<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
COMPUTER SCIENCES CORPORATION
(Name of Subject Company)
------------------------------
CAI COMPUTER SERVICES CORP.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
(Bidder)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
(Title of Class of Securities)
20536310-4
(CUSIP Number of Class of Securities)
SANJAY KUMAR
PRESIDENT AND CHIEF OPERATING OFFICER
C/O COMPUTER ASSOCIATES INTERNATIONAL, INC.
ONE COMPUTER ASSOCIATES PLAZA
ISLANDIA, NEW YORK 11788-7000
TELEPHONE: (516) 342-5224
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
------------------------------
COPIES TO:
SCOTT F. SMITH, ESQ.
HOWARD, DARBY & LEVIN
1330 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 841-1000
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- -------------------------------- --------------------------------
<S> <C>
$9,111,012,624 $1,822,203
</TABLE>
* Estimated for purposes of calculating the amount of filing fee only. The
amount assumes the purchase of 84,361,228 shares of common stock, par value
$1.00 per share, including associated Preferred Stock Purchase Rights (the
"Shares"), at a price per Share of $108 in cash. Such number of Shares
represents 77,952,347 Shares outstanding as of December 26, 1997, as
reported in the subject company's Form 10-Q for the fiscal quarter ended
December 26, 1997 (less 170,000 Shares owned by Computer Associates
International Inc.), and 6,578,881 Shares issuable upon exercise of options
outstanding at March 28, 1997, as reported in the subject company's Form
10-K for the fiscal year ended March 28, 1997.
/ / Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<CAPTION>
Amount Previously Paid: None.
<S> <C>
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
</TABLE>
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- --------------------------------------------------------------------------------
Page 1 of 8 Pages
Exhibit Index begins on Page 8
<PAGE>
14D-1
CUSIP NO. 20536310-4 PAGE 2 OF 8 PAGES
<TABLE>
<C> <S>
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CAI Computer Services Corp.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF, BK, WC, OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) OR 2(f) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
170,000 Shares*
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.2%*
10. TYPE OF REPORTING PERSON CO
</TABLE>
- ------------------------
* On January 21 and 23, 1998, Computer Associates purchased an aggregate of
170,000 shares in open market purchases for an aggregate purchase price per
Share of approximately $14.8 million (or an average purchase price per Share
of approximately $86.88), in each case including commissions. Such purchases
are reflected in Rows 7 and 9 of the table above. Such purchases are more
fully described in Section 9 ("Certain Information Concerning the Company
and Computer Associates") of the Offer to Purchase.
2
<PAGE>
14D-1
CUSIP NO. 20536310-4 PAGE 3 OF 8 PAGES
<TABLE>
<C> <S>
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Computer Associates International, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
BK, WC, OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(e) OR 2(f) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
170,000 Shares*
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN
SHARES
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.2%*
10. TYPE OF REPORTING PERSON CO
</TABLE>
- ------------------------
* On January 21 and 23, 1998, Computer Associates purchased an aggregate of
170,000 shares in open market purchases for an aggregate purchase price per
Share of approximately $14.8 million (or an average purchase price per Share
of approximately $86.88), in each case including commissions. Such purchases
are reflected in Rows 7 and 9 of the table above. Such purchases are more
fully described in Section 9 ("Certain Information Concerning the Company
and Computer Associates") of the Offer to Purchase.
3
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Computer Sciences Corporation, a
Nevada corporation (the "Company"), and the address of its principal executive
offices is 2100 East Grand Avenue, El Segundo, California 90245.
(b) This Statement on Schedule 14D-1 relates to the offer by Merger
Subsidiary (defined below), to purchase all outstanding shares of Common Stock,
par value $1.00 per share, including associated Series A Junior Participating
Preferred Stock Purchase Rights (the "Shares"), of the Company at $108 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase (the "Offer to Purchase") and in the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2) (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). On February 2, 1998, the Company publicly
announced a two-for-one split of the Shares in the form of a 100% stock dividend
thereon (the "Stock Split Dividend"). The Company further announced that the
Stock Split Dividend will be payable on March 23, 1998 to holders of record of
Shares on March 2, 1998. The effect of the Stock Split Dividend on the terms of
the Offer is described in more detail in the Offer to Purchase. The information
set forth in the Introduction to the Offer to Purchase (the "Introduction") is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement on Schedule 14D-1 is filed by CAI Computer
Services Corp. ("Merger Subsidiary") and Computer Associates International, Inc.
("Computer Associates"), each of which is a Delaware corporation. Merger
Subsidiary is a wholly owned subsidiary of Computer Associates. Information
concerning the principal business and the addresses of the principal offices of
Merger Subsidiary and Computer Associates is set forth in Section 9 ("Certain
Information Concerning the Purchaser and Computer Associates") of the Offer to
Purchase, and is incorporated herein by reference. The names, business
addresses, present principal occupations or employments, material occupations,
positions, offices or employment during the last five years and citizenship of
the directors and executive officers of Merger Subsidiary and Computer
Associates are set forth in Schedule I to the Offer to Purchase and are
incorporated herein by reference.
(e) and (f) None of Merger Subsidiary, Computer Associates or, to the best
knowledge of such corporations, any of the persons listed on Schedule I to the
Offer of Purchase, has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and Computer Associates"),
Section 10 ("Background of the Offer; Contacts with the Company"), Section 11
("Purpose of the Offer and the Proposed Merger; Plans for the Company") and
Schedule I to the Offer to Purchase, is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 12 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
4
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction and Section 11
("Purpose of the Offer and the Proposed Merger; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Possible Effects of the
Offer on the Market for the Shares; Stock Exchange 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 Section 9 ("Certain Information
Concerning the Purchaser and Computer Associates") of the Offer to Purchase 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 the Purchaser and Computer Associates"), Section 10
("Background of the Offer; Contacts with the Company") and Section 11 ("Purpose
of the Offer and the Proposed Merger; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 ("Certain Fees and Expenses") of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Computer Associates") of the Offer to Purchase, and such
information and the consolidated financial statements of Computer Associates in
Computer Associates' Annual Report on Form 10-K for the fiscal year ended March
31, 1997 and Quarterly Report for the nine months ended December 31, 1997,
respectively, are incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("Purpose of the Offer and the
Proposed Merger; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
(b)-(d) The information set forth in Section 15 ("Certain Legal Matters;
Required Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
(e) The information set forth in the Introduction and Section 10
("Background of the Offer; Contacts with the Company") of the Offer to Purchase
is incorporated herein by reference.
(f) The information set forth in (i) the Offer to Purchase and (ii) the
Letter of Transmittal is incorporated herein by reference.
5
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
(a)(1) Offer to Purchase dated February 17, 1998.
<S> <C>
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Text of press release issued by Computer Associates dated February 11, 1998.
(a)(7) Text of press release issued by Computer Associates dated February 13, 1998.
(a)(8) Text of press release issued by Computer Associates dated February 16, 1998.
(a)(9) Text of press release issued by Computer Associates dated February 17, 1998.
(a)(10) Other material made available on Computer Associates' World Wide Web (Internet)
Home Page (http://www.cai.com) on February 16, 1998.
(a)(11) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
(a)(12) Form of summary advertisement dated February 17, 1998.
(b)(1) Commitment Letter dated February 15, 1998.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: February 17, 1998
CAI COMPUTER SERVICES CORP.
BY /S/ PETER SCHWARTZ
-----------------------------------------
Name: Peter Schwartz
Title: Vice President and Treasurer
COMPUTER ASSOCIATES INTERNATIONAL, INC.
BY /S/ PETER SCHWARTZ
-----------------------------------------
Name: Peter Schwartz
Title: Senior Vice President and
Chief Financial Officer
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase dated February 17, 1998.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(6) Text of press release issued by Computer Associates dated February 11, 1998.
(a)(7) Text of press release issued by Computer Associates dated February 13, 1998.
(a)(8) Text of press release issued by Computer Associates dated February 16, 1998.
(a)(9) Text of press release issued by Computer Associates dated February 17, 1998.
(a)(10) Other material made available on Computer Associates' World Wide Web (Internet) Home Page
(http://www.cai.com) on February 16, 1998.
(a)(11) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(12) Form of summary advertisement dated February 17, 1998.
(b)(1) Commitment Letter dated February 15, 1998.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
8
<PAGE>
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COMPUTER SCIENCES CORPORATION
AT
$108 NET PER SHARE
BY
CAI COMPUTER SERVICES CORP.
A WHOLLY OWNED SUBSIDIARY OF
COMPUTER ASSOCIATES INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 16, 1998, UNLESS THE OFFER IS EXTENDED
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES,
INCLUDING THE PREFERRED STOCK PURCHASE RIGHTS ASSOCIATED THEREWITH (THE
"RIGHTS"), WHICH, WHEN ADDED TO THE NUMBER OF SHARES (AND RIGHTS) BENEFICIALLY
OWNED BY CAI COMPUTER SERVICES CORP. (THE "PURCHASER") AND ITS AFFILIATES,
CONSTITUTES A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES (AND RIGHTS) OF
COMPUTER SCIENCES CORPORATION (THE "COMPANY") ON A FULLY DILUTED BASIS, (2) THE
RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN
INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER
(AS HEREINAFTER DEFINED), (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE NEVADA CONTROL SHARE ACQUISITION STATUTE IS INAPPLICABLE TO
THE OFFER AND THE PROPOSED MERGER AND (4) THE PURCHASER BEING SATISFIED, IN ITS
SOLE DISCRETION, THAT THE NEVADA BUSINESS COMBINATION STATUTE IS INAPPLICABLE TO
THE OFFER AND THE PROPOSED MERGER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15.
THE OFFER IS NOT CONDITIONED ON OBTAINING FINANCING.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
February 17, 1998
<PAGE>
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares, and the associated Rights, should either (a) complete and sign the
Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together with
the certificate(s) representing tendered Shares and, if separate, the
certificate(s) representing the associated Rights, and any other required
documents, to the Depositary or tender such Shares (and associated Rights, if
applicable) pursuant to the procedures for book-entry transfer set forth in
Section 3 or (b) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him. A stockholder
whose Shares and, if applicable, associated Rights 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 if he
desires to tender such Shares and, if applicable, the associated Rights. Unless
and until the Purchaser declares that the Rights Condition (as hereinafter
defined) is satisfied, stockholders will be required to tender one associated
Right for each Share tendered in order to effect a valid tender of such Share.
A stockholder who desires to tender his Shares and associated Rights, and
whose certificates representing such Shares (and, if applicable, associated
Rights) are not immediately available or who cannot comply with the procedures
for book-entry transfer on a timely basis may tender such Shares (and, if
applicable, associated Rights) by following the procedures for guaranteed
delivery set forth in Section 3.
ON FEBRUARY 2, 1998, THE COMPANY PUBLICLY ANNOUNCED A TWO-FOR-ONE SPLIT OF
THE SHARES (THE "ANNOUNCED STOCK SPLIT") IN THE FORM OF A 100% STOCK DIVIDEND
THEREON (THE "STOCK SPLIT DIVIDEND"). THE COMPANY FURTHER ANNOUNCED THAT THE
STOCK SPLIT DIVIDEND WILL BE PAYABLE ON MARCH 23, 1998 TO HOLDERS OF SHARES OF
RECORD ON MARCH 2, 1998. UNLESS THE COMPANY RESCINDS THE ANNOUNCED STOCK SPLIT
AND THE STOCK SPLIT DIVIDEND PRIOR TO THE RECORD DATE THEREFOR AND THE PURCHASER
DETERMINES, IN ITS SOLE DISCRETION, THAT THE HOLDERS OF SHARES HAVE NO FURTHER
RIGHTS WITH RESPECT TO THE ANNOUNCED STOCK SPLIT AND THE STOCK SPLIT DIVIDEND,
THE PURCHASER, IN ITS SOLE DISCRETION, MAY MAKE SUCH ADJUSTMENTS AS IT DEEMS
APPROPRIATE IN THE PURCHASE PRICE AND OTHER TERMS OF THE OFFER, INCLUDING
(WITHOUT LIMITATION) IN THE NUMBER OF SECURITIES REQUIRED TO SATISFY THE MINIMUM
CONDITION (AS HEREINAFTER DEFINED) AND REQUIRING TENDERING STOCKHOLDERS
RECEIVING THE STOCK SPLIT DIVIDEND, IF ANY, TO RECEIVE AND HOLD SUCH DIVIDEND
FOR THE ACCOUNT OF THE PURCHASER AND PROMPTLY REMIT AND TRANSFER SUCH DIVIDEND
TO THE DEPOSITARY FOR THE ACCOUNT OF THE PURCHASER. IF THE EXPIRATION DATE (AS
HEREINAFTER DEFINED) OCCURS PRIOR TO MARCH 23, 1998, THE PURCHASER INTENDS TO
REQUIRE TENDERING STOCKHOLDERS RECEIVING THE STOCK SPLIT DIVIDEND, IF ANY, TO
RECEIVE AND HOLD SUCH DIVIDEND FOR THE ACCOUNT OF THE PURCHASER AND PROMPTLY
REMIT AND TRANSFER SUCH DIVIDEND TO THE DEPOSITARY FOR THE ACCOUNT OF THE
PURCHASER AS A CONDITION TO A TENDER BEING VALID AND SUCH STOCKHOLDER BEING
ENTITLED TO RECEIVE PAYMENT FOR SUCH TENDERED SHARES. IN THIS EVENT, THE
PURCHASE PRICE OF $108 PER SHARE WILL NOT BE ADJUSTED. IF, HOWEVER, THE
EXPIRATION DATE OCCURS ON OR AFTER MARCH 23, 1998, THE PURCHASER ANTICIPATES
THAT THE PURCHASE PRICE FOR THE SHARES PURSUANT TO THE OFFER WILL BE ADJUSTED
FOR THE EFFECT OF THE ANNOUNCED STOCK SPLIT TO AN AMOUNT EQUAL TO $54 PER SHARE
FOR EACH SPLIT-ADJUSTED SHARE AND THAT THE MINIMUM CONDITION WILL BE DETERMINED
BY REFERENCE TO SUCH INCREASED AMOUNT OF SHARES OUTSTANDING. SEE SECTION 13.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
INTRODUCTION.................................................................................................... 1
THE TENDER OFFER................................................................................................ 6
1. Terms of the Offer................................................................................... 6
2. Acceptance for Payment and Payment................................................................... 7
3. Procedures for Accepting the Offer and Tendering Shares and Rights................................... 9
4. Withdrawal Rights.................................................................................... 13
5. Certain United States Tax Consequences............................................................... 13
6. Price Range of the Shares; Dividends................................................................. 14
7. Possible Effects of the Offer on the Market for the Shares; Stock Exchange Listing; Exchange Act
Registration; Margin Regulations..................................................................... 15
8. Certain Information Concerning the Company........................................................... 16
9. Certain Information Concerning the Purchaser and Computer Associates................................. 18
10. Background of the Offer; Contacts with the Company................................................... 20
11. Purpose of the Offer and the Proposed Merger; Plans for the Company.................................. 27
12. Source and Amount of Funds........................................................................... 31
13. Dividends and Distributions.......................................................................... 33
14. Certain Conditions of the Offer...................................................................... 34
15. Certain Legal Matters; Required Regulatory Approvals................................................. 38
16. Certain Fees and Expenses............................................................................ 42
17. Miscellaneous........................................................................................ 42
Schedule I -- Information Concerning Directors and Executive Officers of Computer Associates
and the Purchaser................................................................................... I-1
</TABLE>
ii
<PAGE>
To the Holders of Shares of Common Stock
(including the Associated Preferred Stock
Purchase Rights) of Computer Sciences Corporation:
INTRODUCTION
CAI Computer Services Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Computer Associates International, Inc., a Delaware
corporation ("Computer Associates"), hereby offers to purchase all outstanding
shares of Common Stock, par value $1.00 per share (the "Shares"), of Computer
Sciences Corporation, a Nevada corporation (the "Company"), together with
(unless and until the Purchaser declares that the Rights Condition (as defined
below) has been satisfied) the associated Series A Junior Participating
Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of December 21, 1988, amended and restated as of August 1,
1996 (the "Rights Agreement"), between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights Agent"), at a purchase price of
$108 per Share (and associated Right), net to the seller in cash, without
interest thereon, in each case upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"). Unless the context otherwise requires, (i) all
references to "Shares" shall include the associated Rights, (ii) all references
to the "Rights" shall include all benefits that may inure to holders of the
Rights pursuant to the Rights Agreement and (iii) all references to "Shares"
shall include any shares issued pursuant to the Stock Split Dividend (as defined
below). On February 2, 1998, the Company publicly announced a two-for-one split
of the Shares (the "Announced Stock Split") in the form of a 100% stock dividend
thereon (the "Stock Split Dividend"). The Company further announced that the
Stock Split Dividend will be payable on March 23, 1998 to holders of Shares of
record on March 2, 1998. The $108 per Share offered in the Offer has been
determined based on the Shares without giving effect to the Announced Stock
Split. Information with respect to the effect of the Announced Stock Split on
the terms of the Offer is set forth in Section 13.
Tendering stockholders 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 or Rights by the
Purchaser pursuant to the Offer. However, any tendering stockholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included in
the Letter of Transmittal may be subject to a required backup federal income tax
withholding of 31% of the gross proceeds payable to such stockholder or other
payee pursuant to the Offer. See Section 3. The Purchaser will pay all charges
and expenses of Bear, Stearns & Co. Inc., as Dealer Manager (the "Dealer
Manager"), First Chicago Trust Company of New York, as Depositary (the
"Depositary"), and MacKenzie Partners, Inc., as Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
The purpose of the Offer is to enable Computer Associates to acquire control
of, and the entire equity interest in, the Company. The Offer, as the first step
in the acquisition of the Company, is intended to facilitate the acquisition of
all the Shares. Computer Associates currently intends, as soon as practicable
following consummation of the Offer, to propose and seek to have the Company
consummate a merger or similar business combination with the Purchaser or
another direct or indirect wholly owned subsidiary of Computer Associates (the
"Proposed Merger"). The purpose of the Proposed Merger is to acquire all Shares
not tendered and purchased pursuant to the Offer or otherwise. Pursuant to the
Proposed Merger, each then outstanding Share (other than Shares owned by the
Purchaser, Computer Associates or any of their subsidiaries, Shares held in the
treasury of the Company and Shares owned by stockholders who perfect any
available appraisal rights under Chapters 78 and 92A of the Nevada Revised
Statutes (the "Nevada Law")) would be converted into the right to receive an
amount in cash equal to the price per Share paid pursuant to the Offer.
Although the Purchaser will seek to have the Company consummate the Proposed
Merger as soon as practicable after consummation of the Offer, if the Board of
Directors of the Company opposes the Offer
1
<PAGE>
and the Proposed Merger, certain terms of the Rights and certain provisions of
the Nevada Law may affect the ability of the Purchaser to consummate the Offer,
to obtain control of the Company and to effect the Proposed Merger. Accordingly,
the timing and details of the Proposed Merger will depend on a variety of
factors and legal requirements, the actions of the Board of Directors of the
Company, the number of Shares acquired by the Purchaser pursuant to the Offer
and whether the Minimum Condition, the Rights Condition, the Control Share
Condition and the Business Combination Condition (each as defined below) are
satisfied or waived.
Computer Associates intends to solicit (the "Solicitation") holders of
Shares with respect to one or more of (i) written consents to act in lieu of a
meeting, (ii) proxies to act at any meeting of stockholders held pursuant to the
Control Share Acquisition Statute (as defined below) and (iii) agent
designations for the call of a special meeting of holders of Shares pursuant to
Article II, Section 2 of the Company's Amended and Restated Bylaws (the
"Bylaws"), each to adopt or facilitate the adoption of the Proposals (as defined
below). The Proposals are targeted principally at (1) replacing the existing
directors of the Company with directors who are committed, subject to their
fiduciary duties, to removing any impediments to the ability of holders of
Shares to choose freely whether to accept the Offer and approve the Proposed
Merger (the "Director Replacement Proposals") and (2) clarifying that the
Company's Board of Directors may not delay the Company's annual meeting of
stockholders (the "Annual Meeting") at which Computer Associates will seek to
replace the Company's existing directors if this action cannot be accomplished
by consent or at a special meeting, and limiting the Board's ability to take
certain defensive actions (the "Anti-Entrenchment Proposals" and, together with
the Director Replacement Proposals, the "Proposals"). The Solicitation will be
made only pursuant to separate solicitation materials, preliminary copies of
which were filed with the Securities and Exchange Commission (the "Commission")
on February 17, 1998, which comply with the requirements of Section 14(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder.
On February 17, 1998, Computer Associates filed its Complaint (the
"Complaint") for Injunctive and Declaratory Relief in the United States District
Court for the District of Nevada (the "Court"). The Complaint requests that the
Company be enjoined from taking actions to impede the exercise of the
shareholder franchise, or the consummation of the Offer, and that the Company be
required to render inapplicable various anti-takeover devices including the
Rights Agreement, so that the Offer may be consummated.
The Complaint also seeks various declarations pursuant to the Nevada Law and
the Bylaws regarding the Solicitation. Computer Associates has asked the Court
to declare that the holders of a majority of the Shares may act, by written
consent or vote, to amend the Bylaws. Computer Associates also has asked the
Court to declare that the holders of two-thirds of the Shares may act, by
written consent or vote, to remove a sufficient number of the existing directors
to be able to designate a majority of the members of the Company's Board of
Directors. Computer Associates has moved the Court for an expedited
determination of these issues. That motion is pending before the Court.
Computer Associates intends to continue to seek to negotiate with the
Company with respect to the acquisition of the Company by Computer Associates.
The Purchaser reserves the right to amend the Offer upon entry into an
acquisition agreement or other agreement regarding a business combination with
the Company or otherwise or to negotiate an acquisition agreement or other
agreement regarding a business combination with the Company not involving a
tender offer. See Section 14.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR
AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY SPECIAL MEETING
OF THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH COMPUTER ASSOCIATES
OR THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT
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TO SEPARATE SOLICITATION MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF
SECTION 14(a) OF THE EXCHANGE ACT AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
CERTAIN CONDITIONS TO THE OFFER
The Offer is subject to the fulfillment of certain conditions, including the
following:
MINIMUM CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED (THE "MINIMUM
CONDITION") UPON THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE
EXPIRATION DATE (AS DEFINED IN SECTION 1) A NUMBER OF SHARES, WHICH WHEN ADDED
TO THE NUMBER OF SHARES OWNED BY THE PURCHASER AND ITS AFFILIATES, CONSTITUTES A
MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON
THE DATE OF PURCHASE.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended December 26, 1997 (the "December 1997 10-Q"), at December 26, 1997,
77,952,347 Shares were issued and outstanding. According to the Company's Annual
Report on Form 10-K for the fiscal year ended March 28, 1997 (the "1997 10-K"),
at March 28, 1997, options covering a total of 6,578,881 Shares were outstanding
under the Company's various stock option plans. Computer Associates currently
beneficially owns 170,000 Shares. Based on the foregoing and assuming that no
options were granted after March 28, 1997, and no options were exercised or
expired from March 29, 1997 through December 26, 1997, there would be 84,531,228
Shares outstanding on a fully diluted basis and the Minimum Condition would be
satisfied if 42,095,614 Shares are validly tendered pursuant to the Offer and
not properly withdrawn. However, the actual number of Shares that must be
validly tendered pursuant to the Offer and not properly withdrawn in order to
satisfy the Minimum Condition will depend on the facts as they exist on the date
of purchase.
RIGHTS CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED (THE "RIGHTS
CONDITION") UPON THE RIGHTS HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF
THE COMPANY OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
RIGHTS HAVE BEEN INVALIDATED OR ARE INAPPLICABLE TO THE OFFER AND THE PROPOSED
MERGER. THE RIGHTS ARE DESCRIBED IN THE COMPANY'S REGISTRATION STATEMENT ON FORM
8-A, DATED DECEMBER 21, 1988, AS AMENDED (THE "COMPANY 8-A"), AND A SUMMARY
DESCRIPTION IS PROVIDED BELOW AND IN SECTION 11. THE FOLLOWING SUMMARY IS BASED
ON INFORMATION CONTAINED IN THE COMPANY 8-A.
The Rights Agreement provides that, until the close of business on the
Distribution Date (as defined in Section 11), the Rights will be represented by
and transferred with the associated Shares. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates representing the Shares will constitute the transfer of the
Rights associated with the Shares represented by such certificate. The Rights
Agreement further provides that, following the Distribution Date, the Rights
become exercisable, and separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to the holders of record of the outstanding
Shares.
The Rights Agreement provides that, at any time prior to the close of
business on the earliest of (i) the tenth business day after the first public
announcement that a person has become an Acquiring Person (as defined in Section
11), (ii) the date an Acquisition Event (as defined in Section 11) has occurred
and (iii) the Final Expiration Date (as defined in Section 11), the Board of
Directors of the Company may direct the Company to redeem the Rights in whole,
but not in part, at a price of $.01 per Right (except as provided in the Rights
Agreement).
Based on publicly available information, the Purchaser believes that, as of
February 17, 1998, the Rights were not exercisable, Rights Certificates had not
been issued and the Rights were evidenced by the
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Shares. The Purchaser believes that, as a result of the commencement of the
Offer on February 17, 1998, the Distribution Date may occur as early as March 3,
1998, unless prior to such date the Company's Board of Directors redeems the
Rights or takes action to delay the Distribution Date. The Distribution Date may
also occur sooner. See Section 11.
THE CONTROL SHARE CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED (THE
"CONTROL SHARE CONDITION") UPON THE PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT SECTIONS 78.378 THROUGH 78.3793 OF THE NEVADA LAW (THE "NEVADA
CONTROL SHARE ACQUISITION STATUTE") ARE INAPPLICABLE TO THE OFFER AND THE
PROPOSED MERGER.
Pursuant to the Nevada Control Share Acquisition Statute, an "acquiring
person," who acquires a "controlling interest" in an "issuing corporation," may
not exercise voting rights as to any "control shares" unless such voting rights
are conferred by a majority vote of the disinterested stockholders of the
issuing corporation at a meeting of such stockholders. In the event that the
control shares are accorded full voting rights and the acquiring person acquires
control shares with a majority or more of all the voting power, any stockholder,
other than the acquiring person, who does not vote in favor of authorizing
voting rights for the control shares, is entitled to demand payment for the fair
value of such stockholder's shares, and the corporation must comply with the
demand. For purposes of the provisions under this subsection, "acquiring person"
means any person who, individually or in association with others, acquires or
offers to acquire, directly or indirectly, the ownership of outstanding voting
shares of an issuing corporation sufficient to enable the acquiring person,
individually or in association with others, directly or indirectly, to exercise
(i) one-fifth or more but less than one-third, (ii) one-third or more but less
than a majority and/or (iii) a majority or more of the voting power of the
issuing corporation in the election of directors. Voting rights must be
conferred by a majority of the outstanding voting shares of disinterested
stockholders as each threshold is reached and/or exceeded.
