or encumbrances in the ordinary course of business consistent with past practice; (viii) (A) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, other than indebtedness owing to or guarantees of indebtedness owing to Company or any direct or indirect wholly owned Subsidiary of Company or (B) make any loans or advances to any other person, other than to Company or to any direct or indirect wholly owned Subsidiary of Company and other than routine advances to employees consistent with past practice, except, in the case of clause (A), for borrowings under existing credit facilities described in the Filed SEC Documents in the ordinary course of business consistent with past practice; (ix) grant or agree to grant to any officer, employee or consultant any increase in wages or bonus, severance, profit sharing, retirement, deferred compensation, insurance or other compensation or benefits, or establish any new compensation or benefit plans or arrangements, or amend or agree to amend any existing Company Plans, except as may be required under existing agreements or by 37 law; (x) accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred compensation, stock option, insurance or other compensation or benefits; (xi) enter into or amend any employment, consulting, severance or similar agreement with any individual; (xii) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization or any agreement relating to an Acquisition Proposal (as defined in Section 6.5(d)), except as provided for in Section 6.5; (xiii) make or rescind any tax election or settle or compromise any income tax liability of Company or of any of its Subsidiaries involving on an individual basis more than $100,000; (xiv) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (x) of any such claims, liabilities or obligations in the ordinary course of business and consistent with past practice or (y) of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of Company and its consolidated Subsidiaries; (xv) except as required by GAAP, make any change in any method of accounting or accounting practice or policy, except as required by any changes in generally accepted accounting principles; (xvi) settle any action, suit, claim, investigation or proceeding (legal, administrative or arbitrative) in an amount in excess of $50,000, except in connection with the Selesta litigation described in Section 4.1(x); (xvii) permit any material insurance policy naming it as a beneficiary or a loss payable payee to be cancelled or terminated without notice to Parent, except in the ordinary course of business and consistent with past practice; (xviii) enter into any agreement, understanding or commit- 38 ment that restrains, limits or impedes Company's ability to compete with or conduct any business or line of business, including, but not limited to, geographic limitations on Company's activities; (xix) plan, announce, implement or effect any reduction in force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of Company or its Subsidiaries, provided, however, that routine employee terminations for cause shall not be considered subject to this clause (xix); (xx) accelerate the collection of any account receivable or delay the payment of any account payable, or otherwise reduce the assets or increase the liabilities of Company or any of its Subsidiaries otherwise than in the ordinary course of business consistent with past practice, in any such case with the purpose or effect of using the resulting increase in the cash flow of Company or any of its Subsidiaries to reduce the total indebtedness of Company and its Subsidiaries for money borrowed; (xxi) willfully take any action that would result in (i) any of its representations and warranties set forth in this Agreement that are qualified as to materiality becoming untrue, (ii) any of such representations and warranties that are not so qualified becoming untrue in any material respect or (iii) except to the extent such action is otherwise expressly contemplated by this Agreement, any of the conditions to the Offer set forth in Exhibit A not being satisfied; or (xxii) authorize any of, or commit or agree to take any of, the foregoing actions in respect of which it is restricted by the provisions of this Section 5.1 except to the extent such action is otherwise expressly contemplated by this Agreement. ARTICLE VI ADDITIONAL COVENANTS Section 6.1 Company Stockholders Meeting; Preparation of the Proxy ------------------------------------------------------ Statement; Short-Form Merger. ---------------------------- (a) As soon as practicable following the acceptance for payment 39 of and payment for Shares by Purchaser in the Offer, if required by law to consummate the Merger, Company shall take all action necessary, in accordance with the DGCL, the Exchange Act and other applicable law and its certificate of incorporation and bylaws to convene and hold a special meeting of the stockholders of Company (the "Stockholders Meeting") for the purpose of considering and voting upon this Agreement and to solicit proxies pursuant to the Proxy Statement in connection therewith. The Board of Directors of Company shall recommend that the holders of Shares vote in favor of the adoption of this Agreement at the Stockholders Meeting and shall cause such recommendation to be included in the Proxy Statement. At the Stockholders Meeting, Parent and Purchaser shall cause all of the Shares owned by them to be voted in favor of the adoption of this Agreement. (b) Company, if requested by Parent, shall promptly prepare and file with the SEC a proxy statement or information statement (together with any supplement or amendment thereto, the "Proxy Statement") relating to the Stockholder Meeting in accordance with the Exchange Act and the rules and regulations thereunder. Parent, Purchaser and Company will cooperate with each other in the preparation of the Proxy Statement. Without limiting the generality or effect of the foregoing, Company shall use its commercially reasonable efforts to respond to all SEC comments with respect to the Proxy Statement and, subject to compliance with SEC rules and regulations, to cause the Proxy Statement to be mailed to Company's stockholders at the earliest practicable date. Each of Parent and Purchaser shall promptly supply to Company in writing, for inclusion in the Proxy Statement, all information concerning Parent and Purchaser required under the Exchange Act and the rules and regulations thereunder to be included in the Proxy Statement. (c) Notwithstanding the foregoing clauses (a) and (b), in the event that Purchaser or any other wholly owned Subsidiary of Parent shall acquire at least 90% of the outstanding Shares in the Offer, the parties hereto shall, at the request of Purchaser, take all necessary actions to cause the Merger to become effective, as soon as practicable after the expiration of the Offer, without a meeting of stockholders of Company, in accordance with Section 253 of the DGCL. (d) Parent shall: (i) cause Purchaser promptly to submit this Agreement for adoption by its sole stockholder; (ii) cause the outstanding shares of capital stock of Purchaser to be voted in favor of the adoption of this Agreement; and (iii) cause to be taken all additional actions necessary for Purchaser to adopt this Agreement. 40 Section 6.2 Access to Information; Confidentiality. Company -------------------------------------- shall, and shall cause each of its Subsidiaries to, afford to Parent and its officers, employees, counsel, financial advisors and other representatives access during the period prior to the Effective Time to all of Company's and its Subsidiaries' properties, books, contracts, commitments, Returns, personnel and records and, during such period, Company shall, and shall cause each of its Subsidiaries to, furnish as promptly as practicable to Parent such information concerning Company's and its Subsidiaries' businesses, properties, financial condition, operations and personnel as Parent may from time to time request. Any such investigation by Parent shall not affect the representations or warranties of Company contained in this Agreement. Except as required by law, Parent and Company will hold, and will use commercially reasonable efforts to cause its directors, officers, employees, accountants, counsel, financial advisors and other representatives and affiliates to hold, any non-public information obtained from the other in confidence to the extent required by, and in accordance with the provisions of, the letter agreement (the "Letter Agreement"), dated December 21, 1998, between Parent and Company with respect to confidentiality and other matters. Section 6.3 Commercially Reasonable Efforts. On the terms and ------------------------------- subject to the conditions set forth in this Agreement, including, without limitation, Section 6.5 hereof, each of the parties shall use its commercially reasonable efforts to take, or cause to be taken, all actions, and do, or cause to be done, and 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 hereby, including the satisfaction of the respective conditions set forth in Article VII. Section 6.4 Public Announcements. Parent and Purchaser, on the one -------------------- hand, and Company, on the other hand, shall attempt in good faith to consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release, SEC filing (including without limitation the Offer Documents, the Schedule 14D-9 and the Proxy Statement) or other public statements with respect to the transactions contemplated hereby, including the Offer and 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, by court process or by obligations pursuant to any listing agreement with any national securities exchange. Section 6.5 No Solicitation; Acquisition Proposals. (a) Company -------------------------------------- shall 41 not, nor shall it permit any of its Subsidiaries to, nor shall it authorize (and shall use its best efforts not to permit) any officer, director or employee of, or any investment banker, attorney or other advisor or representative of, Company or any of its Subsidiaries to, (i) solicit or initiate, or intentionally encourage, directly or indirectly, any inquiries relating to, or the submission of, any Acquisition Proposal, (ii) participate in any discussions or negotiations regarding any Acquisition Proposal, or, in connection with any Acquisition Proposal, furnish to any Person any information or data with respect to or access to the properties of Company or any of its Subsidiaries, or take any other action, to knowingly facilitate the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal or approve or resolve to approve any Acquisition Proposal; provided, that nothing contained in this Section 6.5 or any other provision hereof shall prohibit Company or Company's Board of Directors from (i) taking and disclosing to Company's stockholders a position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to Company's stockholders as, in the good faith judgment of Company's Board of Directors, after consultation with outside counsel, is required under, or is necessary to comply with, applicable law, provided that Company may not, except as permitted by Section 6.5(b), withdraw or modify, or propose to withdraw or modify, its position with respect to the Offer or the Merger or approve or recommend, or propose to approve or recommend any Acquisition Proposal, or enter into any agreement with respect to any Acquisition Proposal. Upon execution of this Agreement, Company will immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. Notwithstanding the foregoing, prior to the time of acceptance of Shares for payment pursuant to the Offer, Company may furnish information concerning its and/or its Subsidiaries' business, properties or assets to any person or group and may negotiate and participate in discussions and negotiations with such person or group concerning an Acquisition Proposal, provided that such person or group shall have entered into a confidentiality agreement, the confidentiality provisions of which shall be no more favorable to such third party than those provided for in the Letter Agreement, if: (x) such Person or group has submitted a Superior Proposal; and (y) in the opinion of Company's Board of Directors such action is required to discharge the Board's fiduciary duties to Company's 42 stockholders under applicable law, determined only after consultation with independent legal counsel to Company. Company will promptly (but in no case later than 24 hours) notify Parent in writing of the existence of any proposal, discussion, negotiation or inquiry received by Company regarding any Acquisition Proposal, and Company will promptly communicate to Parent the terms of any proposal, discussion, negotiation or inquiry which it may receive regarding any Acquisition Proposal (and will promptly provide to Parent copies of any written materials received by Company in connection with such proposal, discussion, negotiation or inquiry) and the identity of the party making such proposal or inquiry or engaging in such discussion or negotiation. Company will promptly provide to Parent any non-public information concerning Company provided to any other person in connection with any Acquisition Proposal which was not previously provided to Parent. Company will keep Parent informed of the status and details of any such Acquisition Proposal and of any amendments or proposed amendments to any Acquisition Proposal and of the status of any discussions or negotiations relating to any Acquisition Proposal and will promptly (but in no case later than 24 hours) notify Parent of any determination by Company's Board of Directors that a Superior Proposal has been made. (b) Except as set forth in this Section 6.5, neither the Board of Directors of Company nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or recommendation by the Board of Directors of Company of the Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to approve or recommend, any Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal. Notwithstanding the foregoing or anything else herein, subject to compliance with the provisions of this Section 6.5, prior to the time of acceptance for payment of Shares pursuant to the Offer, Company's Board of Directors may withdraw or modify its approval or recommendation of the Offer, this Agreement or the Merger, approve or recommend a Superior Proposal, or enter into an agreement with respect to a Superior Proposal, in each case at any time after the third business day following Parent's receipt of written notice (including by facsimile) from Company advising Parent that the Board of Directors of Company has received a Superior Proposal which it intends to accept, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal, but only if Company shall have caused its financial and legal advisors to negotiate with Parent to make such adjustments to the terms and conditions of this Agreement as would enable Company to proceed with the transactions 43 contemplated hereby on such adjusted terms. (c) Nothing in this Section 6.5, and no action taken by the Board of Directors of Company pursuant to this Section 6.5, will (i) permit Company to enter into any agreement providing for any transaction contemplated by an Acquisition Proposal for as long as this Agreement remains in effect or (ii) affect in any manner any other obligation of Company under this Agreement. (d) For purposes of this Agreement, "Acquisition Proposal" means any bona fide offer, proposal or other indication of interest regarding any of the following (other than the transactions provided for in this Agreement involving Company): (i) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction involving the Company or any of its Subsidiaries; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of a significant portion of the assets of Company and its Subsidiaries, taken as a whole, in a single transaction or series of related transactions (other than sales of inventory or used equipment in the ordinary course of business); (iii) any purchase of, or tender offer or exchange offer for, 20% percent or more of the outstanding shares of capital stock of Company by any person or the filing of a registration statement under the Securities Act in connection therewith; or (iv) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing. For purposes of this Agreement, "Superior Proposal" means an unsolicited Acquisition Proposal on terms which the Board of Directors of Company determines in good faith to be more favorable to Company's stockholders than the Offer and the Merger (based on advice of Company's independent financial advisor that the value of the consideration provided for in such proposal is superior to the value of the consideration provided for in the Offer and the Merger); for which financing, to the extent required, is then committed or which, in the good faith reasonable judgment of the Board of Directors of Company (based on advice from Company's independent financial advisor) is reasonably capable of being financed by such third party provided