"Control shares" means those outstanding voting shares of an issuing
corporation which an acquiring person acquires or offers to acquire in an
acquisition or within 90 days immediately preceding the date when the acquiring
person became an acquiring person. "Issuing corporation" means a corporation
that is organized in Nevada, has 200 or more stockholders (at least 100 of whom
are stockholders of record and residents of Nevada) and does business in Nevada
directly or through an affiliated corporation.
The above provisions do not apply if, prior to the acquisition, the articles
of incorporation or bylaws of the Company to be in effect on the tenth day
following the acquisition of a controlling interest by an acquiring person
provide that said provisions do not apply. The Company's Restated Articles of
Incorporation, as amended (the "Articles"), and its Bylaws currently do not
exclude the Company from the restrictions imposed by such provisions. The
Control Share Condition would be satisfied if, prior to the acquisition, the
Bylaws were amended such that, on the tenth day following consummation of the
Offer, the Bylaws provide that the provisions of the Nevada Control Share
Acquisition Statute do not apply, or if the Purchaser, in its sole discretion,
were satisfied that the Nevada Control Share Acquisition Statute was invalid or
its restrictions were otherwise inapplicable to the Purchaser in connection with
the Offer and the Proposed Merger for any reason, including, without limitation,
those specified in the Nevada Control Share Acquisition Statute.
THE BUSINESS COMBINATION CONDITION. CONSUMMATION OF THE OFFER IS
CONDITIONED (THE "BUSINESS COMBINATION CONDITION") UPON THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT SECTIONS 78.411 THROUGH 78.444 OF THE
NEVADA LAW (THE "NEVADA BUSINESS COMBINATION STATUTE") ARE INAPPLICABLE TO THE
PURCHASER IN CONNECTION WITH THE OFFER AND THE PROPOSED MERGER.
The Nevada Business Combination Statute restricts the ability of a "resident
domestic corporation" to engage in any combination with an "interested
stockholder" for three years following the date on which the interested
stockholder acquired the shares that caused such stockholder to become an
interested
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stockholder, unless the combination or the purchase of shares by the interested
stockholder on the date on which the interested stockholder acquired the shares
that caused such stockholder to become an interested stockholder is approved by
the board of directors of the resident domestic corporation before that date.
If the combination was not previously approved, the interested stockholder
may effect a combination after the three-year period only if such stockholder
receives approval from a majority of the disinterested shares or the offer meets
certain fair price criteria.
For purposes of the above provisions, "resident domestic corporation" means
a Nevada corporation that has 200 or more stockholders. "Interested stockholder"
means any person, other than the resident domestic corporation or its
subsidiaries, who is (i) the beneficial owner, directly or indirectly, of 10% or
more of the voting power of the outstanding voting shares of the resident
domestic corporation or (ii) an affiliate or associate of the resident domestic
corporation and, at any time within three years immediately before the date in
question was the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the then outstanding shares of the resident domestic
corporation. The above provisions do not apply to corporations that so elect in
their articles of incorporation or in a charter amendment approved by a majority
of the outstanding voting shares of disinterested stockholders. Such a charter
amendment, however, would not become effective for 18 months after its passage
and could apply only to stock acquisitions occurring after its effective date.
The Articles do not exclude the Company from the restrictions imposed by such
provisions.
The Business Combination Condition would be satisfied if the Company's Board
of Directors approved the Offer and the Proposed Merger prior to consummation of
the Offer and the Proposed Merger or if the Purchaser, in its sole discretion,
were satisfied that the Nevada Business Combination Statute was invalid or its
restrictions were otherwise inapplicable to the Purchaser in connection with the
Offer and the Proposed Merger for any reason, including, without limitation,
those specified in the Nevada Business Combination Statute.
Certain other conditions to the consummation of the Offer are described in
Section 14. The Purchaser expressly reserves the right, in its sole discretion,
to waive any one or more of the conditions to the Offer. See Sections 14 and 15.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER 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 any such extension or amendment), the Purchaser will accept for payment and
thereby purchase all Shares validly tendered and not withdrawn in accordance
with the procedures set forth in Section 4 on or prior to the Expiration Date.
The term "Expiration Date" means 12:00 Midnight, New York City time, on Monday,
March 16, 1998, unless and until the Purchaser, in its sole discretion, shall
have extended the period of time for which the Offer is open, in which event the
term "Expiration Date" shall mean the time and date at which the Offer, as so
extended by the Purchaser, shall expire.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the period during which the Offer is open
for any reason, including the occurrence of any of the events specified in
Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer and subject to the right of a
tendering stockholder to withdraw such stockholder's Shares. See Section 4.
Subject to the applicable regulations of the Commission, the Purchaser also
expressly reserves the right, in its sole discretion, at any time or from time
to time, to (i) delay acceptance for payment of or, regardless of whether such
Shares were theretofore accepted for payment, payment for any Shares pending
receipt of any regulatory or governmental approvals specified in Section 15,
(ii) terminate the Offer (whether or not any Shares have theretofore been
accepted for payment) if any condition referred to in Section 14 has not been
satisfied or upon the occurrence of any event specified in Section 14 and (iii)
waive any condition or otherwise amend the Offer in any respect, in each case,
by giving oral or written notice of such delay, termination, waiver or amendment
to the Depositary and, other than in the case of any such waiver, by making a
public announcement thereof. The Purchaser acknowledges that (i) Rule 14e-1(c)
under the Exchange Act requires the Purchaser to pay the consideration offered
or return the Shares tendered promptly after the termination or withdrawal of
the Offer and (ii) the Purchaser may not delay acceptance for payment of, or
payment for (except as provided in clause (i) of the preceding sentence), any
Shares upon the occurrence of any event specified in Section 14 without
extending the period of time during which the Offer is open.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 14. Any such extension,
delay, termination or amendment will be followed as promptly as practicable by
public announcement thereof, and such announcement in the case of an extension
will be made no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date. Without limiting the manner
in which the Purchaser may choose to make any public announcement, subject to
applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act, which require that material changes be promptly disseminated to holders of
Shares), the Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release or other public announcement.
If the Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, the Purchaser will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in percentage of
securities sought or a change in any dealer's soliciting fee, will depend upon
the facts and circumstances, including the relative materiality, of the changes.
With respect to a change in price or a change in the percentage of securities
sought, a minimum period of 10 business days is generally required to allow for
adequate dissemination and investor response. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
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Unless and until the Purchaser declares that the Rights Condition is
satisfied, stockholders will be required to tender one associated Right for each
Share tendered to effect a valid tender of such Share. See Sections 3 and 11.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF THE
MINIMUM CONDITION, THE RIGHTS CONDITION, THE CONTROL SHARE CONDITION AND THE
BUSINESS COMBINATION CONDITION AND THE EXPIRATION OR TERMINATION OF ALL WAITING
PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT"), AND THE SATISFACTION OF
THE OTHER CONDITIONS SET FORTH IN SECTION 14. The Purchaser reserves the right
(but shall not be obligated), in accordance with applicable rules and
regulations of the Commission, to waive any or all of such conditions. If, by
the Expiration Date, any or all of such conditions have not been satisfied, the
Purchaser may, in its sole discretion, elect to (i) extend the Offer and,
subject to applicable withdrawal rights, retain all tendered Shares until the
expiration of the Offer, as extended, subject to the terms of the Offer, (ii)
waive all of the unsatisfied conditions and, subject to complying with
applicable rules and regulations of the Commission, accept for payment all
Shares so tendered and not extend the Offer or (iii) terminate the Offer and not
accept for payment any Shares and return all tendered Shares to tendering
stockholders. In the event that the Purchaser waives any condition set forth in
Section 14, the Commission may, if the waiver is deemed to constitute a material
change to the information previously provided to the stockholders, require that
the Offer remain open for an additional period of time and/or that the Purchaser
disseminate information concerning such waiver.
Requests are being made to the Company pursuant to Rule 14d-5 under the
Exchange Act for the use of the Company's stockholder list, its list of holders
of Rights and security position listings for the purpose of disseminating the
Offer to holders of Shares. Upon compliance by the Company with such request,
this Offer to Purchase and the related Letter of Transmittal and, if required,
other relevant materials will be mailed to record holders of Shares and Rights
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
stockholder list and list of holders of Rights, if applicable, or who are listed
as participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares and Rights. A request under Nevada
Law for the Company's stockholder list is also being made to the Company.
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 the Offer as so extended or amended), the Purchaser will
purchase, by accepting for payment, and will pay for, all Shares validly
tendered and not withdrawn (as permitted by Section 4) prior to the Expiration
Date promptly after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 14.
In addition, subject to applicable rules of the Commission, the Purchaser
expressly reserves the right to delay acceptance for payment of, or payment for,
Shares pending receipt of any regulatory or governmental approvals specified in
Section 15.
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including under the HSR Act and the European
Community Regulation 4064/89 (the "EC Merger Regulation"), see Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares ("Share Certificates") and, if applicable, Rights Certificates for
the associated Rights, or, in the case of Shares, timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares and, if
applicable, Rights, into the Depositary's account at The Depository Trust
Company or Philadelphia Depository Trust Company (collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature
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guarantees, or an Agent's Message (as defined below) in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares and, if applicable, the Rights which are
the subject of such Book-Entry Confirmation that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
Unless and until the Purchaser declares that the Rights Condition is
satisfied, if rights certificates have been distributed to holders of Shares,
such holders are required to tender, or make book-entry transfer of, Rights
Certificates representing a number of Rights equal to the number of Shares being
tendered in order to effect a valid tender of such Shares.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all
cases, upon the terms and subject to the conditions of the Offer, payment for
Shares purchased 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 the Purchaser and
transmitting payment to validly tendering stockholders. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER. If, for
any reason whatsoever, acceptance for payment of or payment for any Shares and
Rights tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Shares and Rights tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights set forth herein, the
Depositary may, nevertheless, on behalf of the Purchaser and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Shares and Rights and such
Shares and Rights may not be withdrawn except to the extent that the tendering
stockholder is entitled to and duly exercises withdrawal rights as described in
Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted representing more Shares than are tendered,
Share Certificates representing unpurchased or untendered Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained within such Book-Entry
Transfer Facility), in each case with the Rights Certificates, if any, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of the Purchaser's subsidiaries or
affiliates the right to purchase all or any portion of the Shares and Rights
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the rights
of tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
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3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND RIGHTS.
VALID TENDER OF SHARES AND RIGHTS
Except as set forth below, in order for Shares and (prior to the
Distribution Date) Rights to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares and (prior to the
Distribution Date) Rights, and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date
and either (i) Share Certificates and, if applicable, Rights Certificates
representing tendered Shares and Rights must be received by the Depositary, or
such Shares and Rights must be tendered pursuant to the procedure for book-entry
transfer set forth below and Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures set forth below must be complied with.
IF THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS SATISFIED, THE
PURCHASER WILL NOT REQUIRE DELIVERY OF RIGHTS. UNLESS AND UNTIL THE PURCHASER
DECLARES THAT THE RIGHTS CONDITION IS SATISFIED, HOLDERS OF SHARES WILL BE
REQUIRED TO TENDER ONE ASSOCIATED RIGHT FOR EACH SHARE TENDERED IN ORDER TO
EFFECT A VALID TENDER OF SUCH SHARE.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES (IF
APPLICABLE), THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. 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.
SEPARATE DELIVERY OF RIGHTS CERTIFICATES
If the Distribution Date has not occurred prior to the Expiration Date, a
tender of Shares will also constitute a tender of the associated Rights. If the
Distribution Date has occurred and Rights Certificates are distributed by the
Company to holders of Shares prior to the time a holder's Shares are tendered
pursuant to the Offer, in order for Rights (and the corresponding Shares) to be
validly tendered, Rights Certificates representing a number of Rights equal to
the number of Shares tendered must be delivered to the Depositary or, if
available, a Book-Entry Confirmation received by the Depositary with respect
thereto. If the Distribution Date has occurred and Rights Certificates are not
distributed prior to the time Shares are tendered pursuant to the Offer, Rights
may be tendered prior to a stockholder receiving Rights Certificates by use of
the guaranteed delivery procedure described below. In any case, a tender of
Shares constitutes an agreement by the tendering stockholder to deliver Rights
Certificates representing a number of Rights equal to the number of Shares
tendered pursuant to the Offer to the Depositary within three business days
after the date Rights Certificates are distributed. The Purchaser reserves the
right to require that the Depositary receive Rights Certificates, or a
Book-Entry Confirmation, if available, with respect to such Rights, prior to
accepting the related Shares for payment pursuant to the Offer if the
Distribution Date has occurred prior to the Expiration Date.
BOOK-ENTRY TRANSFER
The Depositary will make a request to establish accounts with respect to the
Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
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Facility may make Book-Entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility 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 a
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 in connection with a book-entry transfer, 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 on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
If the Distribution Date occurs, to the extent that the Rights become
eligible for book-entry transfer under procedures established by a particular
Book-Entry Transfer Facility, the Depositary will also make a request to
establish an account with respect to the Rights at each of the Book-Entry
Transfer Facilities. No assurance can be given that book-entry delivery of
Rights will be available. If book-entry delivery of Rights is available, the
foregoing book-entry transfer procedures will also apply to Rights. Otherwise,
if Rights Certificates have been issued, a tendering stockholder will be
required to tender Rights by means of physical delivery to the Depositary of
Rights Certificates (in which event references in this Offer to Purchase to
Book-Entry Confirmations with respect to Rights will be inapplicable) or
pursuant to the guaranteed delivery procedure set forth below.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
SIGNATURE GUARANTEES
Signatures on all Letters of Transmittal must be guaranteed by a firm that
is a bank, broker, dealer, credit union, savings association or other entity
which is a member in good standing of the Securities Transfer Agents Medallion
Program (an "Eligible Institution"), unless the Shares and Rights tendered
thereby are tendered (i) by a registered holder of Shares and Rights who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal.
If the Share Certificates or Rights Certificates are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made to, or Share Certificates or Rights Certificates for unpurchased
Shares or Rights are to be issued or returned to, a person other than the
registered holder, then the tendered certificates must be endorsed or
accompanied by appropriate stock powers, signed exactly as the name or names of
the registered holder or holders appear on such certificates, with the
signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the appropriate Letter of Transmittal. See
Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates and Rights Certificates are forwarded separately
to the Depositary, a properly completed and duly executed appropriate Letter of
Transmittal (or facsimile thereof) must accompany each such delivery.
10
<PAGE>
GUARANTEED DELIVERY
If a stockholder desires to tender Shares and Rights pursuant to the Offer
and such stockholder's Share Certificates or, if applicable, Rights Certificates
are not immediately available (including, if the Distribution Date has occurred,
because Rights Certificates have not yet been distributed by the Company) or
time will not permit all required documents to reach the Depositary on or prior
to the Expiration Date, or, in the case of Shares, the procedures for book-entry
transfer cannot be completed on a timely basis, such Shares or Rights may
nevertheless be tendered if all of the following guaranteed delivery procedures
are duly complied with:
(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 made available by the Purchaser, is received by the
Depositary, as provided below, on or prior to the Expiration Date; and
(iii) the Share Certificates and Rights Certificates (or a Book-Entry
Confirmation) representing all tendered Shares and Rights, in proper form for
transfer 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
documents required by the Letter of Transmittal are received by the Depositary
within (x) in the case of Shares, three New York Stock Exchange, Inc. ("NYSE")
trading days after the date of execution of such Notice of Guaranteed Delivery
or (y) in the case of Rights, a period ending on the later of (1) three NYSE
trading days after the date of execution of such Notice of Guaranteed Delivery
and (2) three business days after the date Rights Certificates are distributed
to stockholders by the Company.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, and if the Distribution Date has
occurred, Rights Certificates for, or a Book-Entry Confirmation, if available,
with respect to, the associated Rights (unless the Purchaser elects, in its sole
discretion, to make payment for such Shares pending receipt of the Rights
Certificates for, or a Book-Entry Confirmation with respect to, such Rights), 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, Rights, an Agent's Message) and any other documents
required by the Letter of Transmittal. Accordingly, payment might not be made to
all tendering stockholders at the same time, and will depend upon when Share
Certificates (or Rights Certificates) are received by the Depositary or
Book-Entry Confirmations of the Shares (or Rights, if available) are received
into the Depositary's account at a Book-Entry Transfer Facility.
If the Rights Condition is satisfied, the guaranteed delivery procedure with
respect to Rights Certificates and the requirement for the tender of Rights will
no longer apply.
BACKUP FEDERAL INCOME TAX WITHHOLDING
UNDER THE BACKUP FEDERAL INCOME TAX WITHHOLDING APPLICABLE TO CERTAIN
STOCKHOLDERS (OTHER THAN CERTAIN EXEMPT STOCKHOLDERS, INCLUDING, AMONG OTHERS,
ALL CORPORATIONS AND CERTAIN FOREIGN INDIVIDUALS), THE DEPOSITARY MAY BE
REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO SUCH STOCKHOLDERS
PURSUANT TO THE OFFER. TO PREVENT
11
<PAGE>
BACKUP FEDERAL INCOME TAX WITHHOLDING, EACH SUCH STOCKHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
APPOINTMENT AS PROXY
By executing the Letter of Transmittal, a tendering stockholder irrevocably
appoints designees of the Purchaser, and each of them, as such stockholder's
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares and, if applicable, Rights tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or Rights and other securities or rights issued or issuable
in respect of such Shares and Rights on or after the date of this Offer to
Purchase. All such powers of attorney and proxies shall be considered
irrevocable and coupled with an interest in the tendered Shares and Rights. Such
appointment will be effective upon the acceptance for payment of such Shares and
Rights by the Purchaser in accordance with the terms of the Offer. Upon such
acceptance for payment, all other powers of attorney and proxies given by such
stockholder with respect to such Shares, Rights, and such other securities or
rights prior to such payment will be revoked, without further action, and no
subsequent powers of attorney and proxies may be given by such stockholder (and,
if given, will not be deemed effective). The designees of the Purchaser will,
with respect to the Shares and Rights and such other securities and rights for
which such appointment is effective, be empowered to exercise all voting and
other rights of such stockholder as they in their sole discretion may deem
proper at any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, or by consent in lieu of any such meeting
or otherwise. In order for Shares and Rights to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares and Rights, the
Purchaser or its designee must be able to exercise full voting rights with
respect to such Shares, Rights and other securities, including voting at any
meeting of stockholders.
DETERMINATION OF VALIDITY
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
or Rights will be determined by the Purchaser, in its sole discretion, whose
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer or
any defect or irregularity in any tender of Shares or Rights of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of other stockholders.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares or Rights will be deemed to have been validly
made until all defects and irregularities with respect to such tender have been
cured or waived by the Purchaser. None of the Purchaser or any of its affiliates
or assigns, the Dealer Manager, the Depositary, the Information Agent or any
other person or entity will be under any duty to give any notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
The Purchaser's acceptance for payment of Shares and, if applicable, Rights
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering stockholder and the Purchaser upon the
terms and subject to the conditions of the Offer.
12
<PAGE>
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares and Rights made pursuant to the Offer are irrevocable. Shares
and Rights tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment as
provided herein, may also be withdrawn at any time after April 17, 1998 (or such
later date as may apply in case the Offer is extended). A withdrawal of Shares
will also constitute a withdrawal of the associated Rights. Rights may not be
withdrawn unless the associated Shares are also withdrawn.
If, for any reason whatsoever, acceptance for payment of any Shares and
Rights tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Shares and Rights tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights set forth herein, the
Depositary may, nevertheless, on behalf of the Purchaser and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Shares and Rights and such
Shares and Rights may not be withdrawn except to the extent that the tendering
stockholder is entitled to and duly exercises withdrawal rights as described in
this Section 4. Any such delay will be by an extension of the Offer to the
extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares and
Rights to be withdrawn, the number of Shares and Rights to be withdrawn, and (if
Share Certificates and Rights Certificates have been tendered) the name of the
registered holder of the Shares and Rights as set forth in the Share Certificate
and Rights Certificate, if different from that of the person who tendered such
Shares and Rights. If Share Certificates and Rights Certificates have been
delivered or otherwise identified to the Depositary, then prior to the physical
release of such certificates, the tendering stockholder must submit the serial
numbers shown on the particular certificates evidencing the Shares and Rights to
be withdrawn and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, except in the case of Shares and Rights tendered for
the account of an Eligible Institution. If Shares and Rights have been tendered
pursuant to the procedures for book-entry transfer set forth in Section 3, the
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and Rights, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph. Withdrawals of Shares and Rights may not be
rescinded. Any Shares and Rights properly withdrawn will be deemed not validly
tendered for purposes of the Offer, but may be retendered at any subsequent time
prior to the Expiration Date by following any of the procedures described in
Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser or any of its affiliates or assigns, the Dealer Manager, the
Depositary, the Information Agent or any other person or entity will be under
any duty to give any notification of any defects or irregularities in any notice
of withdrawal or incur any liability for failure to give any such notification.
5. CERTAIN UNITED STATES TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or the Proposed Merger will be a taxable transaction for
federal income tax purposes and may also be a taxable transaction under
applicable state, local, foreign and other tax laws. For federal income tax
purposes, each selling stockholder would generally recognize gain or loss equal
to the difference between the amount of cash received and such stockholder's
adjusted tax basis for the sold Shares (together with the Rights). Such gain or
loss will be capital gain or loss (assuming the Shares are held as a capital
asset) and any such capital gain or loss will be long term if, as of the date of
sale, the Shares were held for more than one year or will be short term if, as
of such date, the Shares were held for one year or less. For individuals and
certain other non-corporate taxpayers, there is also a mid-term holding period
of more than one year, but not more than 18 months.
13
<PAGE>
For United States federal income tax purposes, it is unclear whether amounts
received with respect to the redemption of Rights by the Company should be
treated as additional consideration for the Shares or as a dividend or other
ordinary income or as capital gain.
The foregoing discussion may not be applicable to certain stockholders of
the Company, including persons who acquired Shares pursuant to the exercise of
employee stock options or otherwise as compensation, individuals who are not
citizens or residents of the United States and foreign corporations, persons
holding Shares in a straddle, hedging, or conversion transaction, and entities
that are otherwise subject to special tax treatment (such as broker-dealers,
insurance companies, tax-exempt organizations, financial institutions and
passthrough entities).
Unless a stockholder complies with certain reporting and/or certification
procedures or is an exempt recipient under applicable provisions of the Code and
Treasury Regulations, such stockholder may be subject to withholding tax of 31%
with respect to any cash payments received pursuant to the Offer or the Proposed
Merger. Stockholders should consult their brokers or the Depositary to ensure
compliance with such procedures. Foreign stockholders should consult with their
own tax advisors regarding withholding taxes in general.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED ON THE CODE AND TREASURY REGULATIONS
CURRENTLY IN FORCE WHICH MAY BE AMENDED AT ANY TIME, POSSIBLY WITH RETROACTIVE
EFFECT. EACH STOCKHOLDER IS URGED TO CONSULT SUCH STOCKHOLDER'S TAX ADVISOR WITH
RESPECT TO THE TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE OFFER AND PROPOSED
MERGER, INCLUDING FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS. The Shares are listed and traded
on the NYSE under the symbol "CSC." The following table sets forth, for the
periods indicated, the reported high and low sales prices for the Shares on the
NYSE.
COMPUTER SCIENCES CORPORATION
<TABLE>
<CAPTION>
CALENDAR YEAR HIGH LOW
- ----------------------------------------------------------------------------------------------------- -----
<S> <C> <C>
1996
First Quarter................................................................................... $ 80 3/4 $ 65 1/8
Second Quarter.................................................................................. 79 1/2 68 1/8
Third Quarter................................................................................... 77 1/4 64 1/8
Fourth Quarter.................................................................................. 86 1/2 70
1997
First Quarter................................................................................... 82 3/8 61 5/8
Second Quarter.................................................................................. 80 1/8 57 7/8
Third Quarter................................................................................... 83 1/8 69
Fourth Quarter.................................................................................. 87 3/4 67 1/4
1998
First Quarter (through February 13)............................................................. 113 1/2 79 15/16
</TABLE>
On December 17, 1997, the last trading day prior to the date on which
Computer Associates commenced discussions with the Company regarding a potential
business combination, the last reported sale price on the NYSE for the Shares
was $81 5/8. On February 13, 1998, the last trading day prior to the
commencement of the Offer on February 17, 1998, the last reported sale price on
the NYSE for the Shares was $107 3/8. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
14
<PAGE>
According to the 1997 10-K and the December 1997 10-Q, the Company did not
declare or pay any cash dividends on the Shares during fiscal 1996 or 1997 or
during the first three quarters of fiscal 1998.
The Purchaser believes, based upon publicly available information, that as
of the date of this Offer to Purchase, the Rights are listed on the NYSE and all
Rights are attached to the associated Shares and are not traded separately. As a
result, the sale prices per Share set forth above are also the high and low sale
prices per Share and associated Right during all such periods. Upon the
occurrence of the Distribution Date, the Rights are to detach, and may trade
separately, from the Shares. See Section 11. The Purchaser believes that, as a
result of the commencement of the Offer on February 17, 1998, the Distribution
Date may occur as early as March 3, 1998, unless prior to such date the
Company's Board of Directors redeems the Rights or takes action to delay the
Distribution Date. The Distribution Date may also occur sooner. See Section 11.
IF THE DISTRIBUTION DATE OCCURS AND THE RIGHTS BEGIN TO TRADE SEPARATELY FROM
THE SHARES, STOCKHOLDERS ARE ALSO URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR
THE RIGHTS.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK
EXCHANGE LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and could adversely affect the
liquidity and market value of the remaining Shares held by the public. The
purchase of Shares pursuant to the Offer can also be expected to reduce the
number of holders of Shares. The 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 therefor.
STOCK EXCHANGE LISTING
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on the NYSE,
and may, therefore, be delisted from the NYSE. According to the NYSE's published
guidelines, the NYSE would consider delisting the Shares if, among other things,
the number of record holders of at least 100 Shares should fall below 1,200, the
number of publicly held Shares (exclusive of holdings of officers, directors,
their immediate families and other concentrated holdings of 10% or more ("NYSE
Excluded Holdings")) should fall below 600,000 or the aggregate market value of
publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000.
According to the 1997 10-K, as of June 2, 1997, there were 10,947 holders of
record of Shares. If, as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Shares no longer meet the requirements of the NYSE for
continued listing and the listing of the Shares is discontinued, the market and
prices for such Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and that
price quotations would be reported by such exchange, through the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or other
sources. Such trading and the availability of such quotations would, however,
depend upon the number of stockholders and/or the aggregate market value of the
Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
of the Shares under the Exchange Act as described below and other factors.
15
<PAGE>
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application by the Company to the Commission if the Shares are
not listed on a "national securities exchange" and there are fewer than 300
record holders of Shares. 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 the Commission and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirements of furnishing a proxy statement
in connection with stockholders' meetings pursuant to Section 14(a) or 14(c) and
the related requirement of an annual report, no longer applicable to the
Company. If the Shares are no longer registered under the Exchange Act, the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions would no longer be applicable to the Company. 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
promulgated under the Securities Act of 1933 may be impaired or, with respect to
certain persons, eliminated. If registration of the Shares under the Exchange
Act were terminated, the Shares would no longer be "margin securities" or
eligible for stock exchange listing or NASDAQ reporting. The Purchaser intends
to seek to cause the Company to terminate the registration of the Shares as soon
after the consummation of the Offer or Proposed Merger as the requirements for
termination of registration are met.
Based upon publicly available information, the Purchaser believes that, as
of the date of this Offer to Purchase, the Rights are registered under the
Exchange Act and are listed on the NYSE, but are attached to the Shares and are
not separately transferable. The Purchaser believes that, as a result of the
commencement of the Offer on February 17, 1998, the Distribution Date may occur
as early as March 3, 1998, unless prior to such date the Company's Board of
Directors redeems the Rights or takes action to delay the Distribution Date. The
Distribution Date may also occur sooner. See Section 11. The Rights Agreement
provides that, following the Distribution Date, certificates evidencing the
Rights will be sent to all holders of Rights and Rights will become transferable
apart from the Shares. See Section 11. If the Distribution Date occurs and the
Rights separate from the Shares, the foregoing discussion with respect to the
effect of the Offer on the market for the Shares, stock exchange listings and
Exchange Act registration would apply to the Rights in a similar manner.
MARGIN REGULATIONS
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System, which has the effect, among
other things, of allowing brokers to extend credit on the collateral of such
Shares. Depending upon factors similar to those described above regarding
listing and market quotations, 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.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Nevada
corporation with its principal executive offices located at 2100 East Grand
Avenue, El Segundo, California 90245. The following description of the Company's
business has been taken from the 1997 Form 10-K:
The Company was founded in 1959 and is among the world leaders in the
information technology services industry. The Company specializes in the
application of advanced and complex information technology and offers a broad
array of professional services to industry and government, including operating
all or a portion of a customer's technology infrastructure and designing,
developing, implementing and integrating complete information systems. The
Company has enhanced its breadth of service offerings through expansion in
outsourcing and strategic acquisitions across a number of geographic and
16
<PAGE>
vertical industry segments. The Company's principal markets served are the U.S.
commercial markets, international markets and the United States federal
government.
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the 1997 10-K
and the December 1997 10-Q. More comprehensive financial and other information
is included in such reports (including management's discussion and analysis of
results of operations and financial position) and in other reports and documents
filed by the Company with the Commission and the financial information set forth
below is qualified in its entirety by reference to such reports and documents
filed with the Commission and all of the financial statements and related notes
contained therein. These reports and other documents may be examined and copies
thereof may be obtained in the manner set forth below.
COMPUTER SCIENCES CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 26, DECEMBER 27,
MARCH 28, MARCH 29, MARCH 31, 1997 1996
1997 1996 1995 (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues.................................. $ 5,616 $ 4,741 $ 3,788 $ 4,732 $ 4,081
Interest expense, net..................... 32 32 27 32 25
Income before taxes....................... 303 197 221 71 186
Net income................................ 192 109 143 180 117
Earnings per common share................. $ 2.46 $ 1.43 $ 1.99 $ 2.28(1) $ 1.49(1)
Shares used to compute earnings per
share................................... 78,196,862 76,534,794 71,850,949 77,331,000 75,749,000
</TABLE>
- ------------------------
(1) Represents diluted earnings per share as reported in the December 1997 10-Q.
The Company recognized a net special credit of $1.7 million, or 2 cents per
share (diluted), during the first quarter of fiscal 1998 and a net special
charge in the second quarter of fiscal 1997 of $35.3 million, or 45 cents
per share (diluted).
BALANCE SHEET DATA
<TABLE>
<CAPTION>
DECEMBER 26,
MARCH 28, MARCH 29, 1997
1997 1996 (UNAUDITED)
----------- ----------- -------------
<S> <C> <C> <C>
Total current assets........................................................ $ 1,612 $ 1,355 $ 1,865
Total assets................................................................ 3,581 2,936 4,003
Total current liabilities................................................... 1,087 925 1,164
Long-term debt, net of current maturities................................... 631 427 732
Total stockholders' equity.................................................. 1,670 1,420 1,904
</TABLE>
17
<PAGE>
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including their
remuneration and the stock options granted to them), the principal holders of
the Company's securities, any material interests of such persons in transactions
with the Company and certain other matters is required to be disclosed in proxy
statements and annual reports distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
may be inspected and copied at the Commission's public reference facilities at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also
be available for inspection at the following regional offices of the Commission:
7 World Trade Center, New York, New York 10048; and 500 West Madison Street,
Chicago, Illinois 60661-2511; and copies may be obtained by mail at prescribed
rates from the principal office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Website on the Internet that
contains reports, proxy statements and other information (http:// www.sec.gov).
Reports, proxy statements and other information concerning the Company also
should be available for inspection at the NYSE, 20 Broad Street, New York, New
York 10005.
Although the Purchaser has no knowledge that any such information is untrue,
the Purchaser takes no responsibility for the accuracy or completeness of
information contained in this Offer to Purchase with respect to the Company or
any of its subsidiaries or affiliates 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.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND COMPUTER ASSOCIATES.
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Computer Associates, was organized to acquire the Company and has not conducted
any unrelated activities since its organization on February 17, 1998.
Computer Associates, a Delaware corporation, is engaged in the design,
development, marketing and support of standardized computer software products
for use with a broad range of desktop, midrange and mainframe computers from
many different hardware manufacturers. Its products include a broad range of
standardized systems management software (which enables customers to use their
total data processing resources more efficiently), information management
software (which is generally used in connection with database management systems
and applications generators), business management software (which is used in
financial, human resource, manufacturing, distribution and banking systems
applications), and desktop computer software.
The principal executive offices of Computer Associates and the Purchaser are
located at One Computer Associates Plaza, Islandia, New York 11788. The name,
business address, principal occupation or employment and citizenship of each
director and executive officer of the Purchaser and Computer Associates are set
forth in Schedule I hereto.
The following selected consolidated financial data relating to Computer
Associates and its subsidiaries has been taken or derived from the audited
financial statements contained in Computer Associates' Annual Report on Form
10-K for the year ended March 31, 1997, and the unaudited financial statements
contained in Computer Associates' Quarterly Report on Form 10-Q for the nine
months ended December 31, 1997. The information set forth below gives effect to
the acquisitions of Cheyenne Software, Inc. in fiscal 1997, Legent Corporation
in fiscal 1996 and The ASK Group, Inc. in fiscal 1995. More comprehensive
financial information is included in such Annual Report, such Quarterly Report
and the other documents filed by Computer Associates with the Commission, and
the financial data set forth below is qualified in its entirety by reference to
such reports and other documents including the financial statements (and any
related notes) contained therein. Such reports and other documents may be
examined and copies may be obtained from the offices of the Commission in the
same manner as set forth with respect to the Company in Section 8.
18
<PAGE>
COMPUTER ASSOCIATES INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31,
MARCH 31, (UNAUDITED)
------------------------------- --------------------
INCOME STATEMENT DATA 1997 1996 1995 1997 1996
- -------------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total revenue................................................. $ 4,040 $ 3,505 $ 2,623 $ 3,252 $ 2,835
Interest expense, net......................................... 102 71 8 90 70
Income (loss) before income taxes............................. 932 (100) 697 1,228 399
Net income (loss)(1).......................................... 366 (56) 432 767 30
Diluted earnings (loss) per common share(1)(2)................ $ .64 $ (.10) $ .76 $ 1.36 $ .05
Dividends declared per common share(2)........................ $ .065 $ .061 $ .059 $ .073 $ .065
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31,
-------------------- AT DECEMBER 31, 1997
BALANCE SHEET DATA 1997 1996 (UNAUDITED)
- -------------------------------------------------------------- --------- --------- ---------------------
<S> <C> <C> <C> <C>
Working capital (deficiency).................................. $ 53 $ (53) $ 227
Total assets.................................................. 6,084 5,016 6,429
Long-term debt (after current maturities)..................... 1,663 945 1,258
Stockholders' equity.......................................... 1,503 1,482 2,123
</TABLE>
- ------------------------
(1) Computer Associates incurred certain after-tax charges against earnings in
connection with its acquisitions of Cheyenne Software, Inc. in fiscal 1997,
Legent Corporation in fiscal 1996 and The ASK Group, Inc. in fiscal 1995.
Had these charges not been taken, Computer Associates' net income for fiscal
1997, 1996 and 1995 would have been $964 million, $752 million and $586
million, respectively, and diluted earnings per share would have been $1.69,
$1.32 and $1.03, respectively.
(2) Adjusted to reflect three-for-two stock splits effective August 21, 1995,
June 19, 1996 and November 5, 1997, respectively.
Computer Associates is subject to the information and reporting requirements
of the Exchange Act and in accordance therewith is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Certain information, as of
particular dates, concerning Computer Associates' business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including their
remuneration and the stock options granted to them), the principal holders of
Computer Associates' securities, any material interests of such persons in
transactions with Computer Associates and certain other matters is required to
be disclosed in proxy statements and annual reports distributed to Computer
Associates' stockholders and filed with the Commission. Such proxy statements,
reports and other information should be available for inspection and copying at
the offices of the Commission in the same manner as set forth with respect to
the Company in Section 8.
Computer Associates currently beneficially owns 170,000 Shares, representing
approximately 0.2 percent of the 77,952,347 Shares outstanding at December 26,
1997, all of which were acquired by Computer Associates in two open market
transactions of 150,000 Shares on January 21, 1998 at $87.28 per Share and
20,000 Shares on January 23, 1998 at $83.90 per Share.
Except as set forth in this Offer to Purchase and in Schedule I, (i) none of
the Purchaser, Computer Associates, nor to the best knowledge of the Purchaser
and Computer Associates, any of the persons listed in Schedule I hereto or any
associate or majority-owned subsidiary of the Purchaser, Computer Associates or
any of the persons so listed, beneficially owns or has a right to acquire any
Shares or any other equity
19
<PAGE>
securities of the Company; (ii) none of the Purchaser, Computer Associates nor,
to the best knowledge of the Purchaser and Computer Associates, any of the
persons or entities referred to above or any of their respective executive
officers, directors or subsidiaries has effected any transaction in the Shares
or any other equity securities of the Company during the past 60 days; (iii)
neither the Purchaser nor Computer Associates or, to the best knowledge of the
Purchaser and Computer Associates, any of the persons or entities listed in
Schedule I hereto, 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 such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies, consents or
authorizations); (iv) neither the Purchaser nor Computer Associates or, to the
best knowledge of the Purchaser and Computer Associates, any of the persons
listed on Schedule I hereto, has had since April 1, 1994, any business
relationships or transactions with the Company or any of its executive officers,
directors or affiliates that are required to be reported under the rules and
regulations of the Commission applicable to the Offer; and (v) since April 1,
1994, there have been no contacts, negotiations or transactions between any of
the Purchaser, Computer Associates or, to the best knowledge of the Purchaser
and Computer Associates, any of the persons listed on Schedule I hereto, on the
one hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Computer Associates
and the Company are parties to license agreements pursuant to which the Company
licenses Computer Associates software for internal use and for third party
processing on behalf of the Company's clients, and are parties to other
arrangements under which the Company has the right to resell Computer Associates
software. Representatives of Computer Associates and the Company have met from
time to time over the past several years to discuss technical and marketing
aspects of these arrangements.
Early in the week of December 15, 1997, Sanjay Kumar, President and Chief
Operating Officer of Computer Associates, telephoned the office of Van
Honeycutt, Chairman and Chief Executive Officer of the Company, to arrange a
meeting to discuss a possible business combination between the companies. On
December 18, Mr. Kumar and Charles B. Wang, Chairman and Chief Executive Officer
of Computer Associates, met with Mr. Honeycutt at Mr. Honeycutt's office in El
Segundo, California to discuss the merits of combining Computer Associates and
the Company. Mr. Honeycutt agreed to review the idea and get back to Computer
Associates.
20
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On or about January 9, 1998, Mr. Honeycutt called Mr. Kumar. Mr. Kumar and
Mr. Honeycutt discussed a number of issues relating to a business combination,
including possible synergies of a transaction. They agreed to meet in early
February to continue the discussions. On January 19 and 20, the Computer
Associates Board of Directors met and considered the possible business
combination. On or about January 20, Mr. Kumar called Mr. Honeycutt to request
to have their respective financial advisors meet. Mr. Honeycutt expressed his
desire to keep the discussions between principals until a general agreement had
been reached. Following that discussion, Mr. Kumar sent Mr. Honeycutt the
following letter:
January 21, 1998
Mr. Van B. Honeycutt
Chairman
CSC
2100 East Grand Avenue
El Segundo, CA 90245
Dear Van:
I appreciate your candid views of the merits of combining our two
companies, as well as the appreciating value of CSC. While you and I have
some differences over valuation and the synergies of the combined companies,
I continue to believe that a merger would benefit both companies and our
collective shareholders tremendously. Computer Associates Board of Directors
has unanimously supported our negotiation of this transaction. Your
shareholders would receive a substantial premium to market value, and we are
confident that they would be pleased with our offer.
We for a long time have held the strategic view that the strengths of
our company's software products and development capabilities should be
combined with a provider of strategic management consulting and information
technology services. More and more we are seeing the industry moving toward
this view. Such a combination is highly complementary to both companies, in
our case adding strategic consulting and integration services to our strong
group of products and in your case gaining access to a large pool of
products and one of the best stables of new software developers. As year
2000 approaches, our combined enterprise should lead the technology world
into the 21st century.
I look forward to our February 5, 1998 meeting to discuss on-going
management and continue our discussions of other issues. In the interim, I
am requesting that you reconsider having our mutual advisors and a limited
group of senior management further our due diligence. In this way, we both
can be informed by the facts, and in a position to move quickly before any
notice of our discussions becomes generally known.
Again, congratulations on CSC's 3rd Quarter results. I am traveling for
the next few days, but can be reached through my office or by confidential
fax.
Sincerely,
/s/ Sanjay Kumar
Sanjay Kumar
President and
Chief Operating Officer
On January 21 and 23, Computer Associates through a wholly owned subsidiary
bought 170,000 Shares.
21
<PAGE>
On January 27, Mr. Honeycutt advised Mr. Kumar that he did not want to
engage advisors in the process until after the February 5 meeting. On February
2, Mr. Honeycutt called Mr. Kumar to suggest that the February 5 meeting cover
several significant issues and Mr. Honeycutt agreed to travel to Scottsdale,
Arizona to accommodate Mr. Wang's schedule so that he could also participate in
the discussions.
Mr. Honeycutt met with Mr. Wang and Mr. Kumar in Scottsdale, Arizona on
February 5. At that meeting, Mr. Honeycutt raised several issues, including
organization, employee retention, stock options, severance plans, board
composition and valuation. Messrs. Wang and Kumar addressed all of the issues
with Mr. Honeycutt, reaching agreement on all points other than board
composition and valuation. On February 6, Mr. Kumar and Mr. Honeycutt discussed
value and compensation issues and Mr. Honeycutt's role in a combined
organization. After discussing Mr. Honeycutt's range of values for the Company,
Mr. Kumar offered to begin immediate negotiations. After Mr. Honeycutt declined,
he agreed that he and Mr. Kumar would speak further on February 10. Mr. Kumar
sent the following letter summarizing his understanding of the discussions from
the meeting:
February 6, 1998
Mr. Van B. Honeycutt
Chairman and CEO
CSC
2100 East Grand Avenue
El Segundo, CA 90245
Dear Van:
Thank you for taking the time yesterday to meet with Charles and me in
Scottsdale and for our telephone conversation of today. I found the
discussions beneficial but remain disappointed that we were unable to reach
agreement on price.
As we have discussed since our first meeting on this subject in
December, we believe that the combination of CA and CSC would create a world
class information technology solution provider with unparalleled depth in
both software and services. The combination of CA 's people and CA 's
software product strength together with CSC's people and CSC's services
capability would create the perfect model for the next generation of
information technology solutions provider that will lead our industry into
the next millennium.
In reviewing our discussions of yesterday, it is apparent that we are in
agreement on all points with the exception of price. To confirm our views on
a number of the key issues you raised yesterday:
- We are in agreement on the need and manner of retaining key managers
and employees. We would supply key managers and employees with
employment agreements that will provide them with a strong incentive to
remain with the combined company.
- We are in agreement on providing stock option grants, consistent with
CA 's prior practice for our own employees, to key managers and
employees. This will allow them to participate in the success of the
combined company, and will further ensure continuity with respect to
the combined company's commitment to our mutual clients.
- We are in agreement that the CSC organization within the combined
company will be on equal footing to CA's existing product organization.
I am committed to making sure that all of the members of the CSC
organization are welcomed into the combined company with open arms.
22
<PAGE>
- We do not expect the combined company to have to reduce any headcount
to achieve the synergies that a transaction of this size demands.
Consequently, as in our last major acquisition of Cheyenne Software, we
anticipate that all of the valuable CSC employees will be offered
positions with the combined company.
- Beyond the absolute level of staffing, we expect to maintain the
current structure of CSC's organization with little change. As we
discussed, it would make sense for the CA part of the combined company
to take over CSC's product development efforts and for CSC, in turn, to
take over CA's service commitments and efforts. The inherent synergies
in this process will allow both the CA and CSC parts of the combined
company to do what they do best.
- We expect to staff new projects with both outside hiring and some
redeployment of existing CA staff. This will allow the combined company
to aggressively seek new services opportunities.
Given all of the points of agreement, I remain confident that the
employees of both CA and CSC will embrace this combination. Our mutual
clients would also be excited by the possibility of being serviced by a
stronger and broader information technology solutions provider. The industry
and the market will clearly applaud such a combination.
With respect to CSC's shareholders, I remain confident that they would
find CA 's proposal of an all cash offer of $100 very attractive. At our
offer, CSC's shareholders would be receiving a premium of approximately 30%
to the average closing price for the month of December, when we first
initiated discussions regarding a combination of our respective businesses.
We have expressed our concern that knowledge of our discussions might be
contributing to the recent rise in your stock price, to an all time high
during the last week. Even so, our proposed offer still yields a significant
premium. Any analysis of our proposed offer must consider the recent run up
in your stock price.
A transaction would be subject, among other things, to receipt of any
required regulatory approvals and third-party consents and the taking of all
necessary actions to eliminate the applicability of, or to satisfy, any
anti-takeover or other defensive provisions contained in the applicable
corporate statues or CSC's charter and by-laws including CSC's poison pill.
As I mentioned to you yesterday, we have made financing arrangements to
facilitate a rapid conclusion. The Board of Directors, key senior
management, and I have discussed this transaction in detail, and we are all
excited about the possibilities of creating a world class combination of CA
and CSC. Our proposal remains subject to the approval of our Board of
Directors.
Van, I hope that CSC's Board of Directors and you share our enthusiasm
for this transaction. We view our offer as an excellent opportunity for the
shareholders of CSC to realize full value for their holdings, and equally
importantly we view our offer as a tremendous opportunity for CSC's
employees and clients. We are prepared to enter into immediate negotiations
with your directors, management, advisors and you to answer any additional
questions that you may have regarding our proposal. As I mentioned to you
yesterday and today, we would prefer a negotiated transaction that can be
presented to your shareholders as a joint product of CA 's and CSC's Boards
of Directors and management. In this spirit, we would be willing to consider
some adjustment to our offer based on the outcome of our due diligence
reviews and discussions. I look forward to hearing from you at your earliest
convenience.
Sincerely,
/s/ Sanjay Kumar
Sanjay Kumar
President and
Chief Operating Officer
23
<PAGE>
On February 10, after not having received any response to the February 6
letter, Mr. Kumar contacted Mr. Honeycutt to advise him that the Computer
Associates Board of Directors had unanimously approved an offer to acquire the
Company. Mr. Kumar also discussed Mr. Honeycutt's continuing role in the
Company, and had further discussions on value. Mr. Kumar suggested that the
parties immediately begin negotiations to bridge the gap on value with a view to
quickly concluding a negotiated transaction. After Mr. Honeycutt declined, Mr.
Kumar sent to Mr. Honeycutt the following letter:
February 10, 1998
Mr. Van B. Honeycutt
Chairman and CEO
Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, CA 90245
Dear Van,
Charles and I appreciate the significant time you have invested over the
last few months in the discussions that we have had regarding the
combination of Computer Associates International, Inc. ("CA") and Computer
Sciences Corporation ("CSC"). However, we are disappointed that CA and CSC
have not been able to come to a final resolution.
Consequently, we are writing to offer to acquire CSC in a merger
transaction in which your stockholders would receive $108 in cash for each
share of CSC common stock. We believe our offer presents an extremely
attractive opportunity for your stockholders, at a price which represents a
premium of nearly 35% over the closing price of CSC's common stock on the
day we commenced our discussions in mid-December. At that time, CSC's stock
was trading close to its all-time high.
The CA Board of Directors has unanimously approved this offer. Further,
as I have previously informed you, CA has obtained the necessary financing
commitments to consummate this transaction without delay. As we agreed, the
combination of CA and CSC would create a world-class information technology
solutions provider with unparalleled depth in both software and services.
The combination of CA's strength in software and CSC's services
capabilities, together with our collective personnel, would create the
perfect model for the next generation of information technology solutions
provider that will lead our industry into the millennium.
As we discussed at our meeting on February 5, and as confirmed by my
letter of February 6:
- We are in agreement on the need and manner of retaining key managers
and employees. We would supply key managers and employees with
employment agreements that will provide them with a strong incentive to
remain with the combined company.
- We are in agreement on providing stock option grants to key managers
and employees. This will allow them to participate in the success of
the combined company, and will further ensure continuity with respect
to the combined company's commitment to our mutual clients.
- We are in agreement that the CSC organization within the combined
company will be on equal footing to CA's existing product organization.
CA is committed to making sure that all of the members of the CSC
organization are welcomed into the combined company with open arms.
- We do not expect the combined company to need to reduce any headcount
to achieve the synergies that a transaction of this size demands.
Consequently, as in our last major acquisition
24
<PAGE>
of Cheyenne Software, we anticipate that all of the valuable CSC
employees will be offered positions with the combined company.
- Beyond the absolute level of staffing, we expect to maintain the
current structure of CSC's organization with little change. As we
discussed, it would make sense for the CA part of the combined company
to take over CSC's product development efforts and for CSC, in turn, to
take over CA's service commitments and efforts. The inherent synergies
in this process will allow both the CA and CSC parts of the combined
company to do what they do best.
- We expect to staff new projects with both outside hiring and some
redeployment of existing CA staff. This will allow the combined company
to aggressively seek new services opportunities.
As we have previously discussed, we have conducted an extensive analysis
of CSC based on publicly available information. We believe that CA and CSC
may be able to bridge some of our differences with respect to valuation if
CA is given the opportunity to conduct limited due diligence on CSC's
business and operations. With CSC's cooperation, our due diligence review
can be accomplished within a week.
Our offer is subject to the execution of a mutually satisfactory merger
agreement containing customary terms and conditions. We believe that such an
agreement can be negotiated while we are conducting our due diligence review
of CSC. Our counsel has advised us that an acquisition of CSC by CA should
not encounter regulatory delays.
We look forward to meeting with you to discuss our offer. We are hopeful
your Board will conclude that your stockholders should not be denied the
opportunity to consider our offer. We at CA are determined to take every
appropriate action to pursue this transaction. In view of the importance of
this matter, time is of the essence, and we await your prompt response.
Sincerely,
/s/ Sanjay Kumar
Sanjay Kumar
President and
Chief Operating Officer
Mr. Kumar attempted to reach Mr. Honeycutt on February 11 and 12 without
success. On February 14 and 15, at Mr. Kumar's request, Mr. Michael Urfirer of
Bear, Stearns & Co., Inc., Computer Associates' financial advisor, discussed
with Gene Sykes of Goldman Sachs & Co., financial advisor to the Company,
Computer Associates' strong desire to make every effort to consummate a
friendly, negotiated transaction. Mr. Urfirer also advised Mr. Sykes that
Computer Associates believed that the value of a negotiated transaction would be
$114 per Share, the increased price reflecting the difference in value between a
friendly and a contested transaction. Mr. Urfirer offered to arrange a meeting
between the principals to attempt to reach agreement on valuation, which was
declined. Following these discussions, Mr. Kumar sent the following letter to
Mr. Honeycutt.
25
<PAGE>
February 15, 1998
Mr.Van B. Honeycutt
Chairman and CEO
Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, CA 90245
Dear Van:
We have been disappointed by the response to date to the offer that we
made last Tuesday to combine our two companies' businesses by means of a
cash merger at $108 per CSC share. As we have expressed from the beginning,
our hope and intent was to prompt a meaningful effort to move ahead on both
our parts to a negotiated transaction.
We believe that the best way, by far, to effect a combination of our two
companies' businesses is through prompt negotiation of the terms followed by
equally prompt implementation. Every one of CSC's constituencies --
shareholders, employees, customers and partners -- will greatly benefit from
this approach.
We made it clear in our February 10th letter that we believed that we
could bridge some of our differences with respect to value in a friendly
transaction. The value of a friendly, promptly negotiated and concluded
transaction is substantial in our view. Our financial advisor, Michael
Urfirer of Bear Stearns, has communicated to your financial advisor, Gene
Sykes of Goldman Sachs, in very specific terms the magnitude of the value
increase to your shareholders in a negotiated transaction.
Conversely, an adverse impact to CSC's business and people,
substantially increased difficulty in combining the businesses and
significant costs to both companies are inevitable outcomes of a contested
process, which would result in a reduced value of CSC. In short, we are
proposing a transaction that has compelling value to your shareholders and
other constituencies, especially when measured against a contested
alternative.
Our request is simple. We would like to commence negotiations with you
this weekend. We would be guided in those negotiations by the thinking
reflected in my letters of February 6 and 10, which remains unchanged,
except as to price. I very much look forward to this. We are committed to
the business strategy of combining our two companies' businesses and, as I
have stated, believe a negotiated transaction is clearly preferable for all
concerned. However, as we communicated to Mr. Sykes earlier today, if
substantive negotiations have not started by Monday at 12:00 noon EST, we
will have no choice but to move ahead on a unilateral basis at a
substantially lower price than we communicated to Mr. Sykes which would be
required to reflect the diminution in value as indicated above.
We hope this demonstrates our continuing efforts to consummate a
friendly transaction. It is truly important to us that you and your Board
are fully informed at this critical stage.
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I look forward to hearing from you. I can be reached at the numbers I
previously left with you or through Michael Urfirer of Bear Stearns.
Sincerely,
/s/ Sanjay Kumar
Sanjay Kumar
President and
Chief Operating Officer
cc: Board of Directors of Computer Sciences Corporation
Gene Sykes, Goldman, Sachs & Co.
Mr. Urfirer attempted to reach Mr. Sykes on February 16 without success.
On February 17, 1998, Computer Associates commenced the Offer.
In addition, on February 17, 1998, Computer Associates filed the Complaint
in the United States District Court for the District of Nevada. The Complaint
requests that the Company be enjoined from taking actions to impede the exercise
of the shareholder franchise, or the consummation of the Offer, and that the
Company be required to render inapplicable various anti-takeover devices
including its Rights Agreement, so that the Offer may be consummated.