that the Board of Directors of the Company has also, among other things, duly considered the timing of such Acquisition Proposal and the likelihood that such Acquisition Proposal will be consummated. Section 6.6 Consents, Approvals and Filings. Upon the terms and subject ------------------------------- to the conditions hereof, each of the parties hereto shall (a) make promptly its respective filings, and thereafter make any other required submissions, under the HSR Act and the Exchange Act, with respect to the Offer, the Merger and the other 44 transactions contemplated hereby and (b) use commercially reasonable efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Offer, the Merger and the other transactions contemplated hereby, including without limitation using commercially reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Entities and parties to contracts with Company and its Subsidiaries as are necessary for the consummation of the Offer, the Merger and the other transactions contemplated hereby and to fulfill the conditions to the Offer and the Merger; provided, however, that in no event shall Parent or any of its Subsidiaries be required to agree or commit to divest, hold separate, offer for sale, abandon, limit its operation of or take similar action with respect to any assets (tangible or intangible) or any business interest of it or any of its Subsidiaries (including without limitation the Surviving Corporation after consummation of the Offer or the Merger) in connection with or as a condition to receiving the consent or approval of any Governmental Entity (including without limitation under the HSR Act). In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall use their commercially reasonable efforts to take all such action. Section 6.7 Employee Benefit Matters. ------------------------ (a) From and after the Effective Time, Parent shall, and shall cause its Subsidiaries (including the Surviving Corporation) to, honor and provide for payment of all accrued obligations and benefits under all Company Plans and employment or severance agreements disclosed on the Disclosure Schedule between Company and persons who are or had been employees of Company or any of its Subsidiaries at or prior to the Effective Time ("Covered Employees"), all in accordance with their respective terms. (b) From and after the Effective Time, Parent shall, and shall cause its Subsidiaries (including the Surviving Corporation) to, provide Covered Employees who remain in the employ of Company or any of its Subsidiaries with employee benefits that are reasonably comparable to the employee benefits provided to similarly situated employees of Parent or any such Subsidiary who are not Covered Employees. To the extent that Covered Employees are included in any benefit plan of Parent or its Subsidiaries, Parent agrees that the Covered Employees shall receive credit under such plan (other than any such plan providing for sabbati- 45 cals) for service prior to the Effective Time with Company and its Subsidiaries to the same extent such service was counted under similar Company Plans for purposes of eligibility, vesting, eligibility for retirement (but not for benefit accrual) and, with respect to vacation, disability and severance, benefit accrual. To the extent that Covered Employees are included in any medical, dental or health plan other than the plan or plans they participated in at the Effective Time, Parent agrees that any such plans shall not include pre- existing condition exclusions, except to the extent such exclusions were applicable under the similar Company Plan at the Effective Time, and shall provide credit for any deductibles and co-payments applied or made with respect to each Covered Employee in the calendar year of the change. (c) Notwithstanding anything in this Agreement to the contrary, from and after the Effective Time, the Surviving Corporation will have sole discretion over the hiring, promotion, retention, firing and other terms and conditions of the employment of employees of the Surviving Corporation. Except as otherwise provided in this Section 6.7, nothing herein shall prevent Parent or the Surviving Corporation from amending or terminating any Company Plan in accordance with its terms. (d) "Offering Periods" under the Company 1996 Employee Stock Purchase Plan (the "ESPP") shall terminate on the earlier to occur of (i) April 30, 1999, or (ii) the expiration date of the Offer, and the Company shall cause written notice to be given to participants in accordance with the terms of the ESPP. No further Offering Period under the ESPP shall be created. Section 6.8 Indemnification; Directors' and Officers' Insurance. --------------------------------------------------- (a) For a period of four years after the Effective Time, the provisions with respect to indemnification set forth in the certificate of incorporation and bylaws of Purchaser as in effect on the date of this Agreement (true, correct and complete copies of which have been provided to Company) shall not be amended, repealed or otherwise modified in any manner that would adversely affect the rights thereunder of individuals who at any time prior to the Effective Time were directors or officers of Company in respect of actions or omissions occurring at or prior to the Effective Time (including without limitation the transactions contemplated by this Agreement), unless such modification is required by law. (b) From and after the Effective Time, Parent shall, or shall cause the Surviving Corporation to, indemnify, defend and hold harmless each person who 46 is now, or has been at any time prior to the date hereof or who becomes prior to the Effective Time, an officer or director of Company (the "Indemnified Parties") against all losses, claims, damages, costs, expenses (including reasonable attorneys' fees and expenses), liabilities or judgments or amounts that are paid in settlement with the approval of the indemnifying party (which approval shall not be unreasonably withheld) incurred in connection with any threatened or actual action, suit or proceeding based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of Company ("Indemnified Liabilities"), including all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, this Agreement or the transactions contemplated hereby, in each case, to the full extent that a corporation is permitted under the DGCL to indemnify its own directors or officers, as the case may be. In the event any such claim, action, suit, proceeding or investigation is brought against any Indemnified Party, the indemnifying party shall assume and direct all aspects of the defense thereof, including settlement, and the Indemnified Party shall cooperate in the vigorous defense of any such matter. The Indemnified Party shall have a right to participate in (but not control) the defense of any such matter with its own counsel and at its own expense. The indemnifying party shall not settle any such matter unless (i) the Indemnified Party gives prior written consent, which shall not be unreasonably withheld, or (ii) the terms of the settlement provide that the Indemnified Party shall have no responsibility for the discharge of any settlement amount and impose no other obligations or duties on the Indemnified Party and the settlement discharges all rights against Indemnified Party with respect to such matter. In no event shall the indemnifying party be liable for any settlement effected without its prior written consent. Any Indemnified Party wishing to claim indemnification under this Section 6.8(b), upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Parent and the Surviving Corporation (but the failure so to notify shall not relieve the indemnifying party from any liability which it may have under this Section 6.8(b) except to the extent such failure prejudices such indemnifying party), and shall deliver to Parent and the Surviving Corporation the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group will be represented by a single law firm with respect to each such matter unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties. The rights to indemnification under this Section 6.8(b) shall continue in full force and effect for a period of four years from the Effective Time; provided, however, that all rights to indemnification in respect of any Indemnified Liabilities asserted or made within such period shall continue until the disposition of such Indemnified Liabilities. 47 (c) For a period of two years after the Effective Time Parent shall cause to be maintained in effect policies of directors' and officers' liability insurance, for the benefit of those persons who are covered by Company's directors' and officers' liability insurance policies at the Effective Time, providing coverage with respect to matters occurring prior to the Effective Time that is at least equal to the coverage provided under Company's current directors' and officers' liability insurance policies, to the extent that such liability insurance can be maintained at an annual cost to Parent not greater than 150 percent of the premium for the current Company directors' and officers' liability insurance; provided that if such insurance cannot be so maintained at such cost, Parent shall maintain as much of such insurance as can be so maintained at a cost equal to 150 percent of the current annual premiums of Company for such insurance. ARTICLE VII CONDITIONS PRECEDENT Section 7.1 Conditions to Each Party's Obligation to Effect the Merger. ---------------------------------------------------------- The respective obligation of each party to effect the Merger shall be subject to the satisfaction or written waiver on or prior to the Closing Date of the following conditions: (a) Completion of the Offer. Purchaser shall have accepted for ----------------------- payment and paid for all Shares validly tendered in the Offer and not withdrawn; provided, however, that neither Parent nor Purchaser may invoke this condition if Purchaser shall have failed to purchase Shares so tendered and not withdrawn in violation of the terms of this Agreement or the Offer. (b) Stockholder Approval. This Agreement shall have been adopted -------------------- by the affirmative vote of the holders of the requisite number of shares of capital stock of Company if such vote is required pursuant to Company's certificate of incorporation, the DGCL or other applicable law. (c) No Injunctions or Restraints. No temporary restraining order, ---------------------------- preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect; provided, however, that prior to invoking this condition, the party so invoking this condition shall have complied with its obligations under 48 Section 6.3 and Section 6.6 and the parties hereto shall have used commercially reasonable efforts to lift or remove such order, injunction, restraint or prohibition. (d) HSR Act. All necessary waiting periods under the HSR Act ------- applicable to the Merger shall have expired or been earlier terminated. Section 7.2 Conditions to Parent's or Purchaser's Obligation to Effect the -------------------------------------------------------------- Merger. The obligation of Parent and/or Purchaser to effect the Merger shall be - ------ subject to the satisfaction or written waiver on or prior to the Closing Date of the following condition: No outstanding Option shall entitle the holder thereof, at the Effective Time or thereafter, to purchase any capital stock of Company. ARTICLE VIII TERMINATION Section 8.1 Termination. This Agreement may be terminated and the Merger ----------- contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after approval of matters presented in connection with the Merger by the stockholders of Company: (a) By the mutual written consent of Parent and Company; provided, -------- however, that if Parent shall have a majority of the directors pursuant to - ------- Section 1.4, such consent of Company may only be given if approved by the Continuing Directors. (b) By either of Parent or Company if (i) a statute, rule or executive order shall have been enacted, entered or promulgated prohibiting the transactions contemplated hereby on the terms contemplated by this Agreement or (ii) any Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their commercially reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated hereby and such order, decree, ruling or other action shall have become final and non-appealable. (c) By either of Parent or Company if the consummation of the Offer shall not have occurred on or before July 31, 1999; provided, however, -------- ------- that the party seeking to terminate this Agreement pursuant to this Section 8.1(c) shall not 49 have breached in any material respect its obligations under this Agreement; (d) By Company: (i) if Company has entered into an agreement with respect to a Superior Proposal or Company or the Board of Directors of Company has approved or recommended a Superior Proposal in accordance with Section 6.5(b), provided Company has complied with all provisions of Section 6.5, including the notice provisions therein, and that it simultaneously terminates this Agreement and makes simultaneous payment to the Parent of the Termination Fee and the Expenses (as such terms are defined in Section 9.2); or (ii) if Parent or Purchaser shall have terminated the Offer or the Offer expires without Parent or Purchaser, as the case may be, purchasing any Shares pursuant thereto; provided that Company may not terminate this Agreement pursuant to this Section 8.1(d)(ii) if Company is in material breach of this Agreement; or (iii) if Parent, Purchaser or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer; provided, that Company may not terminate this Agreement pursuant to this Section 8.1(d)(iii) if Company is in material breach of this Agreement; or (iv) if there shall be a material breach by either Parent or Purchaser of any of their representations, warranties, covenants or agreements contained in this Agreement, except where such breach does not have a material adverse effect on the ability of Parent or Purchaser to consummate the Offer or the Merger. (e) By Parent or Purchaser: (i) (A) if, prior to the purchase of the Shares pursuant to the Offer, the Board of Directors of Company shall have withdrawn, or modified or changed in a manner adverse to Parent or Purchaser, its approval or recommendation of the Offer, this Agreement or the Merger or shall have recommended or approved, or announced a neutral position with respect to, an Acquisition Proposal or upon request of Parent, shall fail to reaffirm its approval and recommendation of the Offer, the Merger Agreement, or the Merger; or 50 (B) if there shall have been a material breach by the Company of any provision of Section 6.5; or (ii) if the Offer has expired or terminated without Parent or Purchaser purchasing any Shares thereunder and, pursuant to Exhibit A and Article I hereof, the Purchaser is neither required to accept and pay for the Shares tendered in the Offer nor extend the expiration date of the Offer, provided that Parent or Purchaser may not terminate this Agreement pursuant to - -------- this Section 8.1(e)(ii) if Parent or Purchaser is in material breach of this Agreement; or (iii) if, due to an occurrence that if occurring after the commencement of the Offer would result in a failure to satisfy any of the conditions set forth in Exhibit A hereto which occurrence is incapable of being cured or remediated prior to the initial expiration date of the Offer, Parent, Purchaser or any of their affiliates shall have failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer, provided that Parent or Purchaser may not terminate this Agreement pursuant to Section 8.1(e)(iii) if Parent or Purchaser is in material breach of this Agreement; or (iv) if any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates or any group of which any of them is a member, shall have acquired beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Shares; or (v) if there shall be a breach by Company of any of its representations or warranties, contained in this Agreement (without reference to any "Material Adverse Effect" or "materiality" qualifications contained therein) which breach causes a Material Adverse Effect on Company and is incapable of being cured prior to the twentieth business day following the initial expiration date of the Offer or there shall be a material breach by Company of any of its covenants or agreements contained in this Agreement. Section 8.2 Effect of Termination. In the event of termination of this --------------------- Agreement by either Company or Parent or Purchaser as provided in Section 8.1, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Parent, Purchaser or Company, other than the provisions of Section 4.1(t), Section 6.2, this Section 8.2 and Article IX and except to the extent 51 that such termination results from the willful breach by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement. ARTICLE IX GENERAL PROVISIONS Section 9.1 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 9.