The Complaint also seeks various declarations pursuant to the Nevada Law and
the Bylaws regarding the Solicitation. Computer Associates has asked the Court
to declare that the holders of a majority of the Shares may act, by written
consent or vote, to amend the Bylaws. Computer Associates also has asked the
Court to declare that the holders of two-thirds of the Shares may act, by
written consent or vote, to remove a sufficient number of the existing directors
to be able to designate a majority of the members of the Company's Board of
Directors. Computer Associates has moved the Court for an expedited
determination of these issues. That motion is pending before the Court.
Also, on February 17, 1998, with respect to the Solicitation, Computer
Associates filed preliminary copies of solicitation materials with the
Commission.
11. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER AND THE PROPOSED MERGER. The purpose of the Offer and
the Proposed Merger is to enable Computer Associates to acquire control of, and
the entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. Computer Associates currently intends, as soon as practicable following
consummation of the Offer, to propose and seek to consummate the Proposed
Merger. The purpose of the Proposed Merger is to acquire all Shares not tendered
and purchased pursuant to the Offer or otherwise. Pursuant to the Proposed
Merger, each then outstanding Share (other than Shares owned by the Purchaser,
Computer Associates or any of their subsidiaries, Shares held in the treasury of
the Company and Shares owned by stockholders who perfect any available appraisal
rights under the Nevada Law) would be converted into the right to receive an
amount in cash equal to the price per Share paid pursuant to the Offer. The
timing of consummation of the Offer and the Proposed Merger will depend on a
variety of factors and legal requirements, the actions of the Company's Board of
Directors, the number of Shares (if any) acquired by the Purchaser pursuant to
the Offer, and whether the conditions to the Offer have been satisfied.
Except in the case of a "short-form" merger as described below, under the
Nevada Law, the approval of the Company's Board of Directors and the affirmative
vote of holders of a majority of the outstanding Shares (including any Shares
owned by the Purchaser and its affiliates) would be required to approve the
Proposed Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares which
would be the case if the Minimum Condition and the Control Share Condition were
satisfied and the Purchaser were to accept for payment Shares tendered pursuant
to the Offer, it would have sufficient voting power to effect the Proposed
Merger without the vote
27
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of any other stockholder of the Company. If, following the consummation of the
Offer, the current members of the Board of Directors of the Company have not
previously been removed pursuant to the Solicitation and do not either resign or
cause nominees of Computer Associates to be elected to fill the resulting
vacancies or approve the Proposed Merger, then the Purchaser intends to act by
written consent to remove the members of the Board of Directors and to cause
nominees of the Purchaser to be elected to fill the resulting vacancies who,
subject to the fiduciary duties they would have as directors of the Company,
intend to approve the Proposed Merger; amend the Rights Agreement or redeem the
Rights if possible, or otherwise act to ensure that the Rights Condition is
satisfied; satisfy the Control Share Condition, if applicable; satisfy the
Business Combination Condition, if applicable; and take any other actions
necessary to permit the Offer and the Proposed Merger to be consummated.
The Nevada Law also provides that if a parent company owns at least 90% of
each class of stock of a subsidiary, the parent company can effect a
"short-form" merger with that subsidiary without a stockholder vote.
Accordingly, if, as a result of the Offer or otherwise, the Purchaser acquires
or controls the voting power of at least 90% of the outstanding Shares, the
Purchaser could, and intends to, effect the Proposed Merger without prior notice
to, or any action by, any other stockholder of the Company.
If the Proposed Merger has not been consummated, the Purchaser or an
affiliate of the Purchaser may, either immediately following the consummation or
termination of the Offer (whether or not the Purchaser purchases Shares pursuant
to the Offer), or from time to time thereafter, 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 may determine, which may be more or less than the price to be paid
pursuant to the Offer. Alternatively, the Purchaser and its affiliates reserve
the right to sell or otherwise dispose of any or all of the Shares acquired by
them pursuant to the Offer or otherwise, upon such terms and at such prices as
they shall determine.
The precise timing and other details of any merger or other business
combination transaction will depend on a variety of factors such as general
economic conditions and prospects, the future prospects, asset value and
earnings of the Company, the number of Shares acquired by the Purchaser pursuant
to the Offer or otherwise and the statutory requirements described above. The
Purchaser can give no assurance that a merger or other business combination will
be proposed or that, if it is proposed, it will not be delayed or abandoned. The
Purchaser expressly reserves the right not to propose any merger or similar
business combination involving the Company, or to propose a merger or other
business combination on terms other than those set forth herein, and its
ultimate decision could be affected by information hereafter obtained by the
Purchaser, changes in general economic or market conditions or in the business
of the Company or other factors.
The making of the Offer will enable the Purchaser to commence the process of
seeking regulatory approvals for its acquisition of the Company. See Section 15.
In addition, by tendering Shares pursuant to the Offer, the Company's
stockholders effectively will be given the opportunity to express to the
Company's Board that they wish to be able to accept the Offer and to approve the
Proposed Merger or a similar transaction with Computer Associates.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR
AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY SPECIAL MEETING
OF THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION WHICH COMPUTER ASSOCIATES
OR THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE SOLICITATION
MATERIALS COMPLYING WITH ALL APPLICABLE REQUIREMENTS OF SECTION 14(a) OF THE
EXCHANGE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
PLANS FOR THE COMPANY. Upon the consummation of the Offer and the Proposed
Merger, Computer Associates expects that it will offer all of the valuable
employees of the Company positions with the combined company and expects to
maintain the current structure of the Company's organization with little change.
However, Computer Associates intends to conduct a review of the Company and its
assets,
28
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corporate structure, dividend policy, capitalization, operations, properties and
policies and to consider what, if any, changes would be desirable in light of
the circumstances then existing, and reserves the right to take such actions or
effect such changes as it deems desirable. See Section 10.
Except as described in this Offer to Purchase, the Purchaser has no present
plans or proposals that would relate to or would result in (i) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, (ii) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, (iii) any
change in the present Board of Directors or management of the Company, (iv) any
material changes in the present capitalization or dividend policy of the
Company, (v) any other material change in the Company's corporate structure or
business, (vi) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association or
(vii) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act.
APPRAISAL RIGHTS AND "GOING-PRIVATE" TRANSACTIONS. Upon consummation of the
Proposed Merger, if, as of the record date fixed to determine the stockholders
of the Company entitled to receive notice of and to vote at the meeting of
stockholders of the Company to act upon the Proposed Merger, shares of Common
Stock are either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. (the "NASD") or (ii) held of
record by more than 2,000 holders, holders of Shares who do not vote in favor of
the Proposed Merger and who comply with applicable statutory procedures under
the Nevada Law may be entitled to receive a judicial determination and payment
of the "fair value" (excluding any element of value arising from the
accomplishment or expectation of the Offer and Proposed Merger) of their Shares
(subject to certain exceptions). The value so determined could be the same as,
or more or less than, the price per Share offered pursuant to the Offer or
proposed to be paid in the Proposed Merger. 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
Proposed Merger. Rule 13e-3 would be inapplicable if (i) the Shares were
deregistered under the Exchange Act prior to the Proposed Merger or other
business combination or (ii) if holders of Shares receive only equity securities
of Parent in the Proposed Merger. If applicable, Rule 13e-3 would require, among
other things, that certain financial information concerning the Company and
certain information relating to the fairness of the Proposed Merger and the
consideration offered to minority stockholders be filed with the Commission and
distributed to minority stockholders before the consummation of any such
transaction.
THE RIGHTS. Set forth below is a summary description of the Rights derived
from the Company 8-A.
On December 21, 1988, the Company's Board of Directors authorized and
declared a dividend distribution of one Right for each outstanding Share of the
Company. Each Right entitles the registered holder to purchase from the Company
one four-thousandth (1/4000) of a share of Series A Junior Participating
Preferred Stock, $1.00 par value (the "Series A Preferred Stock"), of the
Company at a purchase price of $78.33 (the "Exercise Price"), subject to
adjustment.
The Rights will not be transferable apart from the Shares until the earlier
of (i) the close of business on the tenth business day after a public
announcement that a person or group (other than a Company or certain related
entities), has become the beneficial owner of 20% or more of the Shares (an
"Acquiring Person") or (ii) the close of business on the tenth business day
after the date that a tender offer or an exchange offer is first published or
sent or given within the meaning of Rule 14d-2 under the Exchange Act, the
consummation of which would result in a person or group (other than a Company or
certain related entities) beneficially owning at least 30% of the outstanding
Shares (the earlier of the dates specified in clauses (i) and (ii) being the
"Distribution Date"). Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
representing the Shares will constitute the transfer of the Rights associated
with the Shares represented by such certificate.
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Following the Distribution Date, the Rights become exercisable, and separate
certificates evidencing the Rights will be mailed to the holders of record of
the outstanding Shares.
The Rights will expire on December 21, 1998 (the "Final Expiration Date"),
unless the Rights are earlier redeemed by the Company as described below.
The Rights Agreement provides that, in the event that on or after the first
date of public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such (the "Stock Acquisition Date"), the Company is
acquired in a merger or other business combination transaction or 50% or more of
its consolidated assets or earning power are sold in one or a series of
transactions (other than the ordinary course of business) (each, an "Acquisition
Event"), proper provision will be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person and certain related
entities (which will thereafter be void), will thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Exercise
Price, shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times such Exercise Price.
The Rights Agreement provides that, from and after the close of business on
the tenth business day following the Stock Acquisition Date, proper provision
will be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person and certain related entities (which will
thereafter be void), will thereafter have the right to receive upon exercise one
Share at an exercise price of 10% of the then current market value of the
Shares. If the Company does not have sufficient Shares available for all Rights
to be exercised, the Company shall substitute for all or any portion of the
Shares that would otherwise be issuable upon the exercise of the Rights, cash,
assets or other securities or any combination of the foregoing having the same
aggregate value as such Shares.
The Rights Agreement provides that, at any time prior to the close of
business on the earliest of (i) the tenth business day after the Stock
Acquisition Date, (ii) the date an Acquisition Event has occurred, and (iii) the
Final Expiration Date, the Board of Directors of the Company may direct the
Company to redeem the Rights in whole, but not in part, at a redemption price of
$.01 per Right (the "Redemption Price"). Promptly upon the action of the Board
electing to redeem the Rights, the Company is to make announcement thereof, and
from and after the date of such election by the Board of Directors of the
Company to redeem the Rights, the right to exercise the Rights will terminate,
and the only right of holders of Rights will be to receive the Redemption Price
per Right.
The Rights Agreement provides that the terms of the Rights may be amended by
the Board of Directors of the Company in any manner (including to shorten or
lengthen any time period such as the redemption period) at any time prior to the
close of business on the earliest of (i) the tenth business day after the Stock
Acquisition Date, (ii) the date an Acquisition Event has occurred, and (iii) the
Final Expiration Date. Thereafter, the terms of the Rights may be amended by the
Company's Board of Directors in any manner so long as such amendment does not
adversely affect the interests of the holders of Rights (other than the
Acquiring Person and certain related entities). Notwithstanding the foregoing,
no amendment may be made which changes the redemption price or the Final
Expiration Date.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Company 8-A and
the text of the Rights Agreement as set forth as an exhibit thereto, filed with
the Commission, copies of which may be obtained in the manner set forth in
Section 8.
If the Rights Condition is not satisfied and the Purchaser elects, in its
sole discretion, to waive the Rights Condition and consummate the Offer, and if
there are outstanding Rights which have not been acquired by the Purchaser, the
Purchaser will evaluate its alternatives. Such alternatives could include
purchasing additional Rights in the open market, in privately negotiated
transactions, in another tender or exchange offer or otherwise. Any such
additional purchase of Rights could be for cash or other consideration. Under
such circumstances, the Proposed Merger might be delayed or abandoned as
impracticable. The form and amount of consideration to be received by the
holders of Shares in the Proposed Merger, if consummated, might be subject to
adjustment to compensate the Purchaser for, among other things, the
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costs of acquiring Rights and a portion of the potential dilution cost to the
Purchaser of Rights not owned by the Purchaser and its wholly owned subsidiaries
at the time of the Proposed Merger. In such event, the consideration paid for
Shares in the Proposed Merger could be substantially less than the consideration
paid in the Offer. In addition, the Purchaser may elect under such circumstances
not to consummate the Proposed Merger.
UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS
SATISFIED, STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE ASSOCIATED RIGHT FOR EACH
SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. IF THE
DISTRIBUTION DATE DOES NOT OCCUR PRIOR TO THE EXPIRATION DATE, A TENDER OF
SHARES WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. SEE SECTIONS 1
AND 3.
12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Purchaser to purchase all of the outstanding Shares, refinance certain
outstanding indebtedness of Computer Associates and its subsidiaries and the
Company and its subsidiaries, and pay related fees and expenses is expected to
be approximately $11.7 billion. The Purchaser will obtain such funds from
Computer Associates by means of capital contributions, loans or a combination
thereof, and Computer Associates will, in turn, obtain such funds through
borrowings from commercial banks, other financial institutions and institutional
investors and from its general corporate funds. The Purchaser has not
conditioned the Offer on obtaining financing.
Computer Associates has received a commitment letter dated February 15, 1998
(the "Commitment Letter") from Credit Suisse First Boston ("CSFB"), Bank of
America National Trust & Savings Association, The Chase Manhattan Bank and
NationsBank, N.A. (collectively, the "Underwriters"), pursuant to which the
Underwriters have committed to provide, on specified terms and subject to
specified conditions, up to $10.0 billion in senior credit facilities (the
"Credit Facilities") to Computer Associates. CSFB has agreed to provide up to
$2.8 billion of the Credit Facilities and will act as the Administrative Agent
(the "Administrative Agent") and Arranger for the Credit Facilities; and each of
the other Underwriters has agreed to provide up to $2.4 billion of the Credit
Facilities. Although the Underwriters have committed to provide all of the
Credit Facilities, the Underwriters expect to act as syndication agents for a
syndicate of commercial banks and financial institutions, which, together with
the Underwriters, will provide the Credit Facilities.
The Commitment Letter contemplates three credit facilities: (i) a 1 1/2 year
senior term loan facility in the amount of $3.0 billion (the "Interim
Facility"), (ii) a 5 year senior term loan facility in the amount of $4.5
billion (the "Tranche A Facility", and together with the Interim Facility, the
"Term Loan Facilities") and (iii) a 5 year senior revolving credit facility in
the amount of $2.5 billion (the "Revolving Credit Facility"). The Revolving
Credit Facility and the Term Loan Facilities together comprise the Credit
Facilities. The proceeds of the Credit Facilities may be used (i) to finance the
Offer and the Proposed Merger, (ii) to refinance certain outstanding
indebtedness of Computer Associates and its subsidiaries including, after giving
effect to the consummation of the Offer and the Proposed Merger (together, the
"Transaction"), the Company and its subsidiaries, (iii) to pay fees and expenses
relating thereto, and (iv) in the case of the Revolving Credit Facility, for
working capital and other general corporate purposes.
The Interim Facility will be available in two drawings, each of which will
be repayable in full in a single installment 18 months after the date upon which
the definitive documentation with respect to the Credit Facilities becomes
effective (the "Effective Date"). The Tranche A Facility will also be available
in two drawings, each of which will amortize in quarterly installments over a
five year period ending on the fifth anniversary of the Effective Date. The
Revolving Credit Facility will be available on a revolving basis throughout a
five year term commencing on the Effective Date and ending on the fifth
anniversary thereof. The loans under the Credit Facilities shall bear interest
(at Computer Associates' option) at specified spreads (adjusted based on the
ratings of Computer Associates' senior unsecured long-term debt) over (i) the
London interbank offered rate (adjusted for reserves) (the "Eurodollar Rate") or
(ii) the higher of (x) the CSFB base lending rate and (y) the federal funds rate
plus a margin of 0.5% (the "Base Rate").
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Initially, the spreads will be 1 3/4% in the case of loans bearing interest with
reference to the Eurodollar Rate and 3/4% in the case of loans bearing interest
with reference to the Base Rate. The Credit Facilities will be guaranteed by
certain material subsidiaries of Computer Associates and are required to be
reduced with 100% of the net proceeds of certain asset sales, debt issues, and
equity issues by Computer Associates or its subsidiaries.
The Underwriters' commitments to provide the Credit Facilities is subject to
satisfaction of certain customary conditions, including (a) absence of any
material change in or material disruption of financial, banking or capital
market conditions that, in the judgment of the Underwriters, could materially
impair the syndication of the Credit Facilities, (b) absence of any material
adverse condition or material adverse change in or affecting, or material
adverse information with respect to, the business, operations, property,
condition (financial or otherwise) or prospects of Computer Associates and its
subsidiaries taken as a whole or of the Company and its subsidiaries taken as a
whole, (c) the appropriate markets being clear of certain competing
transactions, (d) the completion by the Underwriters of, and their satisfaction
with, a due diligence investigation of publicly available information with
respect to the Company and its subsidiaries (it being understood that such due
diligence condition shall have been deemed satisfied unless any of the
Underwriters shall have notified Computer Associates in writing to the contrary
by no later than 5:00 p.m. (New York time) on February 24, 1998), (e) the
negotiation, execution and delivery prior to April 30, 1998 of definitive
documentation with respect to the Credit Facilities satisfactory to the
Underwriters and their counsel and (f) the occurrence of the initial borrowings
under the Term Loan Facilities on or before the date which is 180 days after the
earlier of (i) such execution and delivery and (ii) the commencement of the
Offer.
In addition, the Commitment Letter provides that initial advances under the
Credit Facilities will be conditioned upon, among other things, (i) the
consummation of the Offer pursuant to the terms of this Offer to Purchase (as
the same may be modified from time to time in such manner as could not
reasonably be expected to be materially adverse to the rights or interests of
the Administrative Agent or the lenders), (ii) all governmental and third party
approvals necessary or reasonably requested by the Administrative Agent in
connection with the Offer, the Proposed Merger, the Credit Facilities and the
continuing operations of Computer Associates and its subsidiaries (after giving
effect to the Transaction) having been obtained and being in full force and
effect, with all waiting periods provided by applicable law having expired
without there being taken or threatened by any competent authority any action
which could reasonably be expected to restrain, prevent or otherwise impose
material adverse conditions on the Transaction (including the consummation of
the Proposed Merger) or the financing thereof, (iii) the Rights or any other
"poison pill" rights of the Company having been redeemed by the Board of
Directors of the Company or the lenders being satisfied that they have been
invalidated or otherwise not triggered, and (iv) Computer Associates having
arranged for the issue and sale of $2.75 billion in senior notes (or backstopped
bridge financing) on terms reasonably satisfactory to the lenders and for the
repayment and termination of certain existing credit facilities of Computer
Associates and its subsidiaries. It is a further condition precedent that, after
giving effect to the consummation of the Offer, the Purchaser shall own and
control that number of Shares as shall be necessary to permit the Purchaser to
approve the Proposed Merger without the affirmative vote or approval of any
other shareholders, and that there shall be no applicable statute or other
restriction which would prohibit, restrict or materially delay the consummation
of the Proposed Merger or which would make the consummation of the Proposed
Merger subject to material adverse conditions.
The definitive documentation with respect to the Credit Facilities also will
contain representations, warranties, covenants (including a covenant that the
Proposed Merger occur within 120 days of the consummation of the Offer), events
of default and conditions customary for credit facilities of this size and type.
Computer Associates has agreed to pay certain fees to CSFB and the other
Underwriters with respect to the Commitment Letter and to the Underwriters and
the other lenders with respect to the Credit Facilities. Computer Associates
also has agreed to reimburse certain expenses of, and provide customary
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indemnities to, CSFB and the other Underwriters in connection with the
Commitment Letter and the Underwriters and (under certain circumstances) the
other lenders in connection with the Credit Facilities.
The foregoing summary of the source and amount of funds is qualified in its
entirety by reference to the text of the Commitment Letter, a copy of which is
filed as an exhibit to the Schedule 14D-1 of the Purchaser and Computer
Associates filed with the Commission in connection with the Offer (the "Schedule
14D-1") and is incorporated in this Offer to Purchase by reference and may be
inspected in the same manner as set forth with respect to the Company in Section
8. If and when definitive agreements with respect to the Credit Facilities are
executed, copies will be filed as exhibits to amendments to the Schedule 14D-1.
Although no definitive plan or arrangement for repayment of borrowings under
the Credit Facilities has been made, Computer Associates anticipates such
borrowings will be repaid with internally generated funds (including, if the
Proposed Merger is accomplished, those of the Company) and from other sources
which may include the proceeds of future bank refinancings, asset sales or the
public or private sale of debt or equity securities. No decision has been made
concerning the method Computer Associates will use to repay the borrowings under
the Credit Facilities. Such decision will be made based on Computer Associates'
review from time to time of the advisability of particular actions, as well as
prevailing interest rates, financial and other economic conditions and such
other factors as Computer Associates may deem appropriate.
13. DIVIDENDS AND DISTRIBUTIONS. If, on or after February 13, 1998, the
Company should (a) split (including pursuant to the Announced Stock Split),
combine or otherwise change the Shares or its capitalization (other than by
redemption of the Rights in accordance with their terms as publicly disclosed
prior to February 13, 1998), (b) acquire or otherwise cause a reduction in the
number of outstanding Shares or other securities (other than as aforesaid) or
(c) issue or sell additional Shares (other than the issuance of Shares under
option prior to February 13, 1998, in accordance with the terms of such options
as publicly disclosed prior to February 13, 1998), shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, then, subject to the provisions of Section 14, the Purchaser, in its
sole discretion, may make such adjustments as it deems appropriate in the
purchase price and other terms of the Offer, including, without limitation, the
number or type of securities offered to be purchased or the number of securities
required to satisfy the Minimum Condition.
If, on or after February 13, 1998, the Company should declare or pay any
cash dividend on the Shares or other distribution on the Shares (including the
Stock Split Dividend), or issue with respect to the Shares any additional
Shares, shares of any other class of capital stock, other voting securities or
any securities convertible into, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, payable or distributable to
stockholders of record on a record date prior to the transfer of the Shares
purchased pursuant to the Offer to the Purchaser or its nominee or transferee on
the Company's stock transfer records, then, subject to the provisions of Section
14, (a) the purchase price of the Offer may, in the sole discretion of the
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (b) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of the Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance and
subject to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire purchase price or deduct from the purchase
price the amount or value thereof, as determined by the Purchaser in its sole
discretion.
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UNLESS THE COMPANY RESCINDS THE ANNOUNCED STOCK SPLIT AND THE STOCK SPLIT
DIVIDEND PRIOR TO THE RECORD DATE THEREFOR AND THE PURCHASER DETERMINES, IN ITS
SOLE DISCRETION, THAT THE HOLDERS OF SHARES HAVE NO FURTHER RIGHTS WITH RESPECT
TO THE ANNOUNCED STOCK SPLIT AND THE STOCK SPLIT DIVIDEND, THE PURCHASER, IN ITS
SOLE DISCRETION, MAY MAKE SUCH ADJUSTMENTS AS IT DEEMS APPROPRIATE IN THE
PURCHASE PRICE AND OTHER TERMS OF THE OFFER, INCLUDING (WITHOUT LIMITATION) IN
THE NUMBER OF SECURITIES REQUIRED TO SATISFY THE MINIMUM CONDITION AND REQUIRING
TENDERING STOCKHOLDERS RECEIVING THE STOCK SPLIT DIVIDEND, IF ANY, TO RECEIVE
AND HOLD SUCH DIVIDEND FOR THE ACCOUNT OF THE PURCHASER AND PROMPTLY REMIT AND
TRANSFER SUCH DIVIDEND TO THE DEPOSITARY FOR THE ACCOUNT OF THE PURCHASER. IF
THE EXPIRATION DATE OCCURS PRIOR TO MARCH 23, 1998, THE PURCHASER INTENDS TO
REQUIRE TENDERING STOCKHOLDERS RECEIVING THE STOCK SPLIT DIVIDEND, IF ANY, TO
RECEIVE AND HOLD SUCH DIVIDEND FOR THE ACCOUNT OF THE PURCHASER AND PROMPTLY
REMIT AND TRANSFER SUCH DIVIDEND TO THE DEPOSITARY FOR THE ACCOUNT OF THE
PURCHASER AS A CONDITION TO A TENDER BEING VALID AND SUCH STOCKHOLDER BEING
ENTITLED TO RECEIVE PAYMENT FOR SUCH TENDERED SHARES. IN THIS EVENT, THE
PURCHASE PRICE OF $108 PER SHARE WILL NOT BE ADJUSTED. IF, HOWEVER, THE
EXPIRATION DATE OCCURS ON OR AFTER MARCH 23, 1998, THE PURCHASER ANTICIPATES
THAT THE PURCHASE PRICE FOR THE SHARES PURSUANT TO THE OFFER WILL BE ADJUSTED
FOR THE EFFECT OF THE ANNOUNCED STOCK SPLIT TO AN AMOUNT EQUAL TO $54 PER SHARE
FOR EACH SPLIT-ADJUSTED SHARE AND THAT THE MINIMUM CONDITION WILL BE DETERMINED
BY REFERENCE TO SUCH INCREASED AMOUNT OF SHARES OUTSTANDING.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term or
provision of the Offer, the Purchaser will 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 a bidder's obligation to pay
for or return tendered securities promptly after the termination or withdrawal
of such bidder's offer), to pay for any Shares not theretofore accepted for
payment or paid for unless (1) the Minimum Condition shall have been satisfied,
(2) the Rights Condition shall have been satisfied, (3) the Control Share
Condition shall have been satisfied, (4) the Business Combination Condition
shall have been satisfied, and (5) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated. Furthermore, notwithstanding any other term or provision of the
Offer, the Purchaser will not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate or amend the Offer if, at any time on or after February
13, 1998, and before the acceptance of such Shares for payment or the payment
therefor, any of the following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a "Governmental Entity"), or by any other person,
domestic or foreign, before any court or Governmental Entity, (i)(A)
challenging or seeking to, or which is reasonably likely to, make illegal,
delay or otherwise directly or indirectly restrain or prohibit, or seeking
to or which is reasonably likely to, impose voting, procedural, price or
other requirements in connection with, the making of the Offer, the
acceptance for payment of, or payment for, some of or all the Shares by the
Purchaser, Computer Associates or any other affiliate of Computer Associates
or the consummation by the Purchaser, Computer Associates or any other
affiliate of Computer Associates of a merger or other similar business
combination with the Company, (B) seeking to obtain material damages or (C)
otherwise directly or indirectly relating to the transactions contemplated
by the Offer or any such merger or business combination, (ii) seeking to
prohibit the ownership or operation by the Purchaser, Computer Associates or
any other affiliate of Computer Associates of all or any portion of the
business or assets of the Company and its subsidiaries or of the Purchaser,
Computer Associates or any other affiliate of Computer Associates or to
compel the Purchaser, Computer Associates or any other affiliate of Computer
Associates or the Company or any subsidiary thereof to dispose of or hold
separate all or any portion of the business or assets of the Company or any
of its subsidiaries or of the Purchaser, Computer Associates or any other
affiliate of Computer Associates or the Company or any subsidiary thereof or
seeking to impose any limitations on the ability of the Purchaser, Computer
Associates or any other affiliate of Computer Associates to
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conduct such business or own such assets, (iii) seeking to impose or confirm
limitation on the ability of the Purchaser, Computer Associates or any other
affiliate of Computer Associates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by the Purchaser, Computer Associates or any
other affiliate of Computer Associates on all matters properly presented to
the Company's stockholders, (iv) seeking to require divestiture by the
Purchaser, Computer Associates or any other affiliate of Computer Associates
of any Shares, (v) seeking any material diminution in the benefits expected
to be derived by the Purchaser, Computer Associates or any other affiliate
of Computer Associates as a result of the transactions contemplated by the
Offer or any merger or other similar business combination with the Company,
(vi) otherwise directly or indirectly relating to the Offer or which
otherwise, in the sole judgment of the Purchaser, might materially adversely
affect the Company or any of its subsidiaries or the Purchaser, Computer
Associates or any other affiliate of Computer Associates or the value of the
Shares or (vii) in the sole judgment of the Purchaser, materially adversely
affecting the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of the Company or
any of its subsidiaries;
(b) there shall be any action taken or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, Computer Associates or any other affiliate of Computer
Associates or the Company or any of its subsidiaries or (ii) the Offer or
any merger or other similar business combination by the Purchaser, Computer
Associates or any other affiliate of Computer Associates with the Company,
by any government, legislative body or court, domestic, foreign or
supranational, or Governmental Entity, other than the routine application of
the waiting period provisions of the HSR Act to the Offer, that, in the sole
judgment of the Purchaser, might, directly or indirectly, result in any of
the consequences referred to in clauses (i) through (vii) of paragraph (a)
above;
(c) any change shall have occurred or been threatened (or any condition,
event or development shall have occurred or been threatened involving a
prospective change) in the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries that, in the sole judgment of the
Purchaser, is or may be materially adverse to the Company or any of its
subsidiaries, or the Purchaser shall have become aware of any facts that, in
the sole judgment of the Purchaser, have or may have material adverse
significance with respect to either the value of the Company or any of its
subsidiaries or the value of the Shares to the Purchaser, Computer
Associates or any other affiliate of Computer Associates;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States, (ii) any extraordinary or material adverse change in the financial
markets or major stock exchange indices in the United States or abroad or in
the market price of Shares, (iii) any change in the general political,
market, economic or financial conditions in the United States or abroad that
could, in the sole judgment of the Purchaser, have a material adverse effect
upon the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of the Company or
any of its subsidiaries or the trading in, or value of, the Shares, (iv) any
material change in United States currency exchange rates or any other
currency exchange rates or a suspension of, or limitation on, the markets
therefor, (v) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (vi) any limitation
(whether or not mandatory) by any government, domestic, foreign or
supranational, or Governmental Entity on, or other event that, in the sole
judgment of the Purchaser, might affect, the extension of credit by banks or
other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international
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calamity directly or indirectly involving the United States or (viii) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
(e) the Company or any of its subsidiaries shall have (i) split,
combined or otherwise changed, or authorized or proposed a split,
combination or other change of, the Shares or its capitalization (other than
the Announced Stock Split and other than by redemption of the Rights in
accordance with their terms as publicly disclosed prior to February 13,
1998), (ii) acquired or otherwise caused a reduction in the number of, or
authorized or proposed the acquisition or other reduction in the number of,
outstanding Shares or other securities (other than as aforesaid), (iii)
issued or sold, or authorized or proposed the issuance, distribution or sale
of, additional Shares (other than with respect to the Announced Stock Split
and other than the issuance of Shares under option prior to February 13,
1998, in accordance with the terms of such options as publicly disclosed
prior to February 13, 1998), shares of any other class of capital stock,
other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to acquire, any of the
foregoing, (iv) declared or paid, or proposed to declare or pay, any
dividend or other distribution, whether payable in cash, securities or other
property, on or with respect to any shares of capital stock of the Company
(other than the Stock Split Dividend), (v) altered or proposed to alter any
material term of any outstanding security (including the Rights) other than
to amend the Rights Agreement to make the Rights inapplicable to the Offer
and the Proposed Merger, (vi) incurred any debt other than in the ordinary
course of business or any debt containing burdensome covenants, (vii)
authorized, recommended, proposed or entered into an agreement with respect
to any merger, consolidation, liquidation, dissolution, business
combination, acquisition of assets, disposition of assets, release or
relinquishment of any material contractual or other right of the Company or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement or arrangement with any person or group that in the sole judgment
of the Purchaser could adversely affect either the value of the Company or
any of its subsidiaries or the value of the Shares to the Purchaser,
Computer Associates or any other affiliate of Computer Associates, (ix)
entered into any employment, severance or similar agreement, arrangement or
plan with or for the benefit of any of its employees other than in the
ordinary course of business or entered into or amended any agreements,
arrangements or plans so as to provide for increased or accelerated benefits
to the employees as a result of or in connection with the transactions
contemplated by the Offer, (x) except as may be required by law, taken any
action to terminate or amend any employee benefit plan (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended) of the Company or any of its subsidiaries, or the Purchaser shall
have become aware of any such action that was not disclosed in publicly
available filings prior to February 13, 1998, or (xi) amended, or authorized
or proposed any amendment to, its certificate of incorporation or its
by-laws (other than any amendment effected as a result of the adoption of
the Proposals), or the Purchaser shall become aware that the Company or any
of its subsidiaries shall have proposed or adopted any such amendment that
was not disclosed in publicly available filings prior to February 13, 1998;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Purchaser shall have otherwise learned that (i) any person,
entity (including the Company or any of its subsidiaries) or "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired or
proposed to acquire beneficial ownership of more than 5% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted any right, option or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of the Company (including the Shares), other than acquisitions
for bona fide arbitrage purposes only and other than as disclosed in a
Schedule 13G on file with the Commission prior to February 13, 1998, (ii)
any such person, entity or group that prior to February 13,
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1998, had filed such a Schedule with the Commission has acquired or proposes
to acquire, through the acquisition of stock, the formation of a group or
otherwise, beneficial ownership of 1% or more of any class or series of
capital stock of the Company (including the Shares), or shall have been
granted any right, option or warrant, conditional or otherwise, to acquire
beneficial ownership of 1% or more of any class or series of capital stock
of the Company (including the Shares), (iii) any person or group shall have
entered into a definitive agreement or an agreement in principle or made a
proposal with respect to a tender offer or exchange offer or a merger,
consolidation or other business combination with or involving the Company or
(iv) any person shall have filed a Notification and Report Form under the
HSR Act (or amended a prior filing to increase the applicable filing
threshold set forth therein) or made a public announcement reflecting an
intent to acquire the Company or any assets or subsidiaries of the Company;
(g) any approval, permit, authorization, favorable review or consent of
any Governmental Entity (including those described or referred to in Section
15) shall not have been obtained on terms satisfactory to Purchaser in its
sole discretion;
(h) the Purchaser shall become aware (i) that any material contractual
right of the Company or any of its subsidiaries shall be impaired or
otherwise adversely affected as a result of the transactions contemplated by
the Offer or the Proposed Merger, or (ii) of any covenant, term or condition
in any of the Company's or any of its subsidiaries' instruments or
agreements that are or may be materially adverse to the value of the Shares
in the hands of the Purchaser, Computer Associates or any other affiliate of
Computer Associates (including, without limitation, any event of default
that may ensue as a result of the consummation of the Offer, the Proposed
Merger or any other business combination or the acquisition of control of
the Company); or
(i) the Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer, or the Purchaser,
Computer Associates or any other affiliate of Computer Associates shall have
entered into a definitive agreement or announced an agreement in principle
with the Company providing for a merger or other business combination with
the Company or the purchase of stock or assets of the Company;
which, in the sole judgment of the Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by the Purchaser, Computer
Associates or any other affiliate of Computer Associates) giving rise to any
such condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Computer Associates and may be asserted by the Purchaser regardless of the
circumstances giving rise to any such condition or may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion. The failure by the Purchaser at any time to exercise any of the
foregoing rights will not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances will not be
deemed a waiver with respect to any other facts and circumstances and each such
right will be deemed an ongoing right that may be asserted at any time and from
time to time. Any determination by the Purchaser concerning the events described
in this Section 14 will be final and binding upon all parties.
A public announcement may be made of a material change in, or waiver of,
such conditions and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
The Purchaser acknowledges that the Commission believes that (a) if the
Purchaser is delayed in accepting the Shares it must either extend the Offer or
terminate the Offer and promptly return the Shares and (b) the circumstances in
which a delay in payment is permitted are limited and do not include unsatisfied
conditions of the Offer, except with respect to any approval required under the
HSR Act and most other regulatory approvals.
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15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as set
forth in this Offer to Purchase, based on its review of publicly available
filings by the Company with the Commission and other publicly available
information regarding the Company, the Purchaser is not aware of any licenses or
regulatory permits that appear to be material to the business of the Company and
its subsidiaries, taken as a whole, and that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) as contemplated herein, or any filings, approvals or
other actions by or with any domestic, foreign or supranational governmental
authority or administrative or regulatory agency that would be required for the
acquisition or ownership of the Shares (or the indirect acquisition of the stock
of the Company's subsidiaries) by the Purchaser pursuant to the Offer as
contemplated herein. Should any such approval or other action be required, it is
presently contemplated that such approval or action would be sought except as
described below under "State Takeover Laws." Should any such approval or other
action be required, there can be no assurance that any such approval or action,
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Company's or its subsidiaries' businesses,
or that certain parts of the Company's, Computer Associates' or any of their
respective subsidiaries' businesses might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain such
approval or action or in the event that such approvals were not obtained or such
actions were not taken. The Purchaser's obligation to purchase and pay for
Shares is subject to certain conditions, including conditions with respect to
litigation and governmental actions. See the Introduction and Section 14 for a
description thereof.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of Nevada.
As described above, pursuant to Nevada Control Share Acquisition Statute an
"acquiring person", who acquires a "controlling interest" in an "issuing
corporation," may not exercise voting rights on any "control shares" unless such
voting rights are conferred by a majority vote of the disinterested stockholders
of the issuing corporation at a meeting of such stockholders. See
"Introduction."
The above provisions do not apply if the articles of incorporation or bylaws
of the Company in effect on the tenth day following the acquisition of a
controlling interest by an acquiring person provide that said provisions do not
apply. The Articles and Bylaws currently do not exclude the Company from the
restrictions imposed by such provisions. The Control Share Condition would be
satisfied if the Bylaws were amended such that, on the tenth day following
consummation of the Offer, the Bylaws provide that the provisions of the Nevada
Control Share Acquisition Statute do not apply, or, if the Purchaser, in its
sole discretion, were satisfied that the Nevada Control Share Acquisition
Statute was invalid or its restrictions were otherwise inapplicable to the
Purchaser in connection with the Offer and the Proposed Merger for any reason,
including, without limitation, those specified in the Nevada Control Share
Acquisition Statute.
As further described above, the Nevada Business Combination Statute
restricts the ability of a "resident domestic corporation" to engage in any
combination with an "interested stockholder" for three years following the
interested stockholder's date of acquiring the shares that caused such
stockholder to become an interested stockholder, unless the combination or the
purchase of shares by the interested stockholder on the interested stockholder's
date of acquiring the shares that caused such stockholder to become an
interested stockholder is approved by the board of directors of the resident
domestic corporation before that date. See "Introduction." If the combination
was not previously approved, the interested stockholder may effect a combination
after the three-year period only if such stockholder receives approval from a
majority of the disinterested shares or the offer meets certain fair price
criteria.
The Business Combination Condition would be satisfied if the Board approved
the Offer and the Proposed Merger prior to consummation of the Offer and the
Proposed Merger or if the Purchaser, in its sole discretion, were satisfied that
the Nevada Business Combination Statute was invalid or its restrictions were
otherwise inapplicable to the Purchaser in connection with the Offer and the
Proposed Merger for any reason, including, without limitation, those specified
in the Nevada Business Combination Statute.
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A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that
the State of Indiana 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 acquiror 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.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. The Purchaser does not know whether any of these laws will, by their
terms, apply to the offer and has not complied with any such laws. Should any
person seek to apply any state takeover law, the Purchaser will take such action
as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
and the Proposed Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, the Purchaser might be required
to file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Purchaser might be unable to accept
for payment any shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer or the Proposed Merger. In such case, the
Purchaser may not be obligated to accept for payment any Shares tendered. See
Section 14.
ANTITRUST. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The acquisition of Shares
pursuant to the Offer and the Proposed Merger is subject to such requirements.
On February 13, 1998, Computer Associates filed a Premerger Notification and
Report Form with the Antitrust Division and the FTC under the HSR Act in
connection with the purchase of Shares that would include Shares acquired
pursuant to the Offer and the Proposed Merger, and the required waiting period
will expire at 11:59 p.m., New York City time, on March 16, 1998, unless earlier
terminated by the Antitrust Division or the FTC or the Purchaser receives a
request for additional information or documentary material prior thereto. If,
within such 30-calendar-day waiting period, either the FTC or the Antitrust
Division were to request additional information or documentary material from
Computer Associates, the waiting period would be extended for an additional
period of 20 calendar days following the date of substantial compliance with
such request by Computer Associates. Only one extension of the waiting period
pursuant to a request for additional information is authorized by the rules
promulgated under the HSR Act. Thereafter, the waiting period could be extended
only by court order or with the consent of Computer Associates. The additional
20-calendar-day waiting period may be terminated sooner by the FTC or the
Antitrust Division. Although the Company is required to file certain information
and documentary material with the Antitrust Division and the FTC in connection
with the Offer, neither the Company's failure to make such filings nor a request
made to the Company from the Antitrust Division or the FTC for additional
information or documentary material will extend the waiting period with respect
to the purchase of Shares pursuant to the Offer and the Proposed Merger.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer and the Proposed
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Merger. At any time before or after the Purchaser's purchase of Shares, the
Antitrust Division or the FTC could take such action under the antitrust laws as
either deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer and the Proposed Merger, the
divestiture of Shares purchased pursuant to the Offer or the divestiture of
substantial assets of Computer Associates, the Company or any of their
respective subsidiaries or affiliates. Private parties as well as state
attorneys general may also bring legal actions under the antitrust laws under
certain circumstances. See Section 14.
Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, the Purchaser believes that the
acquisition of Shares pursuant to the Offer and the Proposed Merger should not
violate the applicable antitrust laws. Nevertheless, there can be no assurance
that a challenge to the Offer and the Proposed Merger on antitrust grounds will
not be made, or, if such challenge is made, what the result will be. See Section
14.
EC MERGER REGULATION. According to publicly available information, the
Company may conduct substantial operations within the European Community (the
"EC") and certain of the individual member states of the EC. The EC Merger
Regulation requires that notices of concentrations with a "community dimension"
be provided to the EC Commission for review and approval prior to being put into
effect. The Offer would be deemed to have a "community dimension" if the
combined aggregate worldwide annual revenues of both the Company and Computer
Associates exceed ECU 5 billion, if the community-wide annual revenues of each
of the Company and Computer Associates exceed ECU 250 million and if both the
Company and Computer Associates do not receive more than two-thirds of their
respective community-wide revenues from one and the same member state. Based
upon publicly available information, the Purchaser believes that the Offer would
be considered to have a "community dimension." If the Offer falls within the EC
Merger Regulation, the EC Commission, as opposed to individual member states,
has exclusive jurisdiction to review it, subject to certain exceptions.
Under the EC Merger Regulation, a concentration that meets the foregoing
guidelines requires the filing of a notice in a prescribed form with the EC
Commission. This filing must normally be made within seven days of the earlier
of the announcement of a public bid, the conclusion of the relevant agreement or
the acquisition of a controlling interest, although extensions of time are
sometimes granted. Transactions subject to the filing requirements of the EC
Merger Regulation are suspended automatically until three weeks after receipt of
the notice. The EC Commission may extend the suspension period for such period
as it finds necessary to make a final decision on the legality of the
transaction. In the case of a public bid, the bidder may acquire shares of the
target company during the suspension period, but may not vote such shares until
after the end of the period unless the EC Commission grants permission to do so
in order to maintain the full value of the bidder's investment.
The EC Commission must decide whether to initiate proceedings within one
month after the receipt of the notice, subject to certain extensions for EC
holidays or if an individual member state has requested a referral of the
transaction. If proceedings are initiated, the EC Commission must reach a
decision in the proceedings within four months of the commencement of the
proceedings. If the EC Commission fails to reach a decision within either of
these time periods the transaction will be deemed to be compatible with the
common market.
If the EC Commission declares the Offer to be not compatible with the common
market, it may prevent the consummation of the transaction, order a divestiture
if the transaction has already been consummated or impose conditions or other
obligations. In the event that the transaction is found not to be subject to the
EC Merger Regulation, various national merger control regimes of the member
states may apply, resulting in the possibility that approvals may be necessary
from the various national authorities.
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There can be no assurance that a challenge to the Offer will not be made
pursuant to the EC Merger Regulation or, alternatively, pursuant to the merger
regulations of one or more of the various member states, or, if such a challenge
is made, what the outcome will be. See Section 14.
INVESTMENT CANADA ACT. According to publicly available information, the
Company conducts certain operations in Canada. The Investment Canada Act (the
"ICA") requires that notice of the acquisition of "control" (as defined in the
ICA) by "non-Canadians" (as defined by the ICA) of any "Canadian business" (as
defined by the ICA) be furnished to Investment Canada, a Canadian governmental
agency.
The acquisition of Shares by the Purchaser pursuant to the Offer may
constitute an indirect acquisition of a "Canadian business" within the meaning
of the ICA. The Purchaser intends to file any required notice under the ICA.
CANADIAN PRE-MERGER NOTIFICATION REQUIREMENTS. Certain provisions of
Canada's Competition Act require pre-notification to the Director of
Investigation and Research appointed under the Competition Act (the "Canadian
Director") of significant corporate transactions, such as the acquisition of a
large percentage of the stock of a public company which has Canadian operations,
or a merger or consolidation involving such an entity. Pre-notification is
generally required with respect to transactions in which the parties to the
transactions and their affiliates have assets in Canada, or annual gross
revenues from sales in, from or into Canada, in excess of Cdn. $400 million and
which involve the direct or indirect acquisition of an operating business, the
value of the assets of which, or the gross revenues from sales in or from Canada
generated from these assets, exceed Cdn. $35 million per year. For transactions
subject to the notification requirements, notice must be given seven or 21 days
prior to the completion of the transaction depending on the information provided
to the Canadian Director. The Canadian Director may waive the waiting period.
After the applicable waiting period expires or is waived, the transaction may be
completed. If the Canadian Director determines that the proposed transaction
prevents or lessens, or is reasonably likely to prevent or lessen, competition
substantially in a definable market, the Canadian Director may apply to the
Competition Tribunal, a special purpose Canadian tribunal, to, among other
things, require the disposition of the Canadian assets acquired in such
transaction. The Purchaser intends to file any required notice and information
with respect to its proposed acquisition with the Canadian Director for an
advance ruling certificate to the effect that the Offer or Proposed Merger would
not prevent or lessen, or be likely to prevent or lessen, competition
substantially.
OTHER FOREIGN APPROVALS. According to publicly available information, the
Company also owns property and conducts business in a number of other foreign
countries and jurisdictions. In connection with the acquisition of the Shares
pursuant to the Offer or the Proposed Merger, the laws of certain of those
foreign countries and jurisdictions may require the filing of information with,
or the obtaining of the approval of, governmental authorities in such countries
and jurisdictions. The governments in such countries and jurisdictions might
attempt to impose additional conditions on the Company's operations conducted in
such countries and jurisdictions as a result of the acquisition of the Shares
pursuant to the Offer or the Proposed Merger. There can be no assurance that the
Purchaser will be able to cause the Company or its subsidiaries to satisfy or
comply with such laws or that compliance or noncompliance will not have adverse
consequences for the Company or any subsidiary after purchase of the Shares
pursuant to the Offer or the Proposed Merger Combination.
MARGIN CREDIT REGULATIONS. Federal Reserve Board Regulations G,T,U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. The borrowings under
the Credit Facilities will not be directly secured by a pledge of the Shares. In
addition, Computer Associates and the Purchaser believe that such borrowings
will not be "indirectly secured" within the meaning of the Margin Credit
Regulations, as interpreted. Accordingly, Computer Associates and the Purchaser
believe that the Margin Credit Regulations are not applicable to the borrowings
under the Credit Facilities.
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16. CERTAIN FEES AND EXPENSES. Bear, Stearns & Co. Inc. ("Bear Stearns") is
acting as Dealer Manager in connection with the Offer and as financial advisor
to Computer Associates and the Purchaser in connection with the proposed
acquisition of the Company. Computer Associates is obligated to pay to Bear
Stearns, if, as more fully described in the engagement letter relating thereto,
during the term of the engagement or within 12 months thereafter Computer
Associates acquires the Company or more than 50% of its outstanding voting
securities, a fee of $5 million and a fee of $1 million (which will be credited
against such $5 million fee) if Computer Associates requests Bear Stearns to
render a customary fairness opinion. Bear Stearns is also entitled to act as
sole lead underwriter, placement agent and financial advisor in connection with
certain debt and equity financings (and certain refinancings) and certain asset
sales for a specified period following the acquisition and to receive fees in
connection therewith. In addition, Computer Associates has agreed to reimburse
Bear Stearns for its reasonable expenses, including reasonable fees and
disbursements of its counsel, incurred in rendering its services under its
engagement agreement with Computer Associates and has agreed to indemnify Bear
Stearns against certain liabilities and expenses in connection with the Offer
and the Proposed Merger, including certain liabilities under the federal
securities laws. Bear Stearns from time to time renders various investment
banking services to Computer Associates and its affiliates for which it is paid
customary fees.
In the ordinary course of business, Bear Stearns and its affiliates may
actively trade the securities of the Company for their own account and for the
account of customers and accordingly may, at any time, hold long or short
positions in such securities. As of February 16, 1998, Bear Stearns held for its
own account and the account of its affiliates a net short position of
approximately 700 shares.
MacKenzie Partners, Inc. has been retained by Computer Associates as
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares and Rights by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee
stockholders to forward material relating to the Offer to beneficial owners of
Shares and Rights. Computer Associates will pay the Information Agent reasonable
and customary compensation for all such services in addition to reimbursing the
Information Agent for reasonable out-of-pocket expenses in connection therewith.
Computer Associates has agreed to indemnify the Information Agent against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
In addition, First Chicago Trust Company of New York has been retained as
the Depositary. Computer Associates will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, will
reimburse the Depositary for its reasonable out-of-pocket expenses in connection
therewith and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
Except as set forth above, neither Computer Associates nor the Purchaser
will pay any fees or commissions to any broker, dealer or other person (other
than the Information Agent and the Dealer Manager) for soliciting tenders of
Shares and Rights pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies and other nominees will, upon request, be reimbursed by the
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares or Rights residing in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the securities, blue sky or other laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Shares in such jurisdiction.
In any jurisdiction where 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 the Purchaser by the Dealer Manager or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
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Computer Associates and the Purchaser have filed with the Commission a
Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments thereto. Such
Schedule 14D-1 and any amendments thereto, including exhibits, may be examined
and copies may be obtained from the office of the Commission in the same manner
as described in Section 8 with respect to information concerning the Company,
except that they will not be available at the regional offices of the
Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR COMPUTER ASSOCIATES NOT CONTAINED
IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. Neither the delivery of the Offer to Purchase nor any purchase
pursuant to the Offer shall, under any circumstances, create any implication
that there has been no change in the affairs of Computer Associates, the Company
or any of their respective subsidiaries since the date as of which information
is furnished or the date of this Offer to Purchase.
CAI COMPUTER SERVICES CORP.
February 17, 1998
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
COMPUTER ASSOCIATES AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF COMPUTER ASSOCIATES. The following
table sets forth the name, age, business address and present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
Computer Associates. Each such person is a citizen of the United States of
America, except for Willem F.P. de Vogel who is a citizen of The Netherlands.
Unless otherwise indicated below, the business address of each person is c/o
Computer Associates International, Inc., One Computer Associates Plaza,
Islandia, New York 11788. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Computer Associates.
DIRECTORS (INCLUDING EXECUTIVE
OFFICERS WHO ARE DIRECTORS)
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS AGE HELD DURING PAST FIVE YEARS
- ---------------------------------- --- ------------------------------------------------------------------------
<S> <C> <C>
Russell M. Artzt.................. 50 Director of Computer Associates since 1980. Executive Vice
President--Research and Development since April 1987 and Senior
Development Officer since 1976.
Willem F.P. de Vogel.............. 46 Director of Computer Associates since 1991. President of Three Cities
Three Cities Research, Inc. Research, Inc., a private investment management firm in New York City,
135 East 57th Street since 1981. From August 1981 to August 1990, Mr. de Vogel served as a
New York, New York 10022 director of Computer Associates. He is also a director of MLX Corp.
Irving Goldstein.................. 59 Director of Computer Associates since 1990. Director General and Chief
INTELSAT Executive Officer of INTELSAT, an international satellite
3400 International Drive, N.W. telecommunications company, since February 1992. He was Chairman and
Washington, D.C. 20008 Chief Executive Officer of Communications Satellite Corporation from
October 1985 to February 1992 and President from May 1983 to October
1985, and was a director from May 1983 to February 1992.
Richard A. Grasso................. 50 Director of Computer Associates since January 1994. Chairman and Chief
New York Stock Exchange Executive Officer of the New York Stock Exchange since June 1995. He was
11 Wall Street Executive Vice Chairman of the New York Stock Exchange from 1991 to 1995
New York, New York 10005 and President and Chief Operating Officer of the New York Stock Exchange
from 1988 to 1995.
Shirley Strum Kenny............... 62 Director of Computer Associates since July 1994. President of State
President's Office University of New York at Stony Brook since 1994. She was President of
State University of Queens College of the City University of New York from 1989 to 1994. She
New York at Stony Brook is also a director of Toys "R" Us, Inc.
Stony Brook, New York 11794
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS AGE HELD DURING PAST FIVE YEARS
- ---------------------------------- --- ------------------------------------------------------------------------
<S> <C> <C>
Sanjay Kumar...................... 35 Director of Computer Associates since January 1994. President and Chief
Operating Officer since January 1994. He was Senior Vice
President--Planning from April 1989 to December 1992 and Executive Vice
President--Operations from January 1993 to December 1993.
Charles B. Wang................... 52 Director of Computer Associates since 1976. Chief Executive Officer
since 1976 and Chairman of the Board since April 1980. He is also a
director of Symbol Technologies, Inc.
</TABLE>
EXECUTIVE OFFICERS WHO ARE
NOT DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT; MATERIAL POSITIONS
BUSINESS ADDRESS AGE HELD DURING PAST FIVE YEARS
- ----------------------------- --- ----------------------------------------------------------------------------
<S> <C> <C>
Michael A. McElroy........... 53 Vice President and Secretary. He was elected Secretary effective January
1997 and has been a Vice President since 1989.