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. Section 9.2 Fees and Expenses. (a) Except as provided in Section 9.2(b) ----------------- below, all fees and expenses incurred in connection with the Offer, the Merger, this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Offer or the Merger is consummated. (b) If (x) Parent or Purchaser terminates this Agreement pursuant to Section 8.1(e)(i), or (y) Company terminates this Agreement pursuant to Section 8.1(d)(i), then in each case, Company shall pay, or cause to be paid to Parent, at the time of termination, an amount equal to $2,870,000 (the "Termination Fee") and an amount equal to Parent's and Purchaser's actual and reasonably documented out-of-pocket expenses incurred by Parent or Purchaser in connection with the Offer, the Merger, this Agreement and the consummation of the transactions contemplated hereby up to a maximum expense reimbursement amount of $718,000 (the "Expenses"). In addition, if this Agreement is terminated by Parent or Purchaser pursuant to Section 8.1(e)(ii) solely as a result of the failure of the Minimum Condition or by Company pursuant to Section 8.1(d)(ii) and, in each case at the time of such termination, Parent is not in material breach of this Agreement and there has been previously publicly announced, and not withdrawn, an Acquisition Proposal, and, if Company shall thereafter, within 9 months after such termination, enter into an agreement with respect to such Acquisition Proposal, then Company shall pay the Termination Fee concurrently with entering into any such agreement. If this Agreement is terminated by Parent or Purchaser pursuant to Section 8.1(e)(v), then Company shall pay Parent the Expenses. Any payments required to be made pursuant to this Section 9.2 shall be made by wire transfer of same day funds to an 52 account designated by Parent. Section 9.3 Definitions. For purposes of this Agreement: ----------- (a) an "affiliate" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; (b) "business day" means any day other than Saturday, Sunday or any other day on which banks in the City of New York are required or permitted to close; (c) "Disclosure Schedule" means the disclosure schedule delivered by Company to Parent and Purchaser simultaneously with the execution of this Agreement; (d) "Environmental Laws" means any federal, state or local law relating to: (i) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (ii) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (iii) otherwise relating to pollution of the environment or the protection of human health; (e) "Hazardous Substances" means: (i) those substances defined in or regulated under the following federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii) petroleum and petroleum products including crude oil and any fractions thereof; (iii) natural gas, synthetic gas and any mixtures thereof; (iv) radon; (v) any other contaminant; and (vi) any substance with respect to which any Governmental Entity requires environmental investigation, monitoring, reporting or remediation; (f) "knowledge" means the actual knowledge of any executive officer of Company or Parent, as the case may be, after making due inquiry under the circumstances; 53 (g) "Liens" means, collectively, all pledges, claims, liens, charges, mortgages, conditional sale or title retention agreements, hypothecations, collateral assignments, security interests, easements and other encumbrances of any kind or nature whatsoever; (h) a "Material Adverse Effect" with respect to any person means any event, change, occurrence, effect, fact or circumstance having, or which could reasonably be expected to have, a material adverse effect on (i) the ability of such person to perform its obligations under this Agreement or to consummate the transactions contemplated hereby or (ii) the financial condition, results of operations, value or business of such person and its Subsidiaries taken as a whole; except for those changes, events and effects that (i) are caused by conditions affecting the United States or world economy as a whole or affecting the industry in which such entity competes as a whole, which conditions do not affect such entity in a materially disproportionate manner, or (ii) are related to or result from announcement or pendency of the Merger or the Offer; (i) the "NYSE" means the New York Stock Exchange; (j) a "person" means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity; (k) "Principal Stockholders" means Cisco Systems, Inc., Advent International Corp. and certain affiliates thereof, Andrew I. Fillat, Ralph B. Godfrey, Ronald W. Braniff, Augustus J. Berkeley, William C. Jones, Christopher A. Markle, Victor C. Langford, James A. Barth and Michael J. Satterwhite; (l) a "Subsidiary" of any person means any other person of which (i) the first mentioned person or any Subsidiary thereof is a general partner, (ii) voting power to elect a majority of the board of directors or others performing similar functions with respect to such other person is held by the first mentioned person and/or by any one or more of its Subsidiaries, or (iii) at least 50% of the equity interests of such other person is, directly or indirectly, owned or controlled by such first mentioned person and/or by any one or more of its Subsidiaries. Section 9.4 Amendment and Modification. Subject to applicable law, this -------------------------- Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the stockholders of Company contemplated hereby, by written agreement of the parties hereto (which in the case of Company 54 shall include approvals as contemplated in Section 1.4(c)), at any time prior to the Closing Date with respect to any of the terms contained herein; provided, however, that after the approval of this Agreement by the stockholders of Company, no such amendment, modification or supplement shall reduce the amount or change the form of the Merger Consideration or otherwise adversely affect the rights of such stockholders. Section 9.5 Extension; Waiver. Subject to Section 1.4 hereof, at any time ----------------- prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties of the other parties contained in this Agreement or in any document delivered pursuant to this Agreement, or (c) subject to Section 9.4, waive compliance with any of the agreements or conditions of the other parties contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. Section 9.6 Notices. All notices, requests, claims, demands 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) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to Parent or to Purchaser, to Sterling Software, Inc. 300 Crescent Court, Suite 1200 Dallas, Texas 75201 Attention: Don J. McDermett, Jr., Esq. Telecopy: (214) 981-1265 55 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Attention: Blaine V. Fogg, Esq. Telecopy: (212) 735-2000 (ii) if to Company, to Interlink Computer Sciences, Inc. 47370 Fremont Boulevard Fremont, California 94538 Attention: Augustus J. Berkeley Telecopy: (510) 249-6150 with a copy (which shall not constitute notice) to: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attention: Thomas C. DeFilipps, Esq. Telecopy: (650) 845-5000 Section 9.7 Interpretation. 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 convenience of 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 9.8 Entire Agreement; No Third-Party Beneficiaries. This ---------------------------------------------- Agreement constitutes the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement (except for the letter agreement referenced in the last sentence of Section 6.2). Other than the provisions of Section 6.8, this Agreement is not intended to confer upon any person (including without limitation any employees or former employees of Company), other than the parties hereto, any rights or 56 remedies. Section 9.9 Governing Law. This Agreement shall be governed by, and ------------- construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. Section 9.10 Assignment. Neither this Agreement nor any of the rights, ---------- interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void, except that Parent and/or Purchaser may assign this Agreement to any direct or indirect wholly owned Subsidiary of Parent without the prior consent of Company; provided that Parent and/or Purchaser, as the case may be, shall remain liable for all of its obligations under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. Section 9.11 Enforcement. 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. Accordingly, 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 the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto (i) shall submit itself to the personal jurisdiction of the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware) in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (iii) shall not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware). 57 Section 9.12 Severability. Whenever possible, each provision or portion of ------------ any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Section 9.13 Counterparts. This Agreement may be executed in one or more ------------ counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 58 IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. STERLING SOFTWARE, INC. By: /s/ Don J. McDermett, Jr. ------------------------------- Name: Don J. McDermett, Jr. Title: Senior Vice President STERLING SOFTWARE (SOUTHWEST), INC. By: /s/ Don J. McDermett, Jr. ------------------------------- Name: Don J. McDermett, Jr. Title: Vice President INTERLINK COMPUTER SCIENCES, INC. By: /s/ Augustus J. Berkeley ------------------------------- Name: Augustus J. Berkeley Title: President and Chief Executive Officer EXHIBIT A CONDITIONS TO THE OFFER Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement and Plan of Merger (the "Agreement") of which this Exhibit A is a part. Notwithstanding any other provision of the Offer and subject to the terms of the Merger Agreement, Purchaser 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 Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may amend the Offer consistent with the terms of the Agreement or terminate the Offer and not accept for payment any tendered Shares, if (i) there shall not have been validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares which, when added to the Shares, if any, beneficially owned by Parent or Purchaser, would constitute at least a majority of the Shares outstanding on a fully diluted basis on the date of purchase ("on a fully-diluted basis" meaning, as of any date, the number of Shares outstanding, together with the Shares which Company may be required to issue pursuant to warrants, options or obligations outstanding at that date under employee stock or similar benefit plans or otherwise whether or not vested or then exercisable) (the "Minimum Condition"), (ii) any applicable waiting period under the HSR Act has not expired or been terminated, or (iii) at any time on or after the date of the Agreement and prior to the Expiration Date, any of the following events shall occur and be continuing and shall not have resulted from the breach by Parent or Purchaser of any of their obligations under the Agreement: (a) there shall be pending any suit, action or proceeding brought by any third party that has a high likelihood of success on the merits or by any Governmental Entity before any court of competent jurisdiction (i) seeking to prohibit or impose any material limitations on Parent's or Purchaser's ownership or operation (or that of any of their respective Subsidiaries or affiliates) of all or a material portion of their or Company's businesses or assets, (ii) seeking to compel Parent or Purchaser or their respective Subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of Company or Parent and their respective Subsidiaries, in each case taken as a whole, as a result of the Agreement, (iii) challenging the acquisition by Parent or Purchaser of any Shares pursuant to the Offer, (iv) seeking to restrain or prohibit the making or consumma- A-1 tion of the Offer or the Merger or the performance of any of the transactions contemplated by the Agreement, (v) seeking to obtain from Company any damages (including damages against Company's directors or officers for which they may seek indemnification from Company) that would be reasonably likely to have a Material Adverse Effect on Company, (vi) seeking to impose material limitations on the ability of Purchaser, or rendering Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, or (vii) seeking to impose material limitations on the ability of Purchaser or Parent effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Purchaser or Parent on all matters properly presented to Company's stockholders; or (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger, or any other action shall be taken by any Governmental Entity, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (vii) of paragraph (a) above; or (c) (i) the representations and warranties of Company contained in Sections 4.1(b), 4.1(u), 4.1(v), 4.1(w), 4.1(x) and the first five sentences of Section 4.1(d) of the Agreement shall not be true and correct in all material respects as of the date of consummation of the Offer as though made on or as of such date (other than any such representations and warranties that by their terms address only matters as of another specified dated, which shall be true and correct only as of such other specified date) and (ii) all other representations and warranties of Company contained in the Agreement, which representations and warranties shall be deemed for purposes of this condition not to include any qualification or limitation with respect to materiality (whether by reference to "Material Adverse Effect" or otherwise), shall not be true and correct as of the date of consummation of the Offer as though made on or as of such date (other than representations and warranties that by their terms address matters only as of another specified date, which shall be true and correct only as of such other specified date), except in the case of this clause (ii) where the matters in respect of which such representations and warranties are not true and correct, in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect on Company, with the same effect as though such representations and warranties were made as of the date of consummation of the Offer; or A-2 (d) there shall have occurred a Material Adverse Effect on Company; or (e) Company's Board of Directors (i) shall have withdrawn, or modified or changed in a manner adverse to Parent or Purchaser (including by amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the Merger, (ii) shall have recommended or announced a neutral position with respect to an Acquisition Proposal, (iii) shall have adopted any resolution tion to effect any of the foregoing, or (iv) upon request of Parent, shall fail to reaffirm its approval or recommendation of the Offer, the Merger Agreement, or the Merger; or (f) any Person or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or their affiliates or any group of which any of them is a member, shall have acquired or announced its intention to acquire (including by commencement of a tender or exchange offer) beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Shares; or (g) the Merger Agreement shall have been terminated in accordance with its terms; which in the sole good faith judgment of Parent or Purchaser, in any such case, and regardless of the circumstances (including any action or inaction by Parent or Purchaser) giving rise to such condition makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payments for Shares. The foregoing conditions are for the sole benefit of Parent and Purchaser and may (except for the Minimum Condition) be waived by Parent or Purchaser, in whole or in part, at any time and from time to time, in the sole discretion of Parent or Purchaser. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. A-3 EX-99.