Charles P. McWade............ 52 Senior Vice President--Finance since April 1990. He was Senior Vice
President and Treasurer from April 1988 to March 1994.
Lisa Savino.................. 32 Vice President and Treasurer since November 1997. She was Vice President and
Assistant Treasurer April 1996 to November 1997. She was Assistant Vice
President and Assistant Treasurer from April 1995 to April 1996. From 1990
to March 1995, she held various positions at Computer Associates.
Peter A. Schwartz............ 54 Senior Vice President--Finance and Chief Financial Officer since April 1987.
Ira H. Zar................... 36 Senior Vice President--Finance since November 1997. He was Senior Vice
President and Treasurer from April 1994 to October 1997. He was previously
Vice President--Finance from April 1990 to March 1994.
</TABLE>
I-2
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name and position with the Purchaser of each director and
executive officer of the Purchaser and, with respect to Steven M. Woghin, his
age, present principal occupation or employment, and material occupations,
positions, offices or employments for the past five years. For further
information regarding such persons (other than Steven M. Woghin), see paragraph
1 above.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE PURCHASER
- ----------------------------- --- ----------------------------------------------------------------------------
<S> <C> <C>
Sanjay Kumar................. 35 Director and President of the Purchaser since its incorporation on February
17, 1997.
Peter A. Schwartz............ 54 Director, Vice President and Treasurer of the Purchaser since its
incorporation on February 17, 1997.
Steven M. Woghin............. 51 Director, Vice President and Secretary of the Purchaser since its
incorporation on February 17, 1997. Senior Vice President and General
Counsel of Computer Associates since April 1995. He was Vice
President--Legal of Computer Associates from April 1992 to March 1995. Prior
to 1990 through April 1992, he was a partner in the law firm of Arter &
Hadden.
</TABLE>
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and Rights 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 one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT DELIVERY:
FIRST CHICAGO TRUST COMPANY FIRST CHICAGO TRUST COMPANY FIRST CHICAGO TRUST COMPANY
OF NEW YORK OF NEW YORK OF
Tenders & Exchanges Tenders & Exchanges NEW YORK
Suite 4660 c/o The Depository Trust Tenders & Exchanges
P.O. Box 2569 Company Suite 4680
Jersey City, New Jersey 55 Water Street, DTC TAD, 14 Wall Street, 8th Floor
07303-2569 Vietnam Veterans Memorial New York, New York 10005
Plaza
New York, New York 10041
BY FACSIMILE:
(FOR ELIGIBLE INSTITUTIONS
ONLY):
(201) 222-4720
or
(201) 222-4721
</TABLE>
CONFIRM FACSIMILE BY TELEPHONE:
(201) 222-4707
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500
or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-2000
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COMPUTER SCIENCES CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 17, 1998
BY
CAI COMPUTER SERVICES CORP.
A WHOLLY OWNED SUBSIDIARY OF
COMPUTER ASSOCIATES INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 16, 1998, UNLESS THE OFFER IS EXTENDED
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
IF BY MAIL: IF BY HAND: IF BY OVERNIGHT DELIVERY:
<S> <C> <C>
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2569 Vietnam Veterans Memorial Plaza New York, NY 10005
New York, NY 10041
</TABLE>
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
(201) 222-4720
or
(201) 222-4721
CONFIRM FACSIMILE BY TELEPHONE:
(201) 222-4707
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
This Letter of Transmittal is to be completed by stockholders of Computer
Sciences Corporation if certificates evidencing Shares and/or Rights (each as
defined in the Offer to Purchase, dated February 17, 1998, (the "Offer to
Purchase")), are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase) is utilized, if tenders of Shares and/or
Rights are to be made by book-entry transfer to an account maintained by First
Chicago Trust Company of New York (the "Depositary") at The Depository Trust
Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (each a
"Book-Entry Transfer Facility" and collectively referred to as the "Book-Entry
Transfer Facilities"), pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Stockholders who tender Shares or Rights by book-entry
transfer are referred to herein as "Book-Entry Stockholders." UNLESS AND UNTIL
COMPUTER ASSOCIATES INTERNATIONAL, INC., A DELAWARE CORPORATION (THE
"PURCHASER"), DECLARES THAT THE RIGHTS CONDITION (AS DEFINED IN THE OFFER TO
PURCHASE) IS SATISFIED, HOLDERS OF SHARES WILL BE REQUIRED TO TENDER ONE RIGHT
FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. If the
Distribution Date (as defined in the Offer to Purchase) does not occur prior to
the Expiration Date (as defined in the Offer to Purchase), a tender of Shares
will also constitute a tender of the associated Rights. If the Distribution Date
has occurred and the certificates evidencing Rights ("Rights Certificates") are
distributed by Computer Sciences Corporation, a Nevada corporation, to holders
of Shares prior to the time a holder's Shares are tendered pursuant to the Offer
(as defined in the Offer to Purchase), in order for Rights (and the
corresponding Shares) to be validly tendered, Rights Certificates representing a
number of Rights equal to the number of Shares tendered must be delivered to the
Depositary or, if available, a Book-Entry Confirmation (as defined in the Offer
to Purchase) received by the Depositary with respect thereto. If the
Distribution Date has occurred and Rights Certificates are not distributed prior
to the time Shares are tendered pursuant to the Offer, Rights may be tendered
prior to a stockholder receiving Rights Certificates by use of the guaranteed
delivery procedure described below. In any case, a tender of Shares constitutes
an agreement by the tendering stockholder to deliver Rights Certificates
representing a number of Rights equal to the number of Shares tendered pursuant
to the Offer to the Depositary within three business days after the date Rights
Certificates are distributed. The Purchaser reserves the right to require that
the Depositary receive Rights Certificates, or a Book-Entry Confirmation, if
available, with respect to such Rights, prior to accepting the related Shares
for payment pursuant to the Offer if the Distribution Date has occurred prior to
the Expiration Date. See Section 3 of the Offer to Purchase. The Purchaser will
not pay any additional consideration for any Rights tendered pursuant to the
Offer.
Holders of Shares and Rights whose certificates for such Shares (the "Share
Certificates") and, if applicable, Rights Certificates, are not immediately
available (including, if the Distribution Date has occurred, but Rights
Certificates have not yet been distributed) or who cannot deliver their Share
Certificates or, if applicable, their Rights Certificates, and all other
required documents to the Depositary on or prior to the Expiration Date or who
cannot complete the procedures for book-entry transfer on a timely basis, must
tender their Shares and Rights according to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
2
<PAGE>
See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
NOTE: SIGNATURES MUST BE PROVIDED ON THE INSIDE AND REVERSE BACK COVER. PLEASE
READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARE(S) TENDERED
NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
<S> <C> <C> <C>
<CAPTION>
TOTAL NUMBER OF
SHARES
SHARE REPRESENTED BY NUMBER
CERTIFICATE SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
Total Shares
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the
Depositary are being tendered. See Instruction 4.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF RIGHTS TENDERED
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) RIGHTS CERTIFICATE(S) AND
(PLEASE FILL IN, IF BLANK, EXACTLY AS RIGHT(S) TENDERED*
NAME(S) APPEAR(S) ON RIGHTS CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
<S> <C> <C> <C>
<CAPTION>
TOTAL NUMBER OF
RIGHTS
RIGHTS REPRESENTED BY NUMBER
CERTIFICATE RIGHTS OF RIGHTS
NUMBER(S)** CERTIFICATE(S) TENDERED***
<S> <C> <C> <C>
Total Rights
* If the tendered Rights are represented by separate certificates, complete the certificate numbers of such
Rights Certificates. Stockholders tendering Rights which are not represented by separate certificates should
retain a copy of this Letter of Transmittal in order to accurately complete a Letter of Transmittal if Rights
Certificates are received.
** Need not be completed by Book-Entry Stockholders.
*** Unless otherwise indicated, it will be assumed that all Rights represented by certificates delivered to the
Depositary are being tendered. See Instruction 4.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE
DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Book-Entry Transfer Facility:
/ / The Depository Trust Company / / Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT
TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If Delivery by Book-Entry Transfer Facility:
/ / The Depository Trust Company / / Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
/ / CHECK HERE IF RIGHTS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER (IF AVAILABLE) MADE TO AN ACCOUNT
MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Book-Entry Transfer Facility:
/ / The Depository Trust Company / / Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
/ / CHECK HERE IF RIGHTS ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT
TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If Delivery by Book-Entry Transfer Facility:
/ / The Depository Trust Company / / Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
</TABLE>
5
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to CAI Computer Services Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Computer
Associates International, Inc., a Delaware corporation ("Computer Associates"),
the above described shares of Common Stock, par value $1.00 per share (the
"Shares"), of Computer Sciences Corporation, a Nevada corporation (the
"Company"), and (unless and until the Purchaser declares that the Rights
Condition (as defined in the Offer to Purchase) has been satisfied) the
associated Series A Junior Participating Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement dated as of December 21, 1988,
as amended and restated as of August 1, 1996 (the "Rights Agreement"), between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, at a
purchase price of $108 per Share (and associated Right), net to the seller in
cash, without interest thereon, in each case upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 17, 1998 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase and any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Unless the context otherwise requires, all references to Shares shall
include the associated Rights and all references to the Rights shall include all
benefits that may inure to holders of the Rights pursuant to the Rights
Agreement. The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
subsidiaries or affiliates the right to purchase all or any portion of the
Shares and Rights tendered pursuant to the Offer.
On February 2, 1998, the Company publicly announced a two-for-one split of
the Shares in the form of a 100% stock dividend thereon (the "Stock Split
Dividend"). The Company further announced that the Stock Split Dividend will be
payable on March 23, 1998 to holders of record of Shares on March 2, 1998. The
effect of the Stock Split Dividend on the terms of the Offer is described in
more detail in the Offer to Purchase.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares and Rights tendered herewith in accordance with the terms and subject
to the conditions of the Offer, the undersigned hereby sells, assigns, and
transfers to, or upon the order of, the Purchaser all right, title and interest
in and to all of the Shares and Rights that are being tendered hereby and any
and all dividends on the Shares or any distribution (including, without
limitation, the issuance of additional Shares pursuant to the Stock Split
Dividend or any other stock dividend or stock split, the issuance of other
securities or the issuance of rights for the purchase of any securities) with
respect to the Shares or Rights (other than the Redemption Price (as defined in
the Offer to Purchase)) that is declared or paid by the Company on or after
February 13, 1998 and is payable or distributable to stockholders of record on a
record date prior to the transfer into the name of the Purchaser or its nominees
or transferees on the Company's stock transfer records of the Shares and Rights
purchased pursuant to the Offer (except that if the Rights are redeemed by the
Company's Board of Directors, tendering stockholders who are holders of record
as of the applicable record date will be entitled to receive and retain the
Redemption Price) (a "Distribution"), and constitutes and irrevocably appoints
the Depositary the true and lawful agent, attorney-in-fact and proxy of the
undersigned to the full extent of the undersigned's rights with respect to such
Shares and Rights (and any Distributions) with full power of substitution (such
power of attorney and proxy being deemed to be an irrevocable power coupled with
an interest), to (a) deliver Share Certificates and Rights Certificates (as
defined in the Offer to Purchase) (and any Distributions), or transfer ownership
of such Shares or Rights on the account books maintained by the Book-Entry
Transfer Facilities together in either such case with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchaser upon receipt
by the Depositary, as the undersigned's agent, of the purchase price, (b)
present such Shares and Rights (and any Distributions) for transfer on the books
of the Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares and Rights (and any Distribution), all in
accordance with the terms and subject to the conditions of the Offer.
6
<PAGE>
The undersigned understands that if the Distribution Date (as defined in the
Offer to Purchase) has occurred and Rights Certificates have been distributed by
the Company to holders of the Shares prior to the time the Shares are tendered
herewith, in order for the Rights (and the corresponding Shares) to be validly
tendered, Rights Certificates representing a number of Rights equal to the
number of Shares being tendered herewith must be delivered to the Depositary or,
if available, a Book-Entry Confirmation (as defined in Instruction 2) must be
received by the Depositary with respect thereto. If the Distribution Date has
occurred and Rights Certificates have not been distributed prior to the time the
Shares are tendered herewith, the undersigned agrees to deliver the Rights
Certificates representing a number of Rights equal to the number of Shares
tendered herewith to the Depositary within three business days after the date
such Rights Certificates are distributed. The undersigned understands that if
the Rights Condition is not satisfied, the Purchaser reserves the right to
require that the Depositary receive Rights Certificates, or a Book-Entry
Confirmation, if available, with respect to such Rights prior to accepting the
related Shares for payment, if the Distribution Date has occurred prior to the
Expiration Date. In that event, payment for the Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of, among other things, such Rights Certificates.
The undersigned hereby irrevocably appoints Sanjay Kumar and Steven M.
Woghin, and each of them, the attorneys-in-fact and proxies of the undersigned,
each with full power of substitution, to vote in such manner as each such
attorney and proxy or his substitute shall, in his sole discretion, deem proper,
and otherwise act (including pursuant to written consent) with respect to all of
the Shares and Rights tendered hereby which have been accepted for payment by
the Purchaser prior to the time of such vote or action (and any Distributions)
which the undersigned is entitled to vote at any meeting of stockholders
(whether annual or special and whether or not an adjourned meeting) of the
Company, or by written consent in lieu of such meeting, or otherwise. This power
of attorney and proxy is coupled with an interest in the Company and in the
Shares and Rights and is irrevocable and is granted in consideration of, and is
effective upon, the acceptance for payment of such Shares and Rights by the
Purchaser in accordance with the terms of the Offer. Such acceptance for payment
shall revoke, without further action, any other power of attorney or proxy
granted by the undersigned at any time with respect to such Shares and Rights
(and any Distributions) and no subsequent powers of attorney or proxies will be
given (and if given will be deemed not to be effective) with respect thereto by
the undersigned. The undersigned understands that the Purchaser reserves the
right to require that, in order for the Shares and the Rights to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares and Rights, the Purchaser or its designees is able to exercise full
voting rights with respect to such Shares, Rights and other securities,
including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares and the
Rights tendered hereby (and any Distributions) and that, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares and
Rights tendered hereby (and any Distributions). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any and all other Distributions in respect of the Shares and the
Rights tendered hereby, accompanied by appropriate documentation of transfer
and, pending such remittance or appropriate assurance thereof, the Purchaser
shall be entitled to all rights and privileges as owner of any such
Distributions, and may withhold the entire purchase price or deduct from the
purchase price of Shares and Rights tendered hereby the amount or value thereof,
as determined by the Purchaser in its sole discretion.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable, provided that the Shares and Rights tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment as provided in the Offer to Purchase, may also
be withdrawn at any time after April 17, 1998 (or such later date as may apply
in case the Offer is extended).
The undersigned understands that tenders of Shares and Rights 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 the Purchaser upon the terms and subject to the conditions of
the Offer.
7
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates or Rights Certificates not tendered or accepted for payment in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price and/or
return any Share Certificates or Rights Certificates not tendered or accepted
for payment (and accompanying documents, as appropriate) to the undersigned at
the address shown below the undersigned's signature. In the event that both the
"Special Delivery Instructions" and the "Special Payment Instructions" are
completed, please issue the check for the purchase price and/or return any Share
Certificates or Rights Certificates not tendered or accepted for payment in the
name(s) of, and deliver said check and/or return certificates to, the person or
persons so indicated. Stockholders tendering Shares or Rights by book-entry
transfer may request that any Shares or Rights not accepted for payment be
returned by crediting such account maintained at such Book-Entry Transfer
Facility as such stockholder may designate by making an appropriate entry under
"Special Payment Instructions." The undersigned recognizes that the Purchaser
has no obligation pursuant to the "Special Payment Instructions" to transfer any
Shares and Rights from the name of the registered holder thereof if the
Purchaser does not accept for payment any of such Shares and Rights.
8
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share
Certificates and/or Rights
Certificates not tendered or not
purchased and/or the check for the
purchase price of Shares and/or Rights
purchased are to be issued in the name
of someone other than the undersigned,
or if Shares and/or Rights tendered by
book-entry transfer which are not
purchased are to be returned by credit
to an account maintained at a Book- SPECIAL DELIVERY INSTRUCTIONS
Entry Transfer Facility other than (SEE INSTRUCTIONS 1, 5, 6 AND 7)
that designated on the front cover. To be completed ONLY if Share
Issue check and/or certificates to: Certificates and/or Rights
Name: Certificates not tendered or not
(PLEASE PRINT) purchased and/or the check for the
Address: purchase price of Shares and/or Rights
(INCLUDE ZIP CODE) purchased are to be sent to someone
(TAXPAYER IDENTIFICATION OR other than the undersigned, or to the
SOCIAL SECURITY NO.) undersigned at an address other than
(SEE SUBSTITUTE FORM W-9 that shown on the front cover.
ON BACK COVER) Mail check and/or certificates to:
/ / Credit unpurchased Shares and/or Name:
Rights tendered by book-entry transfer (PLEASE PRINT)
to the Book-Entry Transfer Facility Address:
account set forth below: (INCLUDE ZIP CODE)
/ / DTC / / PDTC (TAXPAYER IDENTIFICATION OR SOCIAL
(ACCOUNT NUMBER) SECURITY NO.)
9
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated: _______________
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share Certificate(s) or Rights 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 trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the necessary information. See Instruction 5.)
Name(s): _____________________________________________________________________
______________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title):________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone ______________________________________________________
Number: ______________________________________________________________________
Tax Identification or Social Security No.: ___________________________________
(SEE SUBSTITUTE W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ________________________
Dated: ________________________
10
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares or Rights) of the Shares and the Rights
tendered herewith, unless such holder has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the inside front cover hereof or (ii) if such Shares or Rights
are tendered for the account of a firm that is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program (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 CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates or Rights Certificates
are to be forwarded herewith or, unless an Agent's Message is utilized, if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in Section 3 of the Offer of Purchase. Share Certificates, or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares into the Depositary's account at a Book-Entry Transfer Facility, as
well as this Letter of Transmittal (or a facsimile hereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined in the Offer to Purchase) in the case of a book-entry delivery, and
any other documents required by this Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth herein prior to the Expiration
Date and, unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) is satisfied, Rights Certificates, or Book-
Entry Confirmation of a transfer of Rights into the Depositary's account at a
Book-Entry Transfer Facility, if available (together with, if Rights are
forwarded separately from Shares, a properly completed and duly executed Letter
of Transmittal (or a facsimile hereof) with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal), must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration Date
or, if later, within three business days after the date such Rights Certificates
are distributed. Stockholders whose Share Certificates or Rights Certificates
are not immediately available (including, if the Distribution Date has occurred,
but Rights Certificates have not yet been distributed by the Company) or who
cannot deliver their Share Certificates or Rights Certificates and all other
required documents to the Depositary prior to the Expiration Date or who cannot
complete the procedures for delivery by book-entry transfer on a timely basis
may tender their Shares and Rights by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (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 made available by the Purchaser, must be received by the Depositary on or
prior to the Expiration Date; and (iii) the Share Certificates or Rights
Certificates (or a Book-Entry Confirmation) representing all tendered Shares or
Rights, in proper form for transfer together with a properly completed and duly
executed Letter of Transmittal (or a facsimile hereof), with any required
signature guarantees (or, in the case of a book-entry delivery, an Agent's
Message) and any other documents required by this Letter of Transmittal, must be
received by the Depositary within (x) in the case of Shares, three New York
Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such
Notice of Guaranteed Delivery or (y) in the case of Rights, a period ending on
the later of (1) three NYSE trading days after the date of execution of such
Notice of Guaranteed Delivery and (2) three business days after the date Rights
Certificates are distributed to stockholders by the Company, all as provided in
Section 3 of the Offer to Purchase. If Share Certificates and Rights
Certificates are forwarded separately to the Depositary, a properly completed
and duly executed Letter of Transmittal (or facsimile hereof) must accompany
each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES (IF
APPLICABLE), THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND
SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. 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 or Rights will be purchased. All tendering stockholders, by
execution of this Letter of Transmittal or facsimile hereof, waive any right to
receive any notice of the acceptance of their Shares and Rights for payment.
11
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and Rights and any other
required information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO BOOK-ENTRY STOCKHOLDERS). If fewer
than all the Shares or Rights evidenced by any certificate submitted are to be
tendered, fill in the number of Shares or Rights which are to be tendered in the
box entitled "Number of Shares Tendered" or "Number of Rights Tendered" as
appropriate. In such case, new certificate(s) for the remainder of the Shares or
Rights that were evidenced by your old certificate(s) will be sent to you,
unless otherwise provided in the appropriate box marked "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares and
Rights 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
and Rights tendered hereby, the signature(s) must correspond exactly 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 or Rights tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares or Rights 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 certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority so to act must be submitted.
12
<PAGE>
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares or Rights listed and transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment is to be made to or
certificates for Shares or Rights not tendered or purchased are to be issued in
the name of a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares or Rights listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner(s) appear(s) on the
certificates. Signatures on such certificates or stock powers must be guaranteed
by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares and Rights to it or its order pursuant
to the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares and Rights not tendered or purchased are to be
registered in the name of, any person other than the registered holder, 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 or such person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of and/or certificates for unpurchased Shares or Rights are to be
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 someone other
than the signer of this Letter of Transmittal or to an address other than that
shown on the front cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares or Rights by
book-entry transfer may request that Shares or Rights not purchased be credited
to such account maintained at such Book-Entry Transfer Facility as such
stockholder may designate hereon. If no such instructions are given, such Shares
or Rights not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at its addresses set forth below.
Requests for additional copies of the Offer to Purchase and this Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares or Rights are accepted for payment
is required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares or Rights purchased
pursuant to the Offer may be subject to 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
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% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
13
<PAGE>
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or Rights or of the last transferee appearing on the transfers attached
to, or endorsed on, the Shares or Rights. If the Shares or Rights 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.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares or Rights has been lost, destroyed or stolen, the
stockholder should promptly notify the Depositary. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
11. WAIVER OF CONDITIONS. The Conditions to the Offer may be waived, in
whole or in part, by the Purchaser in its sole discretion, at any time and from
time to time, in the case of any Shares or Rights tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON
OR PRIOR TO THE EXPIRATION DATE.
14
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<S> <C> <C>
-------------------------------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
-------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN SOCIAL SECURITY NUMBER
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY OR
SIGNING AND DATING BELOW. EMPLOYER ID NUMBER
----------------------------------------------------------------------
PART 2 -- CERTIFICATES -- Under penalties of perjury, I certify
that: (1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be issued to
me) and (2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding. CERTIFICATION INSTRUCTIONS -- You must
DEPARTMENT OF THE TREASURY cross out item (2) above if you have been notified by the IRS that you
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER are currently subject to backup withholding because of underreporting
IDENTIFICATION NUMBER ("TIN") interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out such item (2).
-------------------------------------------------------------------------------------------------------
SIGNATURE DATE PART 3
AWAITING TIN / /
----------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
Signature: __________________________________________ Date:____________________
FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY
EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES
AND RIGHTS 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 ONE OF ITS ADDRESSES SET FORTH BELOW:
15
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
IF BY MAIL: IF BY HAND: IF BY OVERNIGHT DELIVERY:
FIRST CHICAGO TRUST COMPANY FIRST CHICAGO TRUST COMPANY FIRST CHICAGO TRUST COMPANY
OF NEW YORK OF NEW YORK OF NEW YORK
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th
Jersey City, NJ 07303-2569 Vietnam Veterans Memorial Plaza New York, NY 10005
New York, NY 10041
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
(201) 222-4720
or
(201) 222-4721
CONFIRM FACSIMILE BY TELEPHONE:
(201) 222-4707
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500(call collect)
or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-2000
16
<PAGE>
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COMPUTER SCIENCES CORPORATION
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
shares of Common Stock, par value $1.00 per share (the "Shares"), of Computer
Sciences Corporation, a Nevada corporation (the "Company"), or, if applicable,
certificates ("Rights Certificates") for the associated Series A Junior
Participating Preferred Stock Purchase Rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of December 21, 1988, amended and restated as of
August 1, 1996 (the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, are not immediately available
(including, if a Distribution Date (as defined in the Offer to Purchase (as
defined below)) has occurred, but Rights Certificates have not yet been
distributed by the Company) or time will not permit all required documents to
reach First Chicago Trust Company of New York (the "Depositary") on or prior to
the Expiration Date (as defined in the Offer to Purchase), or the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mail to the Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
IF BY MAIL: IF BY HAND: IF BY OVERNIGHT DELIVERY:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depository Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor
Jersey City, NJ Vietnam Veterans Memorial Plaza New York, NY 10005
07303-2569 New York, NY 10041
BY FACSIMILE TRANSMISSION:
(for Eligible Institution only)
(201) 222-4720
or
(201) 222-4721
CONFIRM FACSIMILE BY TELEPHONE:
(201) 222-4707
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY 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.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to CAI Computer Services Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Computer
Associates International, Inc., a Delaware corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February 17,
1998 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
and the number of Rights indicated below pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of
Shares: Shares Name(s) of Record Holder(s):
Number of
Rights: Rights
Certificate No(s). (if available): Address(es):
If Share(s) or Right(s) will be tendered by Area Code and Telephone Number(s):
book-entry transfer, check one box.
[ ] The Depository Trust Company Signature(s):
[ ] Philadelphia Depository Trust Company
Account Number:
Date:
</TABLE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, hereby (a) represents that the
tender of Shares and/or Rights effected hereby complies with Rule 14e-4 under
the Securities Exchange Act of 1934, as amended, and (b) guarantees to deliver
to the Depositary, at one of its addresses set forth above, the certificates
representing all tendered Shares and/or Rights, in proper form for transfer, or,
in the case of book-entry delivery of Shares and, if available, Rights, a
Book-Entry Confirmation (as defined in the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of book-entry
delivery of Shares and, if available, Rights, an Agent's Message (as defined in
the Offer to Purchase), and any other documents required by the Letter of
Transmittal within (a) in the case of Shares, three New York Stock Exchange,
Inc. ("NYSE") trading days after the date of execution of this Notice of
Guaranteed Delivery or (b) in the case of Rights, a period ending on the later
of (i) three NYSE trading days after the date of execution of this Notice of
Guaranteed Delivery and (ii) three business days after the date Rights
Certificates are distributed to holders of Shares by the Company.
<TABLE>
<S> <C>
Name of Firm: (Authorized Signature)
Address: Title:
Name:
Area Code and
Telephone Number: (Please type or print)
Date:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR RIGHTS WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES FOR SHARES OR RIGHTS SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (a)(4)
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COMPUTER SCIENCES CORPORATION
AT
$108 NET PER SHARE
BY
CAI COMPUTER SERVICES CORP.
a wholly owned subsidiary of
COMPUTER ASSOCIATES INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 16, 1998, UNLESS THE OFFER IS EXTENDED
February 17, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by CAI Computer Services Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Computer
Associates International, Inc., a Delaware corporation, to act as financial
advisor and Dealer Manager in connection with the Purchaser's offer to purchase
all of the shares of Common Stock, par value $1.00 per share (the "Shares"), of
Computer Sciences Corporation, a Nevada corporation (the "Company"), and (unless
and until the Purchaser declares that the Rights Condition (as defined below)
has been satisfied) the associated Series A Junior Participating Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement dated as
of December 21, 1988, as amended and restated as of August 1, 1996 (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent, at a purchase price of $108 per Share (and associated Right),
net to the seller in cash, without interest thereon, in each case upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated February
17, 1998 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") enclosed herewith. Unless and until the Purchaser
declares that the Rights Condition is satisfied, holders of Shares will be
required to tender one associated Right for each Share tendered in order to
effect a valid tender of such Share. If the Distribution Date (as defined in the
Offer to Purchase) does not occur prior to the Expiration Date (as defined in
the Offer to Purchase), a tender of Shares will also constitute a tender of the
associated Rights. If the Distribution Date has occurred and Rights Certificates
(as defined in the Offer to Purchase) are distributed by the Company to holders
of Shares prior to the time a holder's Shares are tendered pursuant to the
Offer, in order for Rights (and the corresponding Shares) to be validly
tendered, Rights Certificates representing a number of Rights equal to the
number of Shares tendered must be delivered to the Depositary (as defined below)
or, if available, a Book-Entry Confirmation (as defined in the Offer to
Purchase) received by the Depositary with respect thereto. If the Distribution
Date has occurred and Rights Certificates are not distributed prior
<PAGE>
to the time Shares are tendered pursuant to the Offer, Rights may be tendered
prior to a stockholder receiving Rights Certificates by use of the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase. In any case,
a tender of Shares constitutes an agreement by the tendering stockholder to
deliver Rights Certificates representing a number of Rights equal to the number
of Shares tendered pursuant to the Offer to the Depositary within three business
days after the date Rights Certificates are distributed. The Purchaser reserves
the right to require that the Depositary receive Rights Certificates, or a
Book-Entry Confirmation, if available, with respect to such Rights, prior to
accepting the related Shares for payment pursuant to the Offer if the
Distribution Date occurs prior to the Expiration Date. Holders of Shares and
Rights whose certificates for such Shares (the "Share Certificates") and, if
applicable, Rights Certificates, are not immediately available (including, if
the Distribution Date has occurred, but Rights Certificates have not yet been
distributed by the Company), or who cannot deliver their Share Certificates or,
if applicable, their Rights Certificates, and all other required documents to
the Depositary on or prior to the Expiration Date, or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Shares
and Rights according to the guaranteed delivery procedures set forth in Section
3 of the Offer to Purchase. Unless the context otherwise requires, all
references to Shares shall include the associated Rights and all references to
the Rights shall include all benefits that may inure to holders of the Rights
pursuant to the Rights Agreement.
On February 2, 1998, the Company publicly announced a two-for-one split of
the Shares in the form of a 100% stock dividend thereon (the "Stock Split
Dividend"). The Company further announced that the Stock Split Dividend will be
payable on March 23, 1998 to holders of record of Shares on March 2, 1998. The
effect of the Stock Split Dividend on the terms of the Offer is described in
more detail in the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares or, if applicable, Rights registered in your name
or in the name of your nominee.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which, when added to the number of Shares beneficially owned by the
Purchaser and its affiliates, constitutes a majority of the total number of
outstanding Shares on a fully diluted basis on the date of purchase (assuming
the exercise or conversion, as applicable, of all outstanding options, rights
and convertible securities (if any) and the issuance of all Shares that the
Company is obligated to issue), (2) the Rights having been redeemed by the Board
of Directors of the Company or the Purchaser being satisfied, in its sole
discretion, that the Rights have been invalidated or are inapplicable to the
Offer and the Proposed Merger (the "Rights Condition"), (3) the Purchaser being
satisfied, in its sole discretion, that Sections 78.378 to 78.3793 of the Nevada
General Corporation Law are inapplicable to the Offer and the Proposed Merger
and (4) the Purchaser being satisfied, in its sole discretion, that Sections
78.411 to 78.444 of the Nevada General Corporation Law are inapplicable to the
Purchaser in connection with the Offer and the Proposed Merger. The Offer is
also subject to other terms and conditions contained in the Offer to Purchase.
See the Introduction and Sections 1, 14 and 15 of the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated February 17, 1998.
2. Letter of Transmittal to tender Shares and Rights for your use and
for the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares and Rights.
3. The Notice of Guaranteed Delivery for Shares and Rights to be used
to accept the Offer if certificates for Shares or Rights are not immediately
available or if such certificates and all other required documents cannot be
delivered to First Chicago Trust Company of New York (the "Depositary") by
the Expiration Date or if, in the case of the Shares, the procedure for
book-entry transfer cannot be completed by the Expiration Date.
<PAGE>
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
MARCH 16, 1998, UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, an appropriate duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares or, if available, the associated Rights, and any
other required documents should be sent to the Depositary and either Share
Certificates representing the tendered Shares (and, if applicable, Rights
Certificates representing the associated tendered Rights) should be delivered to
the Depositary, or, in the case of Shares, such Shares (and, if applicable,
associated tendered Rights) should be tendered by book-entry transfer into the
Depositary's account maintained at one of the Book Entry Transfer Facilities (as
described in the Offer to Purchase), all in accordance with the instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or, if applicable, Rights Certificates, or
other required documents on or prior to the Expiration Date or to comply with
the book-entry transfer procedures on a timely basis, a tender may be effected
by following the guaranteed delivery procedures specified in Section 3 of the
Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager and the Information Agent, as
described in the Offer to Purchase) for soliciting tenders of Shares pursuant to
the Offer. The Purchaser will, however, upon request, reimburse you for
customary clerical and mailing expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Purchaser will pay or cause to be paid
any stock transfer taxes payable on the transfer of Shares to it, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained from, the Dealer
Manager or the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
BEAR, STEARNS & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE COMPANY,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COMPUTER SCIENCES CORPORATION
AT
$108 NET PER SHARE
BY
CAI COMPUTER SERVICES CORP.
a wholly owned subsidiary of
COMPUTER ASSOCIATES INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MARCH 16, 1998 UNLESS THE OFFER IS EXTENDED
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
17, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any amendments thereto, collectively constitute the
"Offer") relating to the offer by CAI Computer Services Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Computer
Associates International, Inc., a Delaware corporation, to purchase all of the
shares of Common Stock, par value $1.00 per share (the "Shares"), of Computer
Sciences Corporation, a Nevada corporation (the "Company"), and (unless and
until the Purchaser declares that the Rights Condition (as defined below) has
been satisfied) the associated Series A Junior Participating Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement dated as
of December 21, 1988, amended and restated as of August 1, 1996 (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent, at a purchase price of $108 per Share (and associated Right),
net to the seller in cash, without interest thereon, in each case upon the terms
and subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal enclosed herewith. Unless and until the Purchaser
declares that the Rights Condition is satisfied, holders of Shares will be
required to tender one associated Right for each Share tendered in order to
effect a valid tender of such Share. If the Distribution Date (as defined in the
Offer to Purchase) does not occur prior to the Expiration Date (as defined in
the Offer to Purchase), a tender of Shares will also constitute a tender of the
associated Rights. If the Distribution Date has occurred and Rights Certificates
(as defined in the Offer to Purchase) are distributed by the Company to holders
of Shares prior to the time a holder's Shares are tendered pursuant to the
Offer, in order for Rights (and the corresponding Shares) to be validly
tendered, Rights Certificates representing a number of Rights equal to the
number of Shares tendered must be delivered to the Depositary (as defined below)
or, if available, a Book-Entry Confirmation (as defined in the Offer to
Purchase) received by the Depositary with respect thereto. If the Distribution
Date has occurred and Rights Certificates are not distributed prior to the time
Shares are tendered pursuant to the Offer, Rights may be tendered prior to a
stockholder receiving Rights Certificates by use of the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase. In any case, a tender
of Shares constitutes an agreement by the tendering stockholder to deliver
Rights Certificates representing a number of Rights equal to the number of
Shares tendered pursuant to the Offer to the Depositary within three business
days after the date Rights Certificates are distributed. The Purchaser reserves
the right to require that the Depositary receive Rights Certificates, or a
Book-Entry
<PAGE>
Confirmation, if available, with respect to such Rights, prior to accepting the
related Shares for payment pursuant to the Offer if the Distribution Date occurs
prior to the Expiration Date. Holders of Shares and Rights whose certificates
for such Shares (the "Share Certificates") and, if applicable, Rights
Certificates, are not immediately available (including, if the Distribution Date
has occurred, but Rights Certificates have not yet been distributed by the
Company), or who cannot deliver their Share Certificates or, if applicable,
their Rights Certificates, and all other required documents to the Depositary on
or prior to the Expiration Date, or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Shares and Rights
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. Unless the context otherwise requires, all references to
Shares shall include the associated Rights and all references to the Rights
shall include all benefits that may inure to holders of the Rights pursuant to
the Rights Agreement.
WE ARE THE HOLDER OF RECORD OF SHARES AND RIGHTS HELD BY US FOR YOUR
ACCOUNT. A TENDER OF SUCH SHARES AND RIGHTS CAN BE MADE ONLY BY US AS THE HOLDER
OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES AND RIGHTS HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares and Rights held by us for your account
pursuant to the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $108 per Share, including the associated Right,
net to you in cash without interest thereon, upon the terms and subject to
the conditions set forth in the Offer.
2. On February 2, 1998, the Company publicly announced a two-for-one
split of the Shares in the form of a 100% stock dividend thereon (the "Stock
Split Dividend"). The Company further announced that the Stock Split
Dividend will be payable on March 23, 1998 to holders of record of Shares on
March 2, 1998. The effect of the Stock Split Dividend on the terms of the
Offer is described in more detail in the Offer to Purchase.
3. The Offer is being made for all outstanding Shares.
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date a number of
Shares which, when added to the number of Shares beneficially owned by the
Purchaser and its affiliates, constitutes a majority of the total number of
outstanding Shares on a fully diluted basis on the date of purchase
(assuming the exercise or conversion, as applicable, of all outstanding
options, rights and convertible securities (if any) and the issuance of all
Shares that the Company is obligated to issue), (2) the Rights having been
redeemed by the Board of Directors of the Company or the Purchaser being
satisfied, in its sole discretion, that the Rights have been invalidated or
are inapplicable to the Offer and the Proposed Merger (as defined in the
Offer to Purchase) (the "Rights Condition"), (3) the Purchaser being
satisfied, in its sole discretion, that Sections 78.378 to 78.3793 of the
Nevada General Corporation Law are inapplicable to the Offer and the
Proposed Merger and (4) the Purchaser being satisfied, in its sole
discretion, that Sections 78.411 to 78.444 of the Nevada General Corporation
Law are inapplicable to the Purchaser in connection with the Offer and the
Proposed Merger. The Offer is also subject to other terms and conditions
contained in the Offer to Purchase. See the Introduction and Sections 1, 14
and 15 of the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares or
Rights by the Purchaser pursuant to the Offer.
6. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, March 16, 1998, unless the Offer is extended.
7. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by First Chicago Trust Company of New York
(the "Depositary") of (a) Share Certificates and, if applicable, associated
Rights Certificates or, in the case of Shares, timely
<PAGE>
confirmation of the book-entry transfer of such Shares and, if available,
Rights into the account maintained by the Depositary at The Depository Trust
Company or Philadelphia Depository Trust Company (collectively, the
"Book-Entry Transfer Facilities"), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to
Purchase), in connection with a book-entry delivery, and (c) any other
documents required by the appropriate Letter of Transmittal. Accordingly,
payment may not be made to all tendering stockholders at the same time
depending upon when certificates for or, in the case of Shares,
confirmations of book-entry transfer of such Shares (or associated Rights,
if available) into the Depositary's account at a Book-Entry Transfer
Facility are actually received by the Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. Your authorization to tender Shares shall be
deemed authorization to tender the associated Rights regardless of whether they
separate from the Shares. Your instructions should be forwarded to us in ample
time to permit us to submit a tender on your behalf prior to the expiration of
the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares or Rights residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction. However, the
Purchaser may, in its discretion, take such action as it may deem necessary to
make the Offer in any jurisdiction and extend the Offer to holders of Shares in
such jurisdiction.
In any jurisdiction where 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 the Purchaser by Bear, Stearns & Co. Inc., the Dealer Manager
for the Offer, or one or more registered brokers or dealers that are licensed
under the laws of such jurisdiction.
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
COMPUTER SCIENCES CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 17, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any amendments thereto, collectively
constitute the "Offer") in connection with the offer by CAI Computer Services
Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
Computer Associates International, Inc., a Delaware corporation, to purchase all
of the shares of Common Stock, par value $1.00 per share (the "Shares"), of
Computer Sciences Corporation, a Nevada corporation (the "Company"), and (unless
and until the Purchaser declares that the Rights Condition (as defined in the
Offer to Purchase) has been satisfied) the associated Series A Junior
Participating Preferred Stock Purchase Rights (the "Rights") issued pursuant to
the Rights Agreement dated as of December 21, 1988, as amended and restated as
of August 1, 1996 (the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, at a purchase price of $108 per
Share (and associated Right), net to the seller in cash, without interest
thereon, in each case upon the terms and subject to the conditions set forth in
the Offer to Purchase.
This will instruct you to tender to the Purchaser the number of Shares and
the number of Rights indicated below (or if no number is indicated below, all
Shares and Rights) which are held by you for the account of the undersigned,
upon the terms and subject to the conditions set forth in the Offer.
<TABLE>
<S> <C> <C>
Number of Shares to Be Tendered: Number of Rights to Be Tendered:
Shares Rights
</TABLE>
<PAGE>
Unless and until the Purchaser declares that the Rights Condition is
satisfied, holders of Shares are required to tender one associated Right for
each Share tendered in order to effect a valid tender of such Share. If
certificates representing Rights ("Rights Certificates") have been distributed
by the Company to holders of Shares, such holders will be required to validly
tender Rights Certificates representing a number of Rights equal to the number
of Shares being tendered in order to effect a valid tender of such Shares. If
Rights Certificates have not been distributed by the Company to holders of
Shares, a tender of Shares will also constitute a tender of the associated
Rights and only the line with respect to "Number of Shares to Be Tendered"
should be filled in. See Section 3 of the Offer to Purchase. Unless otherwise
indicated, it will be assumed that you instruct us to tender all Shares and
Rights held by us for your account and that you instruct us to tender all Rights
associated with Shares you have instructed us to tender.
On February 2, 1998, the Company publicly announced a two-for-one split of
the Shares in the form of a 100% stock dividend thereon (the "Stock Split
Dividend"). The Company further announced that the Stock Split Dividend will be
payable on March 23, 1998 to holders of record of Shares on March 2, 1998. The
effect of the Stock Split Dividend on the terms of the Offer is described in
more detail in the Offer to Purchase.
SIGN HERE
Signature(s) __________________________________________________________________
(Print Name(s)) _______________________________________________________________
(Print Address(es)) ___________________________________________________________
(Area Code and Telephone Number(s)) ___________________________________________
(Taxpayer Identification or Social Security Number(s)) ________________________
<PAGE>
Exhibit (a)(6)
ISLANDIA, N.Y., February 11, 1998 - Computer Associates International, Inc.
(NYSE:CA) today announced that it has made an offer to acquire Computer
Sciences Corporation (NYSE:CSC) in a merger transaction in which CSC's
shareholders would receive $108 in cash for each share of CSC common stock.
CA has obtained financing commitments for the approximately $9 billion
transaction. The combined companies would employ over 50,000 professionals
and have revenues of approximately $11 billion.
Commenting on today's announcement, CA's founder and Chairman Charles B. Wang
stated that "the proposed combination of CA and CSC would create the
next-generation, world-class information technology services provider that
will lead our industry into the next millenium. The skills that CSC's
employees would bring to CA are critical to the combined company, and we plan
to retain all of CSC's valuable employees. The combined company's client
base would be able to draw upon an unparalleled range of product offerings
and services capabilities that are not now available in the marketplace from
a platform-independent solutions provider."
CA's offer is outlined in a letter to CSC's Chairman and CEO, Van B.
Honeycutt, and is available at CA's web site at http://www.cai.com/csc.
CA is represented by Bear, Stearns & Co. Inc. and by Howard, Darby and Levin.
<PAGE>
Exhibit (a)(7)
ISLANDIA, N.Y., February 13, 1998 - In connection with its previously
announced intention to acquire the shares of Computer Sciences Corporation,
Computer Associates International, Inc. (NYSE: CA) is filing today a Hart
Scott Rodino Premerger Notification with the United States Department of
Justice and the Federal Trade Commission. The Company notified Computer
Sciences Corporation of this filing.
<PAGE>
Exhibit (a)(8)
ISLANDIA, N.Y., February 16, 1998 - Computer Associates International, Inc.
(NYSE:CA) today announced that it continued over the weekend its efforts to
engage Computer Sciences Corporation (NYSE: CSC) in merger discussions,
expressing a strong desire to complete a transaction on negotiated terms
before proceeding directly to shareholders.
Computer Associates released the attached letter from CA President Sanjay
Kumar to Van Honeycutt, CSC's Chairman and Chief Executive Officer (also
available on CA's website at http://www.cai.com/csc).
CA also announced that a financing commitment for this transaction has been
arranged by Credit Suisse First Boston and includes Bank of America National
Trust & Savings Association, The Chase Manhattan Bank and NationsBank, N.A.
###
February 15, 1998
via facsimile to (310) 615-3950
Mr. Van B. Honeycutt
Chairman and CEO
Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, CA 90245
Dear Van:
We have been disappointed by the response to date to the offer that we made
last Tuesday to combine our two companies' businesses by means of a cash
merger at $108 per CSC share. As we have expressed from the beginning, our
hope and intent was to prompt a meaningful effort to move ahead on both our
parts to a negotiated transaction.
We believe that the best way, by far, to effect a combination of our two
companies' businesses is through prompt negotiation of the terms followed by
equally prompt implementation. Every one of CSC's constituencies -
shareholders, employees, customers and partners - will greatly benefit from
this approach.
We made it clear in our February 10th letter that we believed that we could
bridge some of our differences with respect to value in a friendly
transaction. The value of a friendly, promptly negotiated and concluded
transaction is substantial in our view. Our financial
<PAGE>
advisor, Michael Urfirer of Bear Stearns, has communicated to your financial
advisor, Gene Sykes of Goldman Sachs, in very specific terms the magnitude of
the value increase to your shareholders in a negotiated transaction.
Conversely, an adverse impact to CSC's business and people, substantially
increased difficulty in combining the businesses and significant costs to
both companies are inevitable outcomes of a contested process, which would
result in a reduced value of CSC. In short, we are proposing a transaction
that has compelling value to your shareholders and other constituencies,
especially when measured against a contested alternative.
Our request is simple. We would like to commence negotiations with you this
weekend. We would be guided in those negotiations by the thinking reflected
in my letters of February 6 and 10, which remains unchanged, except as to
price. I very much look forward to this. We are committed to the business
strategy of combining our two companies' businesses and, as I have stated,
believe a negotiated transaction is clearly preferable for all concerned.
However, as we communicated to Mr. Sykes earlier today, if substantive
negotiations have not started by Monday at 12:00 noon EST, we will have no
choice but to move ahead on a unilateral basis at a substantially lower price
than we communicated to Mr. Sykes which would be required to reflect the
diminution in value as indicated above.
We hope this demonstrates our continuing efforts to consummate a friendly
transaction. It is truly important to us that you and your Board are fully
informed at this critical stage.
I look forward to hearing from you. I can be reached at the numbers I
previously left with you or through Michael Urfirer of Bear Stearns.
Sincerely,
Sanjay Kumar
President and Chief Operating Officer
cc: Board of Directors of Computer Sciences Corporation
Gene Sykes, Goldman Sachs & Co.
<PAGE>
Exhibit (a)(9)
ISLANDIA, N.Y., February 17, 1998 -- Computer Associates International, Inc.
(NYSE: CA) today announced that it has commenced a cash tender offer at a
price of $108 per share for all of the outstanding common stock (and the
associated preferred share purchase rights) of Computer Sciences Corporation.
CSC has approximately 85 million shares outstanding on a fully diluted basis,
and approximately $700 million of indebtedness, giving the transaction a
total value of approximately $9.8 billion. Credit Suisse First Boston
arranged financing for the acquisition through Bank of America, The Chase
Manhattan Bank and NationsBank.
The terms and conditions of the offer are set forth in documents filed today
with the Securities and Exchange Commission. These documents describe
conditions to the offer, including the redemption or invalidation of CSC's
"poison pill" rights plan and the inapplicability of certain anti-takeover
provisions under Nevada law.
In addition, CA announced today that it has commenced legal action designed
to compel CSC's Board of Directors to take appropriate steps to permit CSC's
shareholders to consider the offer. CA also said it is filing today with the
Securities and Exchange Commission preliminary materials for solicitation of
written consents, proxies and agent designations from CSC shareholders that
are intended to expedite the tender offer.
COMPUTER ASSOCIATES INTERNATIONAL, INC. (NYSE: CA), WITH HEADQUARTERS IN
ISLANDIA, N.Y., IS THE WORLD LEADER IN MISSION-CRITICAL BUSINESS SOFTWARE.
THE COMPANY DEVELOPS, LICENSES AND SUPPORTS MORE THAN 500 INTEGRATED PRODUCTS
THAT INCLUDE ENTERPRISE COMPUTING AND INFORMATION MANAGEMENT, APPLICATION
DEVELOPMENT, MANUFACTURING AND FINANCIAL APPLICATIONS. CA HAS OVER 11,000
PEOPLE IN 160 OFFICES IN 43 COUNTRIES AND HAD A REVENUE OF $4.5 BILLION IN
CALENDAR YEAR 1997. CA CAN BE REACHED BY VISITING HTTP://WWW.CAI.COM ON THE
WORLD WIDE WEB, EMAILING [email protected] OR CALLING 1-516-342-5224.
###
<PAGE>
Exhibit (a)(10)
ISLANDIA, N.Y., February 12, 1998 - Computer Associates International, Inc.
(CA) received notice today that it has been named as a nominal defendant in a
class action complaint filed in Clark County, Nevada District Court in
connection with the Company's offer to acquire Computer Sciences Corporation
(CSC) for $108 per share. The Complaint's allegations focus primarily on the
actions of CSC and its board of directors, all of whom have been named as
defendants in the lawsuit.
The Complaint alleges that CSC and its board's interests are in conflict with
the interests of CSC's shareholders. In particular, the Complaint asserts
that:
- the CSC board has failed and cannot be expected to act in the best
interest of CSC's shareholders.
- the CSC board members have clear and material conflicts of interest.
- the CSC board members are using their positions to better their own
interests at the expense of CSC's shareholders.
The Complaint seeks the appointment of a special committee of the CSC board to
consider the CA offer and negotiate with CA on behalf of the CSC shareholders.
CA yesterday announced that it had made an offer to acquire CSC in a merger
transaction in which CSC's shareholders would receive $108 in cash for each
share of CSC common stock. CA has obtained financing commitments for the
approximately $9 billion transaction. The combined companies would employ
over 50,000 professionals and have revenues of approximately $11 billion.
###
Letter To All Valued Channel and Systems Integration Partners
February 13, 1998
To CA's Valued Channel and Systems Integration Partners:
As you probably know by now, CA has extended an offer to acquire Computer
Sciences Corporation in a merger transaction. While the completion of this
transaction is by no means certain, we remain hopeful that we will be
successful.
<PAGE>
This is an extremely exciting announcement for everyone involved, as it will
enable us to deliver superior products, along with unparalleled services and
support, to our clients and prospects. The combination of CA and CSC will
create a world-class information technology solutions company that will
generate new opportunities for everyone associated with the CA family. It
will also provide significant benefit to our Channel and Systems Integration
Partners by providing new and expanded opportunities.
CA recognizes and values the strategic partnerships we have formed with you
over the years, and we have no intention of changing the way we do business
with you. As we see it, a combined CA/CSC would generate ever more demand for
our products. With your unique sales and services expertise, you will be
able to benefit greatly from substantially expanded business opportunities,
as well as a larger pool of resources at CA that will be focused on
supporting your marketing and sales needs.
In conclusion, I want to reassure you that we remain committed to providing
the support you need to meet your clients' most complex information
management challenges, while helping you increase your bottom line.
Thank you for your continued dedication and support. We look forward to
expanding our business opportunities together.
Sincerely,
/s/ Sanjay Kumar
Sanjay Kumar
President and Chief Operating Officer
###
Open Letter To All Computer Sciences Corporation Employees
February 11, 1998
To All CSC Employees,
As you may have already heard, Computer Associates announced this morning its
offer to acquire Computer Sciences Corporation in a merger transaction.
We wanted to take a moment today to reassure you as to CA's intentions. We
are well aware of the value of each and every CSC employee and will offer
every employee a position in the combined company. Therefore, we will not
have any layoffs as a result of a possible merger. In fact, we believe that
CA is the best place to work for any IT professional - we were voted one of
the "Best Places To Work" three years in a row by ComputerWorld and were
recently named one
<PAGE>
of the 100 Best Companies in America for Working Mothers
in 1997 by Working Mother magazine.
It is our hope that this transaction will be concluded successfully and
quickly, as we are anxious to welcome all CSC employees to the combined
company.
We would also like to take this opportunity to emphasize what we consider the
truly exciting part about this announcement - the incredible potential that
this merger holds for the clients, employees, and shareholders of CA and CSC.
This is a great opportunity for both our organizations. A combined CA/CSC
would radically change the services landscape by creating a truly unique
entity in the IT marketplace today - the only vendor capable of offering
platform-neutral products and services in an integrated, end-to-end fashion.
CSC's expertise in the areas of management consulting, systems integration,
and outsourcing make it a natural and complementary fit for an organization
like CA, which has never really been in the services business but
increasingly finds that it needs to be. Conversely, CA's years of experience
in software development will add great value to CSC's product business.
We remain convinced that this is a great deal for both companies, and we
truly believe that the combination of CA and CSC would create a world-class
IT solutions provider with unparalleled depth in both software and services.
We look forward to having the opportunity to welcome each of you to the CA
family.
Very truly yours,
/s/ Charles B. Wang /s/ Sanjay Kumar
- ------------------------------------ -----------------------------------
Charles B. Wang Sanjay Kumar
Chairman and Chief Executive Officer President and Chief Operating Officer
###
<PAGE>
February 10, 1998
Mr. Van B. Honeycutt
Chairman and CEO
Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, CA 90245
Dear Van,
Charles and I appreciate the significant time you have invested over the last
few months in the discussions that we have had regarding the combination of
Computer Associates International, Inc. ("CA") and Computer Sciences
Corporation ("CSC"). However, we are disappointed that CA and CSC have not
been able to come to a final resolution.
Consequently, we are writing to offer to acquire CSC in a merger transaction
in which your stockholders would receive $108 in cash for each share of CSC
common stock. We believe our offer presents an extremely attractive
opportunity for your stockholders, at a price which represents a premium of
nearly 35% over the closing price of CSC's common stock on the day we
commenced our discussions in mid-December. At that time, CSC's stock was
trading close to its all-time high.