(C)(2) 12 STOCKHOLDER AGREEMENT - ADVENT INTERNATIONAL CORP. EXHIBIT (C)(2) STOCKHOLDER AGREEMENT This STOCKHOLDER AGREEMENT, dated as of March 23, 1999 (this "Agreement"), is made and entered into among Sterling Software, Inc., a Delaware corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and Adtel Limited Partnership, Adventact Limited Partnership, Advent International Investors II Limited Partnership, Adwest Limited Partnership, Global Private Equity II Limited Partnership and Golden Gate Development and Investment Limited Partnership (collectively referred to hereinafter as "Stockholder"). RECITALS: A. Parent, Purchaser and Interlink Computer Sciences, Inc., a Delaware corporation ("Company"), propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which the Purchaser will merge with and into Company (the "Merger") on the terms and subject to the conditions set forth in the Merger Agreement. Except as otherwise defined herein, terms used herein with initial capital letters have the respective meanings ascribed thereto in the Merger Agreement. B. As of the date hereof, Stockholder beneficially owns and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) 447,232 shares of common stock ("Common Stock"), par value $.001 per share ("Shares"), of Company (such Shares, together with any other shares of capital stock of Company the beneficial ownership of which is acquired, or can be acquired upon exercise of options or warrants at a price equal to or less than the Option Consideration (as defined in Section 2.1), by Stockholder during the period from and including the date hereof through and including the earlier of (i) the Effective Time and (ii) the date that is 120 days after the date on which the Merger Agreement is terminated pursuant to Section 8.1 thereof, are collectively referred to herein as "Subject Shares"). C. Pursuant to the Merger Agreement, Purchaser shall commence a cash tender offer (the "Offer") to purchase at a price of $7.00 per Share all outstanding Shares, including all of the Subject Shares. Stockholder has advised Parent and Purchaser that it intends to tender the Subject Shares in the Offer. D. As a condition and inducement to Parent's and Purchaser's willingness to enter into the Merger Agreement, Parent and Purchaser have requested that Stockholder agree, and Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement and the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I VOTING AGREEMENT Section 1.1 Agreement to Vote Shares. During the Option Period (as ------------------------ defined in Section 2.2), at any meeting of the stockholders of Company called to consider and vote upon the adoption of the Merger Agreement (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect of the adoption of the Merger Agreement by written consent of stockholders of Company, Stockholder shall vote or cause to be voted (including by written consent, if applicable) all of the Subject Shares, now owned or hereafter acquired, in favor of the adoption of the Merger Agreement and in favor of any other matter necessary for the consummation of the transactions contemplated by the Merger Agreement and considered and voted upon at any such meeting or made the subject of any such written consent, as applicable. During the Option Period, at any meeting of the stockholders of Company called to consider and vote upon any Other Proposal (as hereinafter defined) (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect of any Other Proposal by written consent of stockholders of Company, Stockholder shall vote or cause to be voted (including by written consent, if applicable) all of the Subject Shares against such Other Proposal. For purposes of this Agreement, the term "Other Proposal" means any (a) Acquisition Proposal (as defined in the Merger Agreement) or (b) other action which is intended or could reasonably be expected to materially impede, interfere with, delay or materially and adversely affect the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement or this Agreement; provided, however, that neither the Merger nor any other transaction contemplated by the Merger Agreement to be consummated by Company, Parent or Purchaser in connection with the Merger shall constitute an Other Proposal. Stockholder shall not enter into any 2 agreement or understanding with any person or entity the effect of which would be violative of the provisions and agreements contained in this Section 1.1. Section 1.2 Irrevocable Proxy. ----------------- (a) Grant of Proxy. STOCKHOLDER HEREBY APPOINTS PARENT AND ANY -------------- DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND ATTORNEY- IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE GENERAL CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO VOTE OR ACT BY WRITTEN CONSENT DURING THE OPTION PERIOD WITH RESPECT TO THE SUBJECT SHARES IN ACCORDANCE WITH SECTION 1.1 HEREOF. THIS PROXY IS GIVEN TO SECURE THE PERFORMANCE OF THE DUTIES OF STOCKHOLDER UNDER THIS AGREEMENT. STOCKHOLDER AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY. (b) Other Proxies Revoked. Stockholder represents that any proxies --------------------- heretofore given in respect of the Subject Shares are not irrevocable, and that all such proxies are hereby revoked. ARTICLE II OPTION Section 2.1 Grant of Option. Stockholder hereby grants to Parent ---------------- an irrevocable option (the "Option") to purchase the Subject Shares on the terms and subject to the conditions set forth herein, at a price per Subject Share equal to $7.00 in cash or any higher price that Parent or any controlled affiliate of Parent offers to pay for the shares of Common Stock of the Company made generally to the stockholders of the Company (such price being referred to as the "Option Consideration"). Section 2.2 Exercise of Option. (a) Parent may exercise the ------------------ Option, in whole or in part, at any time or from time to time during the period (the "Option Period") from and including the date hereof through and including the earlier of (i) the date that is 120 days after the purchase of shares of common stock of the Company 3 pursuant to the Offer, or (ii) the date that is 120 days after the date on which the Merger Agreement is terminated pursuant to Section 8.1 thereof, provided, -------- however, that the Option shall terminate (x) with respect to any Subject Shares - ------- that are tendered pursuant to the Offer and purchased by Purchaser thereunder, (y) if the Merger Agreement is terminated pursuant to Section 8.1(d)(iv) thereof and at the time of such termination Company is not in breach of the Merger Agreement, and (z) if the Merger Agreement is terminated solely because the condition contained in Section 7.1(d) of the Merger Agreement is incapable of being fulfilled. Notwithstanding anything in this Agreement to the contrary, Parent shall be entitled to purchase all Subject Shares in respect of which it shall have exercised the Option in accordance with the terms hereof prior to the expiration of the Option Period, and the expiration of the Option Period shall not affect any rights hereunder which by their terms do not terminate or expire prior to or as of such expiration. (b) Parent shall not demand appraisal rights under Section 262 of the DGCL in respect of any Subject Shares. (c) If Parent wishes to exercise the Option, it shall deliver to Stockholder a written notice (an "Exercise Notice") to that effect which specifies (i) the number of Subject Shares to be purchased from Stockholder and (ii) a date (an "Option Closing Date") not earlier than three business days after the date such Exercise Notice is delivered for the consummation of the purchase and sale of such Subject Shares (an "Option Closing"). If and to the extent necessary to deliver the number of Shares to be purchased pursuant hereto, Stockholder shall exercise vested stock options promptly upon receipt of an Exercise Notice. If the Option Closing cannot be effected on the Option Closing Date specified in the Exercise Notice by reason of a preliminary or final injunction or any other applicable judgment, decree, order, law or regulation, or because any applicable waiting period under the HSR Act shall not have expired or been terminated, (i) Stockholder shall promptly take all such actions as may be reasonably requested by Parent, and shall otherwise fully cooperate with Parent, to cause the elimination of all such impediments to the Option Closing and (ii) the Option Closing Date specified in the Exercise Notice shall be extended to the fifth business day following the elimination of all such impediments. The place of the Option Closing shall be at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center, San Francisco, California 94111, and the time of the Option Closing shall be 10:00 a.m. (New York Time) on the Option Closing Date. Section 2.3 Payment and Delivery of Certificates. At any Option ------------------------------------ Closing, Parent shall pay to Stockholder the Option Consideration payable in respect of 4 the Subject Shares to be purchased from Stockholder at the Option Closing, and Stockholder shall deliver to Parent such Subject Shares, free and clear of all Liens, with the certificate or certificates evidencing such Subject Shares being duly endorsed for transfer by Stockholder and accompanied by all powers of attorney and/or other instruments necessary to convey valid and unencumbered title thereto to Parent, and shall, to the extent permissible, assign to Parent (pursuant to a written instrument in form and substance satisfactory to Parent) all rights that Stockholder may have to require Company to register such Subject Shares under the Securities Act. Transfer taxes, if any, imposed as a result of the exercise of the Option shall be borne by Stockholder. Section 2.4 Adjustment upon Changes in Capitalization, Etc. In the ---------------------------------------------- event of any change in the capital stock of Company by reason of a stock dividend, split-up, merger, recapitalization, combination, exchange of shares, extraordinary distribution or similar transaction, the type and number or amount of shares, securities or other property subject to the Option, and the Option Consideration payable therefor, shall be adjusted appropriately so that Parent shall receive upon exercise of Option the type and number or amount of shares, securities or property that Parent would have retained and/or been entitled to receive in respect of the Subject Shares if the Option had been exercised immediately prior to such event relating to Company or the record date therefor, as applicable. The provisions of this Section 2.4 shall apply in a like manner to successive stock dividends, split-ups, mergers, recapitalizations, combinations, exchanges of shares or extraordinary distributions or similar transactions. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Certain Representations and Warranties of Stockholder. ----------------------------------------------------- Stockholder represents and warrants to Parent and Purchaser as follows: (a) Ownership. Stockholder is the sole record and beneficial owner of --------- 447,232 Shares and has full and unrestricted power to dispose of and to vote such Shares. Stockholder does not beneficially own any securities of Company on the date hereof other than such Shares. Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Articles I and II hereof, 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 5 with respect to all of the Subject Shares with no limitations, qualifications or restriction on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power and Authority; Execution and Delivery. Stockholder has all ------------------------------------------- requisite legal capacity, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Stockholder and the consummation by Stockholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming that this Agreement constitutes the valid and binding obligation of the other parties hereto, constitutes a valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (c) No Conflicts. The execution and delivery of this Agreement do not, ------------ and, subject to compliance with the HSR Act and securities laws, to the extent applicable, the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not (i) conflict with or result in any breach of any organizational documents applicable to Stockholder or (ii) conflict with, result in a breach or violation of or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, a right of termination, cancellation, or acceleration of any obligation or a loss of a material benefit under, or require notice to or the consent of any person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding on Stockholder, other than any such conflicts, breaches, violations, defaults, obligations, rights or losses that individually or in the aggregate would not (i) materially impair the ability of Stockholder to perform Stockholder's obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated hereby. (d) No Encumbrances. Except as applicable in connection with the --------------- transactions contemplated by Articles I and II hereof, the Subject Shares and the certificates representing the Subject Shares are now, and at all times during the term hereof will be, held by Stockholder, or by a nominee or custodian for the benefit of Stockholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder or any such encumbrances not caused or created by Stockholder. 6 (e) No Finder's Fees. No broker, investment banker, financial advisor or ---------------- other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Stockholder. Section 3.2 Representations and Warranties of Parent and Purchaser. ------------------------------------------------------ Parent and Purchaser hereby represent and warrant to Stockholder that: (a) Power and Authority; Execution and Delivery. Parent and Purchaser ------------------------------------------- each has all requisite legal capacity, corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Purchaser. This Agreement has been duly executed and delivered by Parent and Purchaser and, assuming that this Agreement constitutes the valid and binding obligation of Stockholder, constitutes a valid and binding obligation of Parent and Purchaser, enforceable against Parent and Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (b) No Conflicts. The execution and delivery of this Agreement do not, ------------ and, subject to compliance with the HSR Act, to the extent applicable, the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not (i) conflict with or result in any breach of any organizational documents applicable to Parent or Purchaser or (ii) conflict with, result in a breach or violation of or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, right of termination, cancellation, or acceleration of any obligation or a loss of a material benefit under, or require notice to or the consent of any person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding on Parent or Purchaser, other than any such conflicts, breaches, violations, defaults, obligations, rights or losses that individually or in the aggregate would not (i) impair the ability of Parent and Purchaser to perform their obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated hereby. (c) Purchase Not for Distribution. The Option and the Subject Shares to ----------------------------- be acquired upon exercise of the Option are being and shall be acquired by 7 Parent without a view to public distribution thereof otherwise than in compliance with the Securities Act and applicable state securities laws and shall not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act and in compliance with applicable state securities laws. ARTICLE IV CERTAIN COVENANTS Section 4.1 Certain Covenants of Stockholder. -------------------------------- (a) (i) Restriction on Transfer of Subject Shares, Proxies and ------------------------------------------------------ Noninterference. During the period (the "Restricted Period") from and including - --------------- the date hereof through and including the earlier of (x) the Effective Time and (y) the end of the Option Period, Stockholder shall not, directly or indirectly: (A) except pursuant to the terms of this Agreement (including Sections 4.1(a)(ii), (iii) and (iv)) and except for the tender of Subject Shares in the Offer, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Subject Shares; (B) except pursuant to the terms of this Agreement, grant any proxies (other than proxies relating to the election of management's slate of directors at an annual meeting of Company's stockholders, and other routine matters which would not require the filing of a preliminary proxy statement under Rule 14a-6(a) of the Exchange Act), or powers of attorney, deposit any of the Subject Shares into a voting trust or enter into a voting agreement with respect to any of the Subject Shares; or (C) take any action that would make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of Stockholder to perform Stockholder's obligations under this Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby or by the Merger Agreement. (ii) The restrictions with respect to the transfer of the Subject Shares contained in Section 4.1(a)(i)(A) of this Agreement (the "Transfer Restrictions") shall not limit the ability of Stockholder to transfer some, or all, of the Subject Shares to an affiliate of Stockholder, as long as, before any such transfer, such affiliate enters into a written agreement (an "Acknowledgment Agreement") with Parent and Purchaser whereby such affiliate agrees to be bound by all of the terms and provisions of this Agreement with respect to the Subject Shares received by such affiliate. 8 (iii) At any time after the Merger Agreement is terminated in accordance with its terms, except for the termination of the Merger Agreement pursuant to Section 8.1(d)(i) or Section 8.1(e)(i) thereof, the Transfer Restrictions shall not limit the ability of Stockholder to sell some, or all, of the Subject Shares in open market transactions. The sale of Subject Shares in open market transactions permitted by this Section 4.1(a)(iii) shall not, however, limit or relieve Stockholder of its obligations hereunder to deliver Shares to Parent in the event that Parent validly exercises the Option. (iv) At any time after the Merger Agreement is terminated in accordance with its terms, except for the termination of the Merger Agreement pursuant to Section 8.1(d)(i) or Section 8.1(e)(i) thereof, the Transfer Restrictions shall not limit the ability of Stockholder to sell or transfer some or all of the Subject Shares in a privately negotiated transaction to one or more third parties, as long as, before any such sale or transfer, each such third party enters into an Acknowledgment Agreement with Parent. (b) Cooperation. Stockholder, in the capacity as a stockholder, shall ----------- cooperate fully with Parent, Purchaser and Company in connection with their respective efforts to fulfill the conditions to the Merger set forth in Article VII of the Merger Agreement. (c) Releases. Stockholder hereby fully, unconditionally and irrevocably -------- releases, effective as of the Effective Time, any and all claims and causes of action that Stockholder has or may have against Company or any of its Subsidiaries or any present or former director, officer, employee or agent of Company or any of its Subsidiaries (collectively, the "Released Parties") arising or resulting from or relating to any act, omission, event or occurrence prior to the Effective Time. (d) No Solicitation. Stockholder shall not, in the capacity as a --------------- stockholder, respond to any inquiries or the making of any proposal by any person or entity (other than Parent or any affiliate of Parent) concerning any business combination merger, tender offer, exchange offer, sale of assets, sale of shares of capital stock or debt securities or similar transactions involving Company or any Subsidiary, division or operating or principal business unit of Company. If Stockholder, in the capacity as a Stockholder, receives any such inquiry or proposal, then Stockholder shall promptly inform Parent of the existence thereof. Stockholder, in the capacity as a Stockholder, will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. 9 (e) Reliance by Parent. Stockholder understands and acknowledges that ------------------ Parent and Purchaser are entering into, the Merger Agreement in reliance upon Stockholder's execution and delivery of this Agreement. ARTICLE V MISCELLANEOUS Section 5.1 Fees and Expenses. Each party hereto shall pay its own ----------------- expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby. Section 5.2 Amendment; Termination. This Agreement may not be ---------------------- amended except by an instrument in writing signed on behalf of each of the parties hereto. This Agreement and the proxies granted pursuant to Section 1.2 shall terminate immediately following (i) termination of the Merger Agreement pursuant to Section 8.1(a) thereof, provided at the time of such termination the parties intend to abandon the transactions contemplated by the Merger Agreement or (ii) termination of the Merger Agreement pursuant to Section 8.1(d)(iv) thereof, provided at the time of such termination Company is not in breach of the Merger Agreement or (iii) any termination of the Merger Agreement solely because the condition contained in Section 7.1(d) of the Merger Agreement is incapable of being fulfilled. Section 5.3 Extension; Waiver. Any agreement on the part of a party ----------------- to waive any provision of this Agreement, or to extend the time for any performance hereunder, shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. Section 5.4 Entire Agreement; No Third-Party Beneficiaries. This ---------------------------------------------- Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and is not intended to confer upon any person other than the parties any rights or remedies; provided, however, that the provisions of Section 4.1(c) are intended to inure to the benefit of, and to be enforceable by, the Released Parties. 10 Section 5.5 Governing Law. This Agreement shall be governed by, and ------------- construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof. Section 5.6 Notices. All notices, requests, claims, demands and ------- other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, or sent by overnight courier or telecopy (providing proof of delivery) to the address set forth below (or, in each case, at such other address as shall be specified by like notice). If to Parent or Purchaser: Sterling Software, Inc. 300 Crescent Court, Suite 1200 Dallas, Texas 75201 Attention: Don J. McDermett, Jr., Esq. Telecopy: (214) 981-1265 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Attention: Blaine V. Fogg, Esq. Telecopy: (212) 735-2000 If to Stockholder: c/o Advent International 101 Federal Street Boston, MA 02110 Attention: Andrew I. Fillat with a copy (which shall not constitute notice) to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304 Attention: Thomas C. DeFilipps, Esq. Telecopy: (650) 493-6811 11 Section 5.7 Assignment. Neither this Agreement nor any of the rights, ---------- interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by Stockholder without the prior written consent of Parent, and any such assignment or delegation that is not consented to shall be null and void. This Agreement, together with any rights, interests, or obligations of Parent and Purchaser hereunder, may be assigned or delegated, in whole or in part, by Parent and Purchaser without the consent of or any action by Stockholder upon notice by Parent or Purchaser to Stockholder as herein provided. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns (including without limitation any person to whom any Subject Shares are sold, transferred, assigned or passed, whether by operation of law or otherwise). Section 5.8 Confidentiality. Stockholder recognizes that successful --------------- consummation of the transactions contemplated by this Agreement may be dependent upon confidentiality with respect to the matters referred to herein. In this connection, pending public disclosure thereof, Stockholder hereby agrees not to disclose or discuss such matters with anyone not a party to this Agreement (other than its counsel and advisors, if any) without the prior written consent of Parent, except for filings required pursuant to the Exchange Act and the rules and regulations thereunder or disclosures its counsel advises are necessary in order to fulfill its obligations imposed by law, in which event Stockholder shall give notice of such disclosure to Parent as promptly as practicable so as to enable Parent to seek a protective order from a court of competent jurisdiction with respect thereto. Section 5.9 Further Assurances. Stockholder shall execute and deliver ------------------ such other documents and instruments and take such further actions as may be necessary or appropriate or as may be reasonably requested by Parent or Purchaser in order to ensure that Parent and Purchaser receive the full benefit of this Agreement. Section 5.10 Enforcement. 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. Accordingly, 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 the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto (i) shall submit itself to the 12 personal jurisdiction of the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware) in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (iii) shall not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware). Section 5.11 Severability. Whenever possible, each provision or portion ------------ of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Section 5.12 Descriptive Headings. The descriptive headings used herein -------------------- are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Section 5.13 Counterparts. This Agreement may be executed in one or more ------------ counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each party and delivered to the other parties. [signature page follows] 13 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first written above. ADTEL LIMITED PARTNERSHIP ADVENTACT LIMITED PARTNERSHIP ADWEST LIMITED PARTNERSHIP GLOBAL PRIVATE EQUITY II LIMITED PARTNERSHIP GOLDEN GATE DEVELOPMENT AND INVESTMENT LIMITED PARTNERSHIP By: Advent International Limited Partnership, General Partner By: Advent International Corporation, General Partner By: Andrew I. Fillat, Senior Vice President* ADVENT INTERNATIONAL INVESTORS II LIMITED PARTNERSHIP By: Advent International Corporation, General Partner By: Andrew I. Fillat, Senior Vice President* *For all of the above: /s/ Andrew I. Fillat ---------------------------------- Andrew I. Fillat STERLING SOFTWARE, INC. By: /s/ Don J. McDermett, Jr. ----------------------------- Name: Don J. McDermett, Jr. Title: Senior Vice President STERLING SOFTWARE (SOUTHWEST), INC. By: /s/ Don J. McDermett, Jr. ----------------------------- Name: Don J. McDermett, Jr. Title: Vice President EX-99.(C)(3) 13 STOCKHOLDER AGREEMENT - CISCO SYSTEMS, INC. EXHIBIT (C)(3) STOCKHOLDER AGREEMENT This STOCKHOLDER AGREEMENT, dated as of March 23, 1999 (this "Agreement"), is made and entered into among Sterling Software, Inc., a Delaware corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and Cisco Systems, Inc. ("Stockholder"). RECITALS: A. Parent, Purchaser and Interlink Computer Sciences, Inc., a Delaware corporation ("Company"), propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which the Purchaser will merge with and into Company (the "Merger") on the terms and subject to the conditions set forth in the Merger Agreement. Except as otherwise defined herein, terms used herein with initial capital letters have the respective meanings ascribed thereto in the Merger Agreement. B. As of the date hereof, Stockholder beneficially owns and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) 622,000 shares of common stock ("Common Stock"), par value $.001 per share ("Shares"), of Company (such Shares, together with any other shares of capital stock of Company the beneficial ownership of which is acquired, or can be acquired upon exercise of options or warrants at a price equal to or less than the Option Consideration (as defined in Section 2.1), by Stockholder during the period from and including the date hereof through and including the earlier of (i) the Effective Time and (ii) the date that is 120 days after the date on which the Merger Agreement is terminated pursuant to Section 8.1 thereof, are collectively referred to herein as "Subject Shares"). C. Pursuant to the Merger Agreement, Purchaser shall commence a cash tender offer (the "Offer") to purchase at a price of $7.00 per Share all outstanding Shares, including all of the Subject Shares. Stockholder has advised Parent and Purchaser that it intends to tender the Subject Shares in the Offer. D. As a condition and inducement to Parent's and Purchaser's willingness to enter into the Merger Agreement, Parent and Purchaser have requested that Stockholder agree, and Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement and the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I VOTING AGREEMENT Section 1.1 Agreement to Vote Shares. During the Option Period (as ------------------------ defined in Section 2.2), at any meeting of the stockholders of Company called to consider and vote upon the adoption of the Merger Agreement (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect of the adoption of the Merger Agreement by written consent of stockholders of Company, Stockholder shall vote or cause to be voted (including by written consent, if applicable) all of the Subject Shares, now owned or hereafter acquired, in favor of the adoption of the Merger Agreement and in favor of any other matter necessary for the consummation of the transactions contemplated by the Merger Agreement and considered and voted upon at any such meeting or made the subject of any such written consent, as applicable. During the Option Period, at any meeting of the stockholders of Company called to consider and vote upon any Other Proposal (as hereinafter defined) (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect of any Other Proposal by written consent of stockholders of Company, Stockholder shall vote or cause to be voted (including by written consent, if applicable) all of the Subject Shares against such Other Proposal. For purposes of this Agreement, the term "Other Proposal" means any (a) Acquisition Proposal (as defined in the Merger Agreement) or (b) other action which is intended or could reasonably be expected to materially impede, interfere with, delay or materially and adversely affect the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement or this Agreement; provided, however, that neither the Merger nor any other transaction contemplated by the Merger Agreement to be consummated by Company, Parent or Purchaser in connection with the Merger shall constitute an Other Proposal. Stockholder shall not enter into any agreement or understanding with any person or entity the effect of which would be violative of the provisions and agreements contained in this Section 1.1. 2 Section 1.2 Irrevocable Proxy. ----------------- (a) Grant of Proxy. STOCKHOLDER HEREBY APPOINTS PARENT AND ANY -------------- DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND ATTORNEY- IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE GENERAL CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO VOTE OR ACT BY WRITTEN CONSENT DURING THE OPTION PERIOD WITH RESPECT TO THE SUBJECT SHARES IN ACCORDANCE WITH SECTION 1.1 HEREOF. THIS PROXY IS GIVEN TO SECURE THE PERFORMANCE OF THE DUTIES OF STOCKHOLDER UNDER THIS AGREEMENT. STOCKHOLDER AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY. (b) Other Proxies Revoked. Stockholder represents that any proxies --------------------- heretofore given in respect of the Subject Shares are not irrevocable, and that all such proxies are hereby revoked. ARTICLE II OPTION Section 2.1 Grant of Option. Stockholder hereby grants to Parent an --------------- irrevocable option (the "Option") to purchase the Subject Shares on the terms and subject to the conditions set forth herein, at a price per Subject Share equal to $7.00 in cash or any higher price that Parent or any controlled affiliate of Parent offers to pay for the shares of Common Stock of the Company made generally to the stockholders of the Company (such price being referred to as the "Option Consideration"). Section 2.2 Exercise of Option. (a) Parent may exercise the Option, ------------------ in whole or in part, at any time or from time to time during the period (the "Option Period") from and including the date hereof through and including the earlier of (i) the date that is 120 days after the purchase of shares of common stock of the Company pursuant to the Offer, (ii) the date that is 120 days after the date on which the Merger Agreement is terminated pursuant to Sections 8.1(d)(i) or (e)(i) thereof, (iii) the date that 3 is 30 days after the date on which the Merger Agreement is terminated pursuant to Section 8.1(e)(v), and (iv) the date on which the Merger Agreement is terminated if such termination is other than pursuant to Sections 8.1(d)(i), (e)(i) or (e)(v) thereof; provided, however, that the Option shall terminate -------- ------- with respect to any Subject Shares that are tendered pursuant to the Offer and purchased by Purchaser thereunder. Notwithstanding anything in this Agreement to the contrary, Parent shall be entitled to purchase all Subject Shares in respect of which it shall have exercised the Option in accordance with the terms hereof prior to the expiration of the Option Period, and the expiration of the Option Period shall not affect any rights hereunder which by their terms do not terminate or expire prior to or as of such expiration. (b) Parent shall not demand appraisal rights under Section 262 of the DGCL in respect of any Subject Shares. (c) If Parent wishes to exercise the Option, it shall deliver to Stockholder a written notice (an "Exercise Notice") to that effect which specifies (i) the number of Subject Shares to be purchased from Stockholder and (ii) a date (an "Option Closing Date") not earlier than three business days after the date such Exercise Notice is delivered for the consummation of the purchase and sale of such Subject Shares (an "Option Closing"). If and to the extent necessary to deliver the number of Shares to be purchased pursuant hereto, Stockholder shall exercise vested stock options promptly upon receipt of an Exercise Notice. If the Option Closing cannot be effected on the Option Closing Date specified in the Exercise Notice by reason of a preliminary or final injunction or any other applicable judgment, decree, order, law or regulation, or because any applicable waiting period under the HSR Act shall not have expired or been terminated, (i) Stockholder shall promptly take all such actions as may be reasonably requested by Parent, and shall otherwise fully cooperate with Parent, to cause the elimination of all such impediments to the Option Closing and, (ii) the Option Closing Date specified in the Exercise Notice shall be extended to the fifth business day following the elimination of all such impediments. The place of the Option Closing shall be at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center, San Francisco, California 94111, and the time of the Option Closing shall be 10:00 a.m. (New York Time) on the Option Closing Date. Section 2.3 Payment and Delivery of Certificates. At any Option ------------------------------------ Closing, Parent shall pay to Stockholder the Option Consideration payable in respect of the Subject Shares to be purchased from Stockholder at the Option Closing, and Stockholder shall deliver to Parent such Subject Shares, free and clear of all Liens, with 4 the certificate or certificates evidencing such Subject Shares being duly endorsed for transfer by Stockholder and accompanied by all powers of attorney and/or other instruments necessary to convey valid and unencumbered title thereto to Parent, and shall, to the extent permissible, assign to Parent (pursuant to a written instrument in form and substance satisfactory to Parent) all rights that Stockholder may have to require Company to register such Subject Shares under the Securities Act. Transfer taxes, if any, imposed as a result of the exercise of the Option shall be borne by Stockholder. Section 2.4 Adjustment upon Changes in Capitalization, Etc. In the ---------------------------------------------- event of any change in the capital stock of Company by reason of a stock dividend, split-up, merger, recapitalization, combination, exchange of shares, extraordinary distribution or similar transaction, the type and number or amount of shares, securities or other property subject to the Option, and the Option Consideration payable therefor, shall be adjusted appropriately so that Parent shall receive upon exercise of Option the type and number or amount of shares, securities or property that Parent would have retained and/or been entitled to receive in respect of the Subject Shares if the Option had been exercised immediately prior to such event relating to Company or the record date therefor, as applicable. The provisions of this Section 2.4 shall apply in a like manner to successive stock dividends, split-ups, mergers, recapitalizations, combinations, exchanges of shares or extraordinary distributions or similar transactions. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Certain Representations and Warranties of Stockholder. ----------------------------------------------------- Stockholder represents and warrants to Parent and Purchaser as follows: (a) Ownership. Stockholder is the sole record and beneficial owner of --------- 622,000 Shares and has full and unrestricted power to dispose of and to vote such Shares. Stockholder does not beneficially own any securities of Company on the date hereof other than such Shares. Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Articles I and II hereof, 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 5 with respect to all of the Subject Shares with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power and Authority; Execution and Delivery. Stockholder has all ------------------------------------------- requisite legal capacity, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Stockholder and the consummation by Stockholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming that this Agreement constitutes the valid and binding obligation of the other parties hereto, constitutes a valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (c) No Conflicts. The execution and delivery of this Agreement do ------------ not, and, subject to compliance with the HSR Act and securities laws, to the extent applicable, the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not (i) conflict with or result in any breach of any organizational documents applicable to Stockholder or (ii) conflict with, result in a breach or violation of or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, a right of termination, cancellation, or acceleration of any obligation or a loss of a material benefit under, or require notice to or the consent of any person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding on Stockholder, other than any such conflicts, breaches, violations, defaults, obligations, rights or losses that individually or in the aggregate would not (i) materially impair the ability of Stockholder to perform Stockholder's obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated hereby. (d) No Encumbrances. Except as applicable in connection with the --------------- transactions contemplated by Articles I and II hereof, the Subject Shares and the certificates representing the Subject Shares are now, and at all times during the term hereof will be, held by Stockholder, or by a nominee or custodian for the benefit of Stockholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder or any such encumbrances not caused or created by Stockholder. 6 (e) No Finder's Fees. No broker, investment banker, financial advisor ---------------- or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Stockholder. Section 3.2 Representations and Warranties of Parent and Purchaser. ------------------------------------------------------ Parent and Purchaser hereby represent and warrant to Stockholder that: (a) Power and Authority; Execution and Delivery. Parent and Purchaser ------------------------------------------- each has all requisite legal capacity, corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Purchaser. This Agreement has been duly executed and delivered by Parent and Purchaser and, assuming that this Agreement constitutes the valid and binding obligation of Stockholder, constitutes a valid and binding obligation of Parent and Purchaser, enforceable against Parent and Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (b) No Conflicts. The execution and delivery of this Agreement do ------------ not, and, subject to compliance with the HSR Act, to the extent applicable, the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not (i) conflict with or result in any breach of any organizational documents applicable to Parent or Purchaser or (ii) conflict with, result in a breach or violation of or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, right of termination, cancellation, or acceleration of any obligation or a loss of a material benefit under, or require notice to or the consent of any person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding on Parent or Purchaser, other than any such conflicts, breaches, violations, defaults, obligations, rights or losses that individually or in the aggregate would not (i) impair the ability of Parent and Purchaser to perform their obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated hereby. 7 (c) Purchase Not for Distribution. The Option and the Subject Shares ----------------------------- to be acquired upon exercise of the Option are being and shall be acquired by Parent without a view to public distribution thereof otherwise than in compliance with the Securities Act and applicable state securities laws and shall not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act and in compliance with applicable state securities laws. ARTICLE IV CERTAIN COVENANTS Section 4.1 Certain Covenants of Stockholder. -------------------------------- (a) Restriction on Transfer of Subject Shares, Proxies and ------------------------------------------------------- Noninterference. During the period (the "Restricted Period") from and including - --------------- the date hereof through and including the earlier of (i) the Effective Time and (ii) the end of the Option Period, Stockholder shall not, directly or indirectly: (A) except pursuant to the terms of this Agreement and except for the tender of Subject Shares in the Offer, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Subject Shares; (B) except pursuant to the terms of this Agreement, grant any proxies (other than proxies relating to the election of management's slate of directors at an annual meeting of Company's stockholders, and other routine matters which would not require the filing of a preliminary proxy statement under Rule 14a-6(a) of the Exchange Act), or powers of attorney, deposit any of the Subject Shares into a voting trust or enter into a voting agreement with respect to any of the Subject Shares; or (C) take any action that would make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of Stockholder to perform Stockholder's obligations under this Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby or by the Merger Agreement. 8 (b) Cooperation. Stockholder, in the capacity as a stockholder, shall ----------- cooperate fully with Parent, Purchaser and Company in connection with their respective efforts to fulfill the conditions to the Merger set forth in Article VII of the Merger Agreement. (c) Releases. Stockholder hereby fully, unconditionally and -------- irrevocably releases, effective as of the Effective Time, any and all claims and causes of action that Stockholder has or may have against Company or any of its Subsidiaries or any present or former director, officer, employee or agent of Company or any of its Subsidiaries (collectively, the "Released Parties") arising or resulting from or relating to any alleged breach of fiduciary duty by any officer or director of the Company occurring prior to the Effective Time; provided, however, that such release shall not apply to any currently effective contract or agreement between Stockholder and Company (the "Existing Contracts") or any claim or cause of action arising therefrom. (d) No Solicitation. Stockholder shall not, in the capacity as a --------------- stockholder, respond to any inquiries or the making of any proposal by any person or entity (other than Parent or any affiliate of Parent) concerning any business combination merger, tender offer, exchange offer, sale of assets, sale of shares of capital stock or debt securities or similar transactions involving Company or any Subsidiary, division or operating or principal business unit of Company. If Stockholder, in the capacity as a Stockholder, receives any such inquiry or proposal, then Stockholder shall promptly inform Parent of the existence thereof. Stockholder, in the capacity as a Stockholder, will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. (e) Reliance by Parent. Stockholder understands and acknowledges that ------------------ Parent and Purchaser are entering into, the Merger Agreement in reliance upon Stockholder's execution and delivery of this Agreement. 9 ARTICLE V MISCELLANEOUS Section 5.1 Fees and Expenses. Each party hereto shall pay its own ----------------- expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby. Section 5.2 Amendment; Termination. This Agreement may not be ---------------------- amended except by an instrument in writing signed on behalf of each of the parties hereto. This Agreement and the proxies granted pursuant to Section 1.2 shall terminate at the end of the Option Period. Section 5.3 Extension; Waiver. Any agreement on the part of a party ----------------- to waive any provision of this Agreement, or to extend the time for any performance hereunder, shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. Section 5.4 Entire Agreement; No Third-Party Beneficiaries. This ---------------------------------------------- Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and is not intended to confer upon any person other than the parties any rights or remedies; provided, however, that the provisions of Section 4.1(c) are intended to inure to the benefit of, and to be enforceable by, the Released Parties. This Agreement shall not affect or in any way amend any of the Existing Contracts. Section 5.5 Governing Law. This Agreement shall be governed by, and ------------- construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof. Section 5.6 Notices. All notices, requests, claims, demands and ------- other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, or sent by overnight courier or telecopy (providing proof of delivery) to the address set forth below (or, in each case, at such other address as shall be specified by like notice). 10 If to Parent or Purchaser: Sterling Software, Inc. 300 Crescent Court Suite 1200 Dallas, Texas 75201 Attention: Don J. McDermett, Jr., Esq. Telecopy: (214) 981-1265 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Attention: Blaine V. Fogg, Esq. Telecopy: (212) 735-2000 If to Stockholder: Cisco Systems, Inc. 170 West Tasman Drive San Jose, CA 95134-1706 Attention: Vice President, Legal and Government Affairs Telecopy: (408) 526-5925 with a copy (which shall not constitute notice) to: Brobeck, Phleger & Harrison LLP 2200 Geng Road Two Embarcadero Place Palo Alto, CA 94303 Attention: Therese A. Mrozek, Esq. Telecopy: (650) 496-2885 Section 5.7 Assignment. Neither this Agreement nor any of the ---------- rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by Stockholder without the prior written consent of Parent, and any such assignment or delegation that is not consented to shall be null and void. This Agreement, together with any rights, interests, or obligations of Parent and Purchaser hereunder, may be assigned or delegated, in whole or in part, by Parent and Purchaser 11 without the consent of or any action by Stockholder upon notice by Parent or Purchaser to Stockholder as herein provided. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns (including without limitation any person to whom any Subject Shares are sold, transferred, assigned or passed, whether by operation of law or otherwise). Section 5.8 Confidentiality. Stockholder recognizes that successful --------------- consummation of the transactions contemplated by this Agreement may be dependent upon confidentiality with respect to the matters referred to herein. In this connection, pending public disclosure thereof, Stockholder hereby agrees not to disclose or discuss such matters with anyone not a party to this Agreement (other than its counsel and advisors, if any) without the prior written consent of Parent, except for filings required pursuant to the Exchange Act and the rules and regulations thereunder or disclosures its counsel advises are necessary in order to fulfill its obligations imposed by law, in which event Stockholder shall give notice of such disclosure to Parent as promptly as practicable so as to enable Parent to seek a protective order from a court of competent jurisdiction with respect thereto. Section 5.9 Further Assurances. Stockholder shall execute and ------------------ deliver such other documents and instruments and take such further actions as may be necessary or appropriate or as may be reasonably requested by Parent or Purchaser in order to ensure that Parent and Purchaser receive the full benefit of this Agreement. Section 5.10 Enforcement. 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. Accordingly, 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 the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto (i) shall submit itself to the personal jurisdiction of the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware) in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by motion or other request for 12 leave from any such court, and (iii) shall not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware). Section 5.11 Severability. Whenever possible, each provision or ------------ portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Section 5.12 Descriptive Headings. The descriptive headings used -------------------- herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Section 5.13 Counterparts. This Agreement may be executed in one or ------------ more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each party and delivered to the other parties. [signature page follows] 13 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first written above. STERLING SOFTWARE, INC. By: /s/ Don J. McDermett, Jr. ------------------------------- Name: Don J. McDermett, Jr. Title: Senior Vice President STERLING SOFTWARE (SOUTHWEST), INC. By: /s/ Don J. McDermett, Jr. -------------------------------- Name: Don J. McDermett, Jr. Title: Vice President CISCO SYSTEMS, INC. By: /s/ Dennis Powell -------------------------------- Name: Dennis Powell Title: Vice President and Corporate Controller 14 EX-99.(C)(4) 14 FORM OF STOCKHOLDER AGREEMENT EXHIBIT (C)(4) FORM OF STOCKHOLDER AGREEMENT This STOCKHOLDER AGREEMENT, dated as of March 23, 1999 (this "Agreement"), is made and entered into among Sterling Software, Inc., a Delaware corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and [ ] ("Stockholder"). RECITALS: A. Parent, Purchaser and Interlink Computer Sciences, Inc., a Delaware corporation ("Company"), propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which the Purchaser will merge with and into Company (the "Merger") on the terms and subject to the conditions set forth in the Merger Agreement. Except as otherwise defined herein, terms used herein with initial capital letters have the respective meanings ascribed thereto in the Merger Agreement. B. As of the date hereof, Stockholder beneficially owns and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) [ ] shares of common stock ("Common Stock"), par value $.001 per share ("Shares"), of Company (such Shares, together with any other shares of capital stock of Company the beneficial ownership of which is acquired, or can be acquired upon exercise of vested options at a price equal to or less than the Option Consideration (as defined in Section 2.1), by Stockholder during the period from and including the date hereof through and including the earlier of (i) the Effective Time and (ii) the date that is 120 days after the date on which the Merger Agreement is terminated pursuant to Section 8.1 thereof, are collectively referred to herein as "Subject Shares"). C. Pursuant to the Merger Agreement, Purchaser shall commence a cash tender offer (the "Offer") to purchase at a price of $7.00 per Share all outstanding Shares, including all of the Subject Shares. Stockholder has advised Parent and Purchaser that it intends to tender the Subject Shares in the Offer. D. As a condition and inducement to Parent's and Purchaser's willingness to enter into the Merger Agreement, Parent and Purchaser have requested that Stockholder agree, and Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement and the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I VOTING AGREEMENT Section 1.1 Agreement to Vote Shares. During the period (the ------------------------ "Voting Period") from and including the date hereof through and including the earlier of (i) the date that is 120 days after the purchase of shares of common stock of the Company pursuant to the Offer, (ii) the date that is 120 days after the date on which the Merger Agreement is terminated pursuant to Section 8.1 thereof, or (iii) the termination of this Agreement pursuant to Section 5.2 hereof, at any meeting of the stockholders of Company called to consider and vote upon the adoption of the Merger Agreement (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect of the adoption of the Merger Agreement by written consent of stockholders of Company, Stockholder shall vote or cause to be voted (including by written consent, if applicable) all of the Subject Shares, now owned or hereafter acquired, in favor of the adoption of the Merger Agreement and in favor of any other matter necessary for the consummation of the transactions contemplated by the Merger Agreement and considered and voted upon at any such meeting or made the subject of any such written consent, as applicable. During the Voting Period, at any meeting of the stockholders of Company called to consider and vote upon any Other Proposal (as hereinafter defined) (and at any and all postponements and adjournments thereof), and in connection with any action to be taken in respect of any Other Proposal by written consent of stockholders of Company, Stockholder shall vote or cause to be voted (including by written consent, if applicable) all of the Subject Shares against such Other Proposal. For purposes of this Agreement, the term "Other Proposal" means any (a) Acquisition Proposal (as defined in the Merger Agreement) or (b) other action which is intended or could reasonably be expected to materially impede, interfere with, delay or materially and adversely affect the consummation of the Merger or any of the other transactions 2 contemplated by the Merger Agreement or this Agreement; provided, however, that neither the Merger nor any other transaction contemplated by the Merger Agreement to be consummated by Company, Parent or Purchaser in connection with the Merger shall constitute an Other Proposal. Stockholder shall not enter into any agreement or understanding with any person or entity the effect of which would be violative of the provisions and agreements contained in this Section 1.1. Section 1.2 Irrevocable Proxy. ----------------- (a) Grant of Proxy. STOCKHOLDER HEREBY APPOINTS PARENT AND ANY -------------- DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND ATTORNEY-IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE GENERAL CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO VOTE OR ACT BY WRITTEN CONSENT DURING THE VOTING PERIOD WITH RESPECT TO THE SUBJECT SHARES IN ACCORDANCE WITH SECTION 1.1 HEREOF. THIS PROXY IS GIVEN TO SECURE THE PERFORMANCE OF THE DUTIES OF STOCKHOLDER UNDER THIS AGREEMENT. STOCKHOLDER AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY. (b) Other Proxies Revoked. Stockholder represents that any --------------------- proxies heretofore given in respect of the Subject Shares are not irrevocable, and that all such proxies are hereby revoked. ARTICLE II OPTION Section 2.1 Grant of Option. Stockholder hereby grants to --------------- Parent an irrevocable option (the "Option") to purchase the Subject Shares on the terms and subject to the conditions set forth herein, at a price per Subject Share equal to $7.00 in cash or any higher price that Parent or any controlled affiliate of Parent offers to pay for the shares of Common Stock of the Company made generally to the stockholders of the Company (such price being referred to as the "Option Consideration"). 3 Section 2.2 Exercise of Option. (a) Parent may exercise the ------------------ Option, in whole or in part, at any time or from time to time during the period (the "Option Period") from and including the date hereof through and including the earlier of (i) the date that is 120 days after the purchase of shares of common stock of the Company pursuant to the Offer, or (ii) the date that the Merger Agreement is terminated pursuant to Section 8.1 thereof, provided, -------- however, that the Option shall terminate with respect to any Subject Shares that - ------- are tendered pursuant to the Offer and purchased by Purchaser thereunder. Notwithstanding anything in this Agreement to the contrary, Parent shall be entitled to purchase all Subject Shares in respect of which it shall have exercised the Option in accordance with the terms hereof prior to the expiration of the Option Period, and the expiration of the Option Period shall not affect any rights hereunder which by their terms do not terminate or expire prior to or as of such expiration. (b) Parent shall not demand appraisal rights under Section 262 of the DGCL in respect of any Subject Shares. (c) If Parent wishes to exercise the Option, it shall deliver to Stockholder a written notice (an "Exercise Notice") to that effect which specifies (i) the number of Subject Shares to be purchased from Stockholder and (ii) a date (an "Option Closing Date") not earlier than three business days after the date such Exercise Notice is delivered for the consummation of the purchase and sale of such Subject Shares (an "Option Closing"). If and to the extent necessary to deliver the number of Shares to be purchased pursuant hereto, Stockholder shall exercise vested stock options promptly upon receipt of an Exercise Notice. If the Option Closing cannot be effected on the Option Closing Date specified in the Exercise Notice by reason of a preliminary or final injunction or any other applicable judgment, decree, order, law or regulation, or because any applicable waiting period under the HSR Act shall not have expired or been terminated, (i) Stockholder shall promptly take all such actions as may be reasonably requested by Parent, and shall otherwise fully cooperate with Parent, to cause the elimination of all such impediments to the Option Closing and (ii) the Option Closing Date specified in the Exercise Notice shall be extended to the fifth business day following the elimination of all such impediments. The place of the Option Closing shall be at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center, San Francisco, California 94111, and the time of the Option Closing shall be 10:00 a.m. (New York Time) on the Option Closing Date. 4 Section 2.3 Payment and Delivery of Certificates. At any ------------------------------------ Option Closing, Parent shall pay to Stockholder the Option Consideration payable in respect of the Subject Shares to be purchased from Stockholder at the Option Closing, and Stockholder shall deliver to Parent such Subject Shares, free and clear of all Liens, with the certificate or certificates evidencing such Subject Shares being duly endorsed for transfer by Stockholder and accompanied by all powers of attorney and/or other instruments necessary to convey valid and unencumbered title thereto to Parent, and shall, to the extent permissible, assign to Parent (pursuant to a written instrument in form and substance satisfactory to Parent) all rights that Stockholder may have to require Company to register such Subject Shares under the Securities Act. Transfer taxes, if any, imposed as a result of the exercise of the Option shall be borne by Stockholder. Section 2.4 Adjustment upon Changes in Capitalization, Etc. In ---------------------------------------------- the event of any change in the capital stock of Company by reason of a stock dividend, split-up, merger, recapitalization, combination, exchange of shares, extraordinary distribution or similar transaction, the type and number or amount of shares, securities or other property subject to the Option, and the Option Consideration payable therefor, shall be adjusted appropriately so that Parent shall receive upon exercise of Option the type and number or amount of shares, securities or property that Parent would have retained and/or been entitled to receive in respect of the Subject Shares if the Option had been exercised immediately prior to such event relating to Company or the record date therefor, as applicable. The provisions of this Section 2.4 shall apply in a like manner to successive stock dividends, split-ups, mergers, recapitalizations, combinations, exchanges of shares or extraordinary distributions or similar transactions. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Certain Representations and Warranties of Stock ----------------------------------------------- holder. Stockholder represents and warrants to Parent and Purchaser as follows: - ------ (a) Ownership. Stockholder is the sole record and beneficial --------- owner of [ ] Shares and has full and unrestricted power to dispose of and to vote such Shares. Stockholder is the beneficial owner of options to purchase [ ] Shares of which [ ] options to purchase Shares are fully vested. Stockholder 5 does not beneficially own any securities of Company on the date hereof other than such Shares. Stockholder has sole voting power and sole power to issue instructions with respect to the matters set forth in Articles I and II hereof, 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 Subject Shares with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (b) Power and Authority; Execution and Delivery. Stockholder ------------------------------------------- has all requisite legal capacity, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Stockholder and the consummation by Stockholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Stockholder. This Agreement has been duly executed and delivered by Stockholder and, assuming that this Agreement constitutes the valid and binding obligation of the other parties hereto, constitutes a valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (c) No Conflicts. The execution and delivery of this Agreement ------------ do not, and, subject to compliance with the HSR Act and securities laws, to the extent applicable, the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not (i) conflict with or result in any breach of any organizational documents applicable to Stockholder or (ii) conflict with, result in a breach or violation of or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, a right of termination, cancellation, or acceleration of any obligation or a loss of a material benefit under, or require notice to or the consent of any person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding on Stockholder, other than any such conflicts, breaches, violations, defaults, obligations, rights or losses that individually or in the aggregate would not (i) materially impair the ability of Stockholder to perform Stockholder's obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated hereby. (d) No Encumbrances. Except as applicable in connection with --------------- the transactions contemplated by Articles I and II hereof, the Subject Shares and the 6 certificates representing the Subject Shares are now, and at all times during the term hereof will be, held by Stockholder, or by a nominee or custodian for the benefit of Stockholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder or any such encumbrances not caused or created by Stockholder. (e) No Finder's Fees. No broker, investment banker, financial ---------------- advisor or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Stockholder. Section 3.2 Representations and Warranties of Parent and -------------------------------------------- Purchaser. Parent and Purchaser hereby represent and warrant to Stockholder - --------- that: (a) Power and Authority; Execution and Delivery. Parent and ------------------------------------------- Purchaser each has all requisite legal capacity, corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Purchaser. This Agreement has been duly executed and delivered by Parent and Purchaser and, assuming that this Agreement constitutes the valid and binding obligation of Stockholder, constitutes a valid and binding obligation of Parent and Purchaser, enforceable against Parent and Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (b) No Conflicts. The execution and delivery of this Agreement ------------ do not, and, subject to compliance with the HSR Act, to the extent applicable, the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not (i) conflict with or result in any breach of any organizational documents applicable to Parent or Purchaser or (ii) conflict with, result in a breach or violation of or default (with or without notice or lapse of time or both) under, or give rise to a material obligation, right of termination, cancellation, or acceleration of any obligation or a loss of a material benefit under, or require notice to or the consent of any person under any agreement, instrument, undertaking, law, rule, regulation, judgment, order, injunction, decree, determination or award binding 7 on Parent or Purchaser, other than any such conflicts, breaches, violations, defaults, obligations, rights or losses that individually or in the aggregate would not (i) impair the ability of Parent and Purchaser to perform their obligations under this Agreement or (ii) prevent or delay the consummation of any of the transactions contemplated hereby. (c) Purchase Not for Distribution. The Option and the Subject ----------------------------- Shares to be acquired upon exercise of the Option are being and shall be acquired by Parent without a view to public distribution thereof otherwise than in compliance with the Securities Act and applicable state securities laws and shall not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act and in compliance with applicable state securities laws. ARTICLE IV CERTAIN COVENANTS Section 4.1 Certain Covenants of Stockholder. -------------------------------- (a) Restriction on Transfer of Subject Shares, Proxies and ------------------------------------------------------ Noninterference. During the period (the "Restricted Period") from and including - --------------- the date hereof through and including the earlier of (i) the Effective Time and (ii) the end of the Option Period (or, in the case of clause (B), the end of the Voting Period), Stockholder shall not, directly or indirectly: (A) except pursuant to the terms of this Agreement and except for the tender of Subject Shares in the Offer, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of the Subject Shares; (B) except pursuant to the terms of this Agreement, grant any proxies (other than proxies relating to the election of management's slate of directors at an annual meeting of Company's stockholders, and other routine matters which would not require the filing of a preliminary proxy statement under Rule 14a-6(a) of the Exchange Act), or powers of attorney, deposit any of the Subject Shares into a voting trust or enter into a voting agreement with respect to any of the Subject Shares; or (C) take any action that would make any representation or warranty contained herein untrue or incorrect or have the effect of impairing the ability of Stockholder to perform Stockholder's obligations under this 8 Agreement or preventing or delaying the consummation of any of the transactions contemplated hereby or by the Merger Agreement. (b) Cooperation. Stockholder, in the capacity as a ----------- stockholder, shall cooperate fully with Parent, Purchaser and Company in connection with their respective efforts to fulfill the conditions to the Merger set forth in Article VII of the Merger Agreement. (c) Releases. Stockholder hereby fully, unconditionally and -------- irrevocably releases, effective as of the Effective Time, any and all claims and causes of action that Stockholder has or may have against Company or any of its Subsidiaries or any present or former director, officer, employee or agent of Company or any of its Subsidiaries (collectively, the "Released Parties") arising or resulting from or relating to any act, omission, event or occurrence prior to the Effective Time; provided, however, that such release shall not apply to any claim or cause of action insofar as it relates to any entitlement to indemnification, or to compensation or benefits earned or accrued by or for the benefit of Stockholder prior to the Effective Time in respect of services performed by Stockholder to Company as a director, officer, consultant or employee of Company. (d) No Solicitation. Stockholder shall not, in the capacity as --------------- a stockholder, respond to any inquiries or the making of any proposal by any person or entity (other than Parent or any affiliate of Parent) concerning any business combination merger, tender offer, exchange offer, sale of assets, sale of shares of capital stock or debt securities or similar transactions involving Company or any Subsidiary, division or operating or principal business unit of Company. If Stockholder, in the capacity as a Stockholder, receives any such inquiry or proposal, then Stockholder shall promptly inform Parent of the existence thereof. Stockholder, in the capacity as a Stockholder, will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. (e) Reliance by Parent. Stockholder understands and ------------------ acknowledges that Parent and Purchaser are entering into, the Merger Agreement in reliance upon Stockholder's execution and delivery of this Agreement. 9 ARTICLE V MISCELLANEOUS Section 5.1 Fees and Expenses. Each party hereto shall pay its ----------------- own expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby. Section 5.2 Amendment; Termination. This Agreement may not be ---------------------- amended except by an instrument in writing signed on behalf of each of the parties hereto. This Agreement and the proxies granted pursuant to Section 1.2 shall terminate immediately following (i) termination of the Merger Agreement pursuant to Section 8.1(a) thereof, provided at the time of such termination the parties intend to abandon the transactions contemplated by the Merger Agreement or (ii) termination of the Merger Agreement pursuant to Section 8.1(d)(iv) thereof, provided at the time of such termination Company is not in breach of the Merger Agreement or (iii) any termination of the Merger Agreement solely because the condition contained in Section 7.1(d) of the Merger Agreement is incapable of being fulfilled. Section 5.3 Extension; Waiver. Any agreement on the part of a ----------------- party to waive any provision of this Agreement, or to extend the time for any performance hereunder, shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. Section 5.4 Entire Agreement; No Third-Party Beneficiaries. ---------------------------------------------- This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and is not intended to confer upon any person other than the parties any rights or remedies; provided, however, that the provisions of Section 4.1(c) are intended to inure to the benefit of, and to be enforceable by, the Released Parties. Section 5.5 Governing Law. This Agreement shall be governed ------------- by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflict of laws thereof. 10 Section 5.6 Notices. All notices, requests, claims, demands ------- and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, or sent by overnight courier or telecopy (providing proof of delivery) to the address set forth below (or, in each case, at such other address as shall be specified by like notice). If to Parent or Purchaser: Sterling Software, Inc. 300 Crescent Court, Suite 1200 Dallas, Texas 75201 Attention: Don J. McDermett, Jr., Esq. Telecopy: (214) 981-1265 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Attention: Blaine V. Fogg, Esq. Telecopy: (212) 735-2000 If to Stockholder: with a copy (which shall not constitute notice) to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304 Attention: Thomas C. DeFilipps, Esq. Telecopy: (650) 493-6811 Section 5.7 Assignment. Neither this Agreement nor any of the ---------- rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by Stockholder without the prior written consent of Parent, and 11 any such assignment or delegation that is not consented to shall be null and void. This Agreement, together with any rights, interests, or obligations of Parent and Purchaser hereunder, may be assigned or delegated, in whole or in part, by Parent and Purchaser without the consent of or any action by Stockholder upon notice by Parent or Purchaser to Stockholder as herein provided. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns (including without limitation any person to whom any Subject Shares are sold, transferred, assigned or passed, whether by operation of law or otherwise). Section 5.8 Confidentiality. Stockholder recognizes that --------------- successful consummation of the transactions contemplated by this Agreement may be dependent upon confidentiality with respect to the matters referred to herein. In this connection, pending public disclosure thereof, Stockholder hereby agrees not to disclose or discuss such matters with anyone not a party to this Agreement (other than its counsel and advisors, if any) without the prior written consent of Parent, except for filings required pursuant to the Exchange Act and the rules and regulations thereunder or disclosures its counsel advises are necessary in order to fulfill its obligations imposed by law, in which event Stockholder shall give notice of such disclosure to Parent as promptly as practicable so as to enable Parent to seek a protective order from a court of competent jurisdiction with respect thereto. Section 5.9 Further Assurances. Stockholder shall execute and ------------------ deliver such other documents and instruments and take such further actions as may be necessary or appropriate or as may be reasonably requested by Parent or Purchaser in order to ensure that Parent and Purchaser receive the full benefit of this Agreement. Section 5.10 Enforcement. 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. Accordingly, 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 the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware), this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto (i) shall submit itself to the personal jurisdiction of the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appro- 12 priate state or federal court in New Castle County in the State of Delaware) in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (iii) shall not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the Court of Chancery in and for New Castle County in the State of Delaware (or, if such court lacks subject matter jurisdiction, any appropriate state or federal court in New Castle County in the State of Delaware). Section 5.11 Severability. Whenever possible, each provision ------------ or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Section 5.12 Descriptive Headings. The descriptive headings -------------------- used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. Section 5.13 Counterparts. This Agreement may be executed in ------------ one or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each party and delivered to the other parties. [signature page follows] 13 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first written above. STERLING SOFTWARE, INC. By: -------------------------- Name: Don J. McDermett, Jr. Title: Senior Vice President STERLING SOFTWARE (SOUTHWEST), INC. By: ___________________________ Name: Don J. McDermett, Jr. Title: Vice President ______________________________ [ ] 14 ANNEX Share Ownership for Stockholders who executed Stockholder Agreements
SHARES ISSUABLE OPTIONS VESTED AS OUTSTANDING PURSUANT TO OF MARCH 23, STOCKHOLDER SHARES OUTSTANDING OPTIONS 1999 - ------------------------------------ --------------- ------------------------- --------------------- Directors and Officers: Ralph B. Godfrey 0 18,750 4,688 Andrew I. Fillat 0 26,250 10,001 Ronald W. Braniff 21,000 74,250 58,001 Augustus J. Berkeley 17,522 412,300 129,455 William C. Jones 13,746 60,000 13,938 Christopher A. Markle 13,934 47,500 21,043 Victor C. Langford 15,000 75,000 18,752 James A. Barth 19,352 90,000 25,714 Michael J. Satterwhite 1,282 50,000 22,917 Other Stockholders: CISCO Systems, Inc. 622,000 0 0 (Advent International Entities) Adtel, L.P. 38,629 0 0 Adventact, L.P. 21,461 0 0 Advent International Investors II L.P. 861 0 0 Adwest L.P. 17,169 0 0 Global Private Equity II L.P. 322,029 0 0 Golden Gate Development and Investment L.P. 47,083 0 0 --------------- ----------------------- --------------------- 1,171,068 854,050 304,509
15 EX-99.(C)(5) 15 EXCLUSIVITY AGREEMENT EXHIBIT (C)(5) STERLING SOFTWARE, INC. 300 Crescent Court Suite 1200 Dallas, Texas 75201 March 16, 1999 Interlink Computer Sciences, Inc. 47370 Fremont Boulevard Fremont, California 94538 Attn: A.J. Berkeley, President Re: Potential Acquisition Transaction --------------------------------- Gentlemen: This letter is to confirm certain agreements we have reached regarding the potential acquisition (the "Potential Acquisition") by Sterling Software, Inc. ("Sterling Software") of Interlink Computer Sciences, Inc. ("Interlink"). As a material inducement to Sterling Software's continuation of negotiations with Interlink with respect to the terms and conditions of the Potential Acquisition, and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Exclusivity Period. Upon the execution of this letter ------------------ agreement and continuing until the earlier of (a) 6:00 p.m. California time on March 25, 1999 and (b) the execution of a definitive agreement governing the terms and conditions of the Potential Acquisition (such period, the "Exclusivity Period"), Interlink shall, shall cause its subsidiaries to, and shall use reasonable efforts to cause all of its or their affiliates, officers, directors, employees, agents and representatives (including without limitation any investment banker, financial advisor, attorney and accountant retained by Interlink or any of its subsidiaries or affiliates) to, discontinue any solicitation efforts, discussions or negotiations with respect to any Acquisition Proposal (as hereinafter defined) with any person or entity other than Sterling Software. During the Exclusivity Period, Interlink shall not, and shall not authorize or permit any of its subsidiaries or any of its or their affiliates, officers, directors, employees, agents or representatives (including without limitations any investment banker, financial advisor, attorney or accountant retained by Interlink or any of its subsidiaries or affiliates) to, directly or indirectly, initiate, solicit or intentionally encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries, any expression of interest or the making of any proposal that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal, or enter into or maintain or continue discussions or negotiate with any person in furtherance of such inquiries or to seek to obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal. Interlink Computer Sciences, Inc. March 16, 1999 Page 2 Interlink shall notify Sterling Software immediately if any such inquiries, expressions of interest or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with Interlink or any of its subsidiaries, affiliates, agents or representatives; provided, however, that Interlink's obligation under this and the immediately succeeding two sentences shall only be applicable to such of the foregoing as (i) involve any items of non-cash consideration other than securities for which there is an existing public market ("Marketable Securities"), or (ii) involve aggregate consideration consisting of cash and/or Marketable Securities in exchange for all of Interlink's outstanding shares of common stock, such consideration having a value per share of $7.00 or greater (each, a "Superior Proposal"). Such notice shall include the identity of the party making, and the terms of (including delivery of copies thereof), any inquiry or proposal relating to a Superior Proposal. Interlink will keep Sterling Software fully informed of the status of, and any modification to, any Superior Proposal. For purposes of this letter agreement, "Acquisition Proposal" means an inquiry, offer, proposal or other indication of interest (other than by Sterling Software in connection with the Potential Acquisition) regarding any of the following matters involving Interlink: (i) any merger, consolidation, share exchange, tender or exchange offer, recapitalization, business combination or other similar transaction immediately following the consummation of which, the stockholders of Interlink immediately prior thereto would hold less than 80% of the voting stock of the surviving or resulting entity; (ii) any acquisitions of voting stock or other securities issued by Interlink or any of its subsidiaries representing more than 80% of the outstanding voting stock of Interlink or any of its subsidiaries; (iii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or substantially all of the assets of Interlink and its subsidiaries, taken as a whole, in a single transaction or series of related transactions; or (iv) any agreement in principle or other agreement to engage in any of the foregoing. 2. Certain Obligations Only on Definitive Agreement. No agreement ------------------------------------------------ providing for the Potential Acquisition shall be deemed to exist unless and until definitive documentation providing therefor has been executed and delivered by Sterling Software and Interlink (and/or any other appropriate party or parties thereto). Unless and until such definitive documentation concerning a Potential Acquisition has been executed, neither Sterling Software nor any of our representatives will have any liability to Interlink with respect to a Potential Acquisition, whether by virtue of this letter agreement or otherwise. 3. Non-Solicitation of Employees. Sterling Software agrees that for ----------------------------- a period of one year from the date of this letter agreement, it will not, directly or Interlink Computer Sciences, Inc. March 16, 1999 Page 3 indirectly, solicit for employment or attempt to hire or recruit any employee of Interlink (or any subsidiary thereof) with whom Sterling Software has had contact or who became known to Sterling Software in connection with Sterling Software's consideration of the Potential Acquisition. Notwithstanding anything to the contrary herein, Sterling Software shall not be deemed to have breached or violated this paragraph 3 solely (a) as a result of generic employment advertising by Sterling Software (including, without limitation, "open position" and similar listings in Sterling Software's various World Wide Web pages), (b) as a result of the efforts of an executive recruitment or similar firm generally engaged to recruit employees for Sterling Software (without targeting of Interlink or its specific employees) or (c) if any employee of Interlink (or any subsidiary thereof) approaches and obtains employment with Sterling Software after the date hereof solely as a result of any advertising or recruitment effort contemplated in clause (a) or (b) above. 4. General Provisions. No failure or delay in exercising any right ------------------ 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. This letter agreement shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns, although neither party may assign any of its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the sole and absolute discretion of such other party. Money damages would not be a sufficient remedy for any breach or violation of the terms of this letter agreement and, accordingly, Sterling Software or Interlink, as the case may be, shall be entitled to specific performance and injunctive relief as remedies for any breach or violation, in addition to all other remedies available at law or equity. This letter agreement may not be amended except by virtue of a written instrument executed by both of the parties hereto. This letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof. Interlink Computer Sciences, Inc. March 16, 1999 Page 4 Please sign and return one copy of this letter agreement to evidence your acceptance of and agreement to the foregoing, whereupon this letter agreement will become the binding obligation of each of the undersigned subject to the terms hereof. Very truly yours, STERLING SOFTWARE, INC. By: /s/ Don J. McDermett, Jr. ------------------------------ Don J. McDermett, Jr. Senior Vice President and General Counsel Accepted and agreed to as of the date first written above: INTERLINK COMPUTER SCIENCES, INC. By: /s/ James A. Barth -------------------------------------- James A. Barth Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----