The CA Board of Directors has unanimously approved this offer. Further, as I
have previously informed you, CA has obtained the necessary financing
commitments to consummate this transaction without delay. As we agreed, the
combination of CA and CSC would create a world-class information technology
solutions provider with unparalleled depth in both software and services.
The combination of CA's strength in software and CSC's services capabilities,
together with our collective personnel, would create the perfect model for
the next generation of information technology solutions provider that will
lead our industry into the next millenium.
As we discussed at our meeting on February 5, and as confirmed by my letter
of February 6:
- We are in general agreement on the need and manner of retaining key
managers and employees. We would supply key managers and employees
with employment agreements that will provide them with a strong
incentive to remain with the combined company.
- We are in agreement on providing stock option grants to key managers
and employees. This will allow them to participate in the success of
the combined company, and will further ensure continuity with respect
to the combined company's commitment to our mutual clients.
- We are in agreement that the CSC organization within the combined
company will be on equal footing to CA's existing product
organization. CA is committed to making sure
<PAGE>
that all of the members of the CSC organization are welcomed into the
combined company with open arms.
- We do not expect the combined company to need to reduce any headcount
to achieve the synergies that a transaction of this size demands.
Consequently, as in our last major acquisition of Cheyenne Software,
we anticipate that all of the valuable CSC employees will be offered
positions with the combined company.
- Beyond the absolute level of staffing, we expect to maintain the
current structure of CSC's organization with little change. As we
discussed, it would make sense for the CA part of the combined company
to take over CSC's product development efforts and for CSC, in turn,
to take over CA's service commitments and efforts. The inherent
synergies in this process will allow both the CA and CSC parts of the
combined company to do what they do best.
- We expect to staff new projects with both outside hiring and some
redeployment of existing CA staff. This will allow the combined
company to aggressively seek new services opportunities.
As we have previously discussed, we have conducted an extensive analysis of CSC
based on public available information. We believe that CA and CSC may be able
to bridge some of our differences with respect to valuation if CA is given the
opportunity to conduct limited due diligence on CSC's business and operations.
With CSC's cooperation, our due diligence review can be accomplished within a
week.
Our offer is subject to the execution of a mutually satisfactory merger
agreement containing customary terms and conditions. We believe that such an
agreement can be negotiated while we are conducting our due diligence review of
CSC. Our counsel has advised us that an acquisition of CSC by CA should not
encounter regulatory delays.
We look forward to meeting with you to discuss our offer. We are hopeful your
Board will conclude that your stockholders should not be denied the opportunity
to consider our offer. We at CA are determined to take every appropriate action
to pursue this transaction. In view of the importance of this matter, time is
of the essence, and we await your prompt response.
Sincerely,
/s/ Sanjay Kumar
-------------------------------------
Sanjay Kumar
President and Chief Operating Officer
<PAGE>
Exhibit (a)(11)
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.
NAME. If you are an individual, you must generally enter the name shown on your
social security card. However, if you have changed your last name, for instance,
due to marriage, without informing the Social Security Administration of the
name change please enter your first name, the last name shown on your social
security card, and your new last name.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner(3)
account
6. Sole Proprietorship The owner (3)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE NAME AND
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<CAPTION>
- ------------------------------------------------------------
<C> <S> <C>
7. A valid trust, estate, or Legal entity (4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a state or
local government, school
district, or prison) that
receives agricultural
program payments
- ------------------------------------------------------------
</TABLE>
(1) List above the signature line first and circle the name of the person whose
number you furnish.
(2) List first and circle minor's name and furnish the minor's social security
number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use your social security number or
employer identification number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title).
NOTE: If no name above the signature line is listed when more than one name
appears in the registration, the number will be considered to be that of
the first name appearing in the registration.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
Section references are to the Internal Revenue Code.
PURPOSE OF FORM.--A person who is required to file an information return with
the IRS must get your correct TIN to report, for example, income paid to you,
real estate transactions, mortgage interest you paid, the acquisition or
abandonment of secured property, cancellation of debt, or contributions you made
to an IRA. Use Form W-9 to give your correct TIN to the requester (the person
requesting your TIN) and, when applicable, (1) to certify the TIN you are giving
is correct (or you are waiting for a number to be issued), (2) to certify you
are not subject to backup withholding, or (3) to claim exemption from backup
withholding if you are an exempt payee.
NOTE: If a requester gives you a form other than a W-9 to request your TIN, you
must use the requester's form if it is substantially similar to Form W-9.
WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that could be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications,
and report all your taxable interest and dividends on your tax return, payments
you receive will not be subject to backup withholding. Payments you receive WILL
be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tells you that you are subject to backup withholding because you
did not report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts opened
after 1983 only), or
5. You do not certify your TIN.
Certain payees and payments are exempt from backup withholding and
information reporting. See below.
HOW TO GET A TIN: If you do not have a TIN, apply for one immediately. To apply
for an SSN, get Form SS-5 from your local Social Security Administration office.
Get Form W-7 to apply for an Individual TIN or Form SS-4 to apply for an EIN.
You can get Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM
(1-800-829-3676).
If you do not have a TIN, check the box titled "Applied For" in the space
for the TIN, sign and date the form, and give it to the requester. Generally,
you will then have 60 days to get a TIN and give it to the requester. If the
requester does not receive your TIN within 60 days, backup withholding, if
applicable, will begin and continue until you furnish your TIN.
NOTE: CHECKING THE BOX TITLED "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE
ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE SOON.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are NOT exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends.
If you are exempt from backup withholding, you should still complete Form
W-9 to avoid possible erroneous backup withholding. Enter your correct TIN in
Part I, write "Exempt" in Part II, and sign and date the form. If you are a
nonresident alien or a foreign entity not subject to backup withholding, give
the requester a completed FORM W-8, Certificate of Foreign Status.
The following is a list of payees exempt from backup withholding and for
which no information reporting is required. For interest and dividends, all
listed payees are exempt except item (9). For broker transactions, payees listed
in (1) through (13) and a person registered under the Investment Advisers Act of
1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation. (2) An organization exempt from tax under section 501(a),
or an IRA, or a custodial account under section 403(b)(7) if the account
satisfies the requirements of section 401(f)(2). (3) The United States or any of
its agencies or instrumentalities. (4) A state, the District of Columbia, a
possession of the United States, or any of their political subdivisions or
instrumentalities. (5) A foreign government or any of its political
subdivisions, agencies, or instrumentalities. (6) An international organization
or any of its agencies or instrumentalities. (7) A foreign central bank of
issue. (8) A dealer in securities or commodities required to register in the
United States or a possession of the United States. (9) A futures commission
merchant registered with the Commodity Futures Trading Commission. (10) A real
estate investment trust. (11) An entity registered at all times during the tax
year under the Investment Company Act of 1940. (12) A common trust fund operated
by a bank under section 584(a). (13) A financial institution. (14) A middleman
known in the investment community as a nominee or listed in the most recent
publication of the American Society of Corporate Secretaries, Inc., Nominee
List. (15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividends and patronage dividends that are generally exempt from
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 United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest that generally are exempt from 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 TIN 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.
- Mortgage interest paid to you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N, and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires you to give your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states, and the District of Columbia to carry out
their tax laws.
You must provide your TIN whether or not you are required to file a tax
return. Payers must generally withhold 31% of taxable interest, dividends, and
certain other payments to a payee who does not give a TIN to a payer. Certain
penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN.--If you fail to furnish your TIN to a requester, you
are subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TINS.--If the requester discloses or uses TINs in violation of
federal law, the requester may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit (a)(12)
- --------------------------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated
February 17, 1998, and the related Letter of Transmittal, and is being
made to all holders of Shares. The Offer is not being made to (nor
will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
In those jurisdictions where the securities,
blue sky or other laws require the Offer
to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on
behalf of the Purchaser by Bear, Stearns
& Co. Inc. or one or more registered
brokers or dealers licensed under
the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Computer Sciences Corporation
at
$108 Net Per Share
by
CAI Computer Services Corp.
a wholly owned subsidiary of
Computer Associates International, Inc.
CAI Computer Services Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Computer Associates International, Inc. ("Computer
Associates"), hereby offers to purchase all outstanding shares of Common
Stock, par value $1.00 per share (the "Shares"), of Computer Sciences
Corporation, a Nevada corporation (the "Company"), and (unless and until the
Purchaser declares that the Rights Condition (as defined below) has been
satisfied) the associated Series A Junior Participating Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated
as of December 21, 1988, amended and restated as of August 1, 1996 (the
"Rights Agreement"), between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, at a purchase price of $108 per Share (and
associated Right), 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 February 17, 1998 (the "Offer to Purchase"), and in the related Letter
of Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Unless the context otherwise requires,
(i) all references to Shares shall include the associated Rights and (ii) all
references to the Rights shall include all benefits that may inure to holders
of the Rights pursuant to the Rights Agreement. Unless the Rights are
redeemed prior to the Expiration Date (as defined below) or the Purchaser is
satisfied, in its sole discretion, that the Rights have been invalidated or
are otherwise inapplicable to the Offer and the Proposed Merger (as defined
in the Offer to Purchase), holders of Shares are required to tender one Right
for each Share tendered in order to effect a valid tender of Shares in
accordance with the procedures set forth in Section 2 of the Offer to
Purchase. Unless the Distribution Date (as defined in the Offer to Purchase)
occurs, a tender of Shares will also constitute a tender of associated
Rights.
On February 2, 1998, the Company publicly announced a two-for-one split of
the Shares (the "Announced Stock Split") in the form of a 100% stock dividend
thereon (the "Stock Split Dividend"). The Company further announced that the
Stock Split Dividend will be payable on March 23, 1998 to holders of Shares
of record on March 2, 1998. The $108 per Share offered in the Offer has been
determined based on the Shares without giving effect to the Announced Stock
Split. Information with respect to the effect of the Announced Stock Split on
the terms of the Offer is set forth in the Offer to Purchase.
-------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 16, 1998,
UNLESS THE OFFER IS EXTENDED.
-------------------------------------------------------------
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares, including the Rights associated therewith, which, when added to the
number of Shares (and Rights) beneficially owned by the Purchaser and its
affiliates, constitutes a majority of the total number of outstanding Shares
(and Rights) on a fully diluted basis, (2) the Rights having been redeemed by
the Board of Directors of the Company or the Purchaser being satisfied, in
its sole discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger (the "Rights Condition"),
(3) the Purchaser being satisfied, in its sole discretion, that the Nevada
Control Share Acquisition Statute (as defined in the Offer to Purchase) is
inapplicable to the Offer and the Proposed Merger and (4) the Purchaser being
satisfied, in its sole discretion, that the Nevada Business Combination
Statute (as defined in the Offer to Purchase) is inapplicable to the Offer
and the Proposed Merger. The Offer is also subject to other terms and
conditions contained in the Offer to Purchase. See the Introduction and
Sections 1, 14 and 15 of the Offer to Purchase. The Offer is not conditioned
on obtaining financing.
The purpose of the Offer is to enable Computer Associates to acquire control
of, and the entire equity interest in, the Company. The Offer, as the first
step in the acquisition of the Company, is intended to facilitate the
acquisition of all of the Shares.
Computer Associates intends to continue to seek to negotiate with the
Company with respect to the acquisition of the Company by Computer
Associates. The Purchaser reserves the right to amend the Offer upon entry
into an acquisition agreement or other agreement regarding a business
combination with the Company or otherwise or to negotiate an acquisition
agreement or other agreement regarding a business combination with the
Company not involving a tender offer.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the period during which the Offer is
open for any reason, including the occurrence of any event specified in
Section 14 of the Offer to Purchase, by giving oral or written notice of such
extension to First Chicago Trust Company of New York (the "Depositary").
During any such extension, all Shares previously tendered and not withdrawn
will remain subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. Subject to the applicable regulations of the Securities
and Exchange Commission, the Purchaser also expressly reserves the right, in
its sole discretion, at any time or from time to time, to (i) delay
acceptance for payment of or, regardless of whether such Shares were
theretofore accepted for payment, payment for any Shares pending receipt of
any regulatory or governmental approvals specified in Section 15 of the Offer
to Purchase, (ii) terminate the Offer (whether or not any Shares have
theretofore been accepted for payment) if any condition referred to in
Section 14 of the Offer to Purchase has not been satisfied or upon the
occurrence of any event specified in Section 14 and (iii) waive any condition
or otherwise amend the Offer in any respect, in each case, by giving oral or
written notice of such delay, termination, waiver or amendment to the
Depositary and, other than in the case of any such waiver, by making a public
announcement thereof. Any such extension, delay, termination or amendment
will be followed as promptly as practicable by public announcement thereof,
and such announcement in the case of an extension will be made no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to the Depositary
of the Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, upon the terms and subject to the conditions of the
Offer, payment for Shares purchased 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
the Purchaser and transmitting payment to validly tendering stockholders.
Under no circumstances will interest on the purchase price for Shares be paid
by the Purchaser. In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of (i)
certificates representing Shares (the "Share Certificates") for such Shares
and, if applicable, certificates representing the associated Rights (the
"Rights Certificates") for the associated Rights, or, in the case of Shares,
timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer
of such Shares and, if applicable, Rights into the Depositary's account at a
Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant
to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer
and (iii) any other documents required by the Letter of Transmittal.
If, for any reason whatsoever, acceptance for payment of any Shares and
Rights tendered pursuant to the Offer is delayed, or the Purchaser is unable
to accept for payment or pay for Shares and Rights tendered pursuant to the
Offer, then, without prejudice to the Purchaser's rights set forth in the
Offer to Purchase, the Depositary may, nevertheless, on behalf of the
Purchaser and subject to Rule 14e-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), retain tendered Shares and Rights and
such Shares and Rights may not be withdrawn except to the extent that the
tendering stockholder is entitled to and duly exercises withdrawal rights as
described in Section 4 of the Offer to Purchase. Any such delay will be by an
extension of the Offer to the extent required by law.
If certain events occur, the Purchaser will not be obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer. If any tendered
Shares are not purchased pursuant to the Offer for any reason or if Share
Certificates are submitted representing more Shares than are tendered, Share
Certificates representing unpurchased or untendered Shares will be returned,
without expense to the tendering stockholder (or, in the case of Shares
delivered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3 of the Offer to Purchase, such Shares will be credited to an account
maintained within such Book-Entry Transfer Facility), as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
In the event separate Rights Certificates are issued, similar action will be
taken with respect to unpurchased and untendered Rights.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares and Rights made pursuant to the Offer are irrevocable. Shares and
Rights tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date and, unless theretofore accepted for payment as
provided in the Offer to Purchase, may also be withdrawn at any time after
April 17, 1998 (or such later date as may apply in case the Offer is
extended). The term "Expiration Date" means 12:00 midnight, New York City
time, on Monday, March 16, 1998, unless and until the Purchaser, in its sole
discretion, shall have extended the period of time for which the Offer is
open, in which event the term "Expiration Date" shall mean the time and date
at which the Offer, as so extended by the Purchaser, shall expire. A
withdrawal of Shares will also constitute a withdrawal of the associated
Rights. Rights may not be withdrawn unless the associated Shares are also
withdrawn. In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover of the Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who
tendered the Shares and Rights to be withdrawn, the number of Shares and
Rights to be withdrawn, and (if Share Certificates and Rights Certificates
have been tendered) the name of the registered holder of the Shares and
Rights as set forth in the Share Certificate and Rights Certificate, if
different from that of the person who tendered such Shares and Rights. If
Share Certificates and Rights Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers shown
on the particular certificates evidencing the Shares and Rights to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by
a firm that is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program (an "Eligible Institution"), except in the case of
Shares and Rights tendered for the account of an Eligible Institution. If
Shares and Rights have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and Rights, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in this
paragraph. Withdrawals of Shares and Rights may not be rescinded. Any Shares
and Rights properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3
of the Offer to Purchase. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by
the Purchaser, in its sole discretion, whose determination shall be final and
binding.
The information required to be disclosed pursuant to Rule 14d-6(e)(1)(vii)
of the General Rules and Regulations under the Exchange Act is contained in
the Offer to Purchase and is incorporated herein by reference.
Requests are being made to the Company pursuant to Rule 14d-5 under the
Exchange Act for the use of the Company's stockholder list, its list of
holders of Rights and security position listings for the purpose of
disseminating the Offer to holders of Shares. Upon compliance by the Company
with such request, the Offer to Purchase and the related Letter of
Transmittal and, if required, other relevant materials will be mailed to
record holders of Shares and Rights 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 stockholder list and list of
holders of Rights, if applicable, or who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares and Rights.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth below. Copies of the Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained at the
Purchaser's expense from the Information Agent or from brokers, dealers,
commercial banks and trust companies. No fees or commissions will be payable
by the Purchaser to any broker, dealer or other person (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Shares
and Rights pursuant to the Offer.
The Information Agent for the Offer is:
MacKenzie
Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(212) 272-2000
February 17, 1998
- --------------------------------------------------------------------------------
<PAGE>
Exhibit (b) (1)
CREDIT SUISSE FIRST BOSTON BANK OF AMERICA
Eleven Madison Avenue NATIONAL TRUST & SAVINGS
New York, New York 10010-3629 ASSOCIATION
555 California Street
San Francisco, California 94104
THE CHASE MANHATTAN BANK NATIONSBANK, N.A.
270 Park Avenue 901 Main Street
New York, New York 10017 Dallas, Texas 75202
February 15, 1998
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788
Attention: Peter A. Schwartz, Senior Vice President - Finance
and Chief Financial Officer
Re: Amended and Restated Commitment Letter
Proposed Acquisition Credit Facilities
Ladies and Gentlemen:
We understand that you (the "Borrower") intend to (a) form a
corporation ("AcquisitionCo") to acquire (the "Acquisition") all of the issued
and outstanding capital stock of a company which you have identified to us as
"Saturn" ("Saturn") and (b) as promptly as is practicable following the
consummation of the Acquisition, merge Saturn with and into AcquisitionCo, such
that the surviving entity of such merger is a wholly-owned subsidiary of the
Borrower (the "Merger"; together with the Acquisition, the "Transaction"). We
further understand that the Acquisition may include an unsolicited (i.e.
"hostile") tender offer for all of the issued and outstanding capital stock of
Saturn.
You have informed Credit Suisse First Boston ("CSFB"), Bank of America
National Trust & Savings Association, The Chase Manhattan Bank and NationsBank,
N.A. (collectively, the "Underwriters") that the total consideration for the
Transaction (including transaction fees and expenses) will be approximately
$12.6 billion and that a portion of such consideration will be financed through
(a) the issuance and sale by the Borrower of approximately $2.75 billion of
senior notes (the "Senior Notes") of the Borrower and (b) existing cash on hand
of not less than $100.0 million. We further understand that the Borrower will
require up to $10.0 billion in senior credit facilities (the "Credit
Facilities") in order to (w) finance the remainder of the consideration for the
Transaction, (x) refinance certain existing indebtedness of the Borrower and its
subsidiaries (after giving effect to the Transaction), (y) provide working
capital for the Borrower and its subsidiaries and (z) pay fees and expenses in
connection with the transactions contemplated hereby.
CSFB is pleased to inform you of its commitment to provide up to $2.8
billion of the Credit Facilities and each other Underwriter is pleased to inform
you of its commitment to provide up to $2.4 billion of the Credit Facilities.
Attached as Exhibit A to this letter is a Statement of Terms and Conditions (the
"Term Sheet") setting forth the principal terms and conditions on and subject to
which each Underwriter is willing to make available its portion of the Credit
Facilities. The commitments of the Underwriters hereunder are several (and not
joint). It is a condition to commitment of each Underwriter hereunder that the
portion of the Credit Facilities not being provided by such Underwriter shall be
provided by the other Underwriters.
This Amended and Restated Commitment Letter supersedes in all respects
the Commitment Letter, dated February 4, 1998 (the "Original Letter"), from us
to you with respect to the Transaction. From and after the date hereof, our
commitments and agreements under the Original Letter shall be terminated and the
Original Letter shall be of no further force and effect.
The terms and conditions of commitments of the Underwriters hereunder
and of the Credit Facilities are not limited to those set forth herein and in
the Term Sheet, and any matters that are not covered by the provisions hereof
and of the Term Sheet shall be subject to our mutual agreement. We shall be
entitled, after consultation with you, to change the
<PAGE>
pricing, terms and structure of the Credit Facilities after March 15, 1998 if
the syndication has not been completed and if we determine that such changes are
advisable to insure a successful syndication of the Credit Facilities; provided
that the total amount of the Credit Facilities remain unchanged.
It is agreed that (a) CSFB will act as the sole Administrative Agent
and Arranger for the Credit Facilities and (b) each other Underwriter (or an
affiliate thereof) will act as a Syndication Agent (in such capacity, the
"Syndication Agents") for the Credit Facilities. CSFB and the Syndication
Agents shall develop with you a syndication strategy for the Credit Facilities
and, in its capacity as arranger of the Credit Facilities, CSFB shall have the
primary responsibility for coordinating the syndication of the Credit
Facilities. No additional agents or co-agents or arrangers shall be appointed
without the prior written consent of the Administrative Agent and the
Syndication Agents. You hereby agree that, in providing the services
contemplated by this letter, the Administrative Agent and each Syndication Agent
(and their respective affiliates) may share among themselves and with the
Administrative Agent and the Syndication Agents (and their respective
affiliates) such confidential or other information relating to the Borrower, its
subsidiaries and investments and the Transaction as from time to time may be in
their possession; provided that each recipient of such information shall agree
to maintain the confidentiality thereof in accordance with its customary
practice.
The Administrative Agent and the Syndication Agents intend to
syndicate the Credit Facilities to a group of financial institutions (together
with the Underwriters, the "Lenders") identified by us in consultation with you.
We currently intend to commence syndication efforts promptly upon your
commencement of a tender offer for Saturn or, if earlier, the date upon which
you enter into a definitive merger agreement with Saturn regarding the
consummation of the Transactions (it being understood that we reserve the right
to commence syndication earlier or later, if we so elect). You agree to assist
us in forming any such syndicate and to provide the Underwriters and the other
Lenders, promptly upon request, with all information reasonably requested by
them to complete successfully the syndication, including, but not limited to,
(a) an information package for delivery to potential syndicate members and
participants (the "Information Memorandum") and (b) information and projections
(together with the assumptions utilized in preparing such projections) prepared
by you or your advisers relating to the transaction described herein. You also
agree to use your best efforts to ensure that our syndication efforts benefit
from the existing lending relationships of the Borrower and, to the extent
practicable, Saturn. You further agree to make appropriate senior officers and
representatives of the Borrower and, to the extent practicable, Saturn available
to participate in information meetings for potential syndicate members and
participants at such times and places as the Administrative Agent (in
consultation with the Syndication Agents) may reasonably request.
You represent and warrant and covenant that:
(a) all information (other than any financial projections contemplated
by clause (b) below) which has been or is hereafter made available to the
Administrative Agent or any Syndication Agent by you or any of your
representatives in connection with the transaction contemplated hereby is
and will be complete and correct in all material respects and does not and
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein
not materially misleading in light of the circumstances under which such
statements are made; and
(b) all financial projections that have been or are hereafter prepared
by you or on your behalf and made available to the Administrative Agent,
any Underwriter or any other participant in the Credit Facilities have been
or will be prepared in good faith based upon assumptions believed by you to
have been reasonable when made and disclosed therein.
We recognize that changes in the Borrower, Saturn and the Transaction may cause
the representations and warranties made in clause (a) above to cease to be
accurate. You hereby agree that you will promptly supplement the information
and projections referred to in clauses (a) and (b) above from time to time until
completion of the syndication so that the representations and warranties in the
preceding sentence remain correct. In arranging and syndicating the Credit
Facilities, the Administrative Agent and the Syndication Agents will use and
rely on such information and projections without independent verification
thereof.
In connection with the syndication of the Credit Facilities, the
Administrative Agent and the Syndication Agents may, in their discretion,
allocate to other Lenders portions of any fees payable to them and the
Underwriters in connection with the Credit Facilities. You agree that no Lender
will receive any compensation of any kind for its participation in the Credit
Facilities, except as expressly provided for in this letter or as we shall
otherwise agree.
The commitment of each Underwriter hereunder is subject to (a) there
not occurring or becoming known to
2
<PAGE>
us any material adverse condition or material adverse change in or affecting, or
material adverse information with respect to, the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole or of Saturn and its subsidiaries taken as
whole, (b) our completion of and satisfaction in all respects with a due
diligence investigation of publicly available information with respect to Saturn
and its subsidiaries (it being understood that such due diligence shall be
deemed to have been satisfactory to us and this condition shall be deemed to
have been satisfied unless any of us notifies you in writing to the contrary on
or prior to 5:00 p.m., New York City time, on Tuesday, February 24, 1998), (c)
there not having occurred a material disruption of or material adverse change in
financial, banking or capital market conditions that, in our judgment, could
materially impair the syndication of the Credit Facilities, (d) our satisfaction
that prior to and during the syndication of the Credit Facilities there shall be
no competing offering, placement or arrangement of any debt securities (other
than the Senior Notes) or bank financing by or on behalf of the Borrower, any
affiliate or subsidiary thereof or, to the extent that you have control thereof,
Saturn or any subsidiary thereof, (e) the negotiation, execution and delivery of
definitive documentation with respect to the Credit Facilities satisfactory to
the Underwriters and their counsel on or before April 30, 1998 and the
occurrence of the initial borrowing of Term Loans under the Credit Facilities on
or before the date which is 180 days after the earlier of (i) such execution and
delivery and (ii) the date upon which you commence any tender offer relating to
the Acquisition and (f) the other conditions set forth or referred to in the
Term Sheet. Additionally, it shall be a condition to our respective commitments
hereunder that (x) the definitive documents to be filed with the Securities and
Exchange Commission with respect to the commencement of any tender offer shall
be provided to us prior to the commencement of such tender offer and that all
matters relating to the Credit Facilities and the financing of the Transaction
shall be in form and substance reasonably acceptable to us and (y) we shall not
be required to execute and deliver the definitive credit agreement prior to the
date which is 20 business days after the commencement of our syndication
efforts.
The reasonable costs and expenses (including, without limitation, the
fees and expenses of a single counsel to the Administrative Agent and the
Syndication Agents, any appropriate local counsel and the syndication and other
out-of-pocket expenses of the Administrative Agent and each Syndication Agent)
arising in connection with the preparation, execution and delivery of this
letter and the definitive financing agreements shall be for your account. You
further agree to indemnify and hold harmless the Administrative Agent, each
Syndication Agent and each Lender (including the Underwriters) and each
director, officer, employee, affiliate and agent thereof (each, an "indemnified
person") against, and to reimburse each indemnified person, upon its demand,
for, any losses, claims, damages, liabilities or other expenses ("Losses") to
which such indemnified person may become subject insofar as such Losses arise
out of or in any way relate to or result from the Transaction, this letter or
the financing contemplated hereby, including, without limitation, Losses
consisting of legal or other expenses incurred in connection with investigating,
defending or participating in any legal proceeding relating to any of the
foregoing (whether or not such indemnified person is a party thereto); provided
that the foregoing will not apply to any Losses to the extent they are found by
a final decision of a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of, or the breach of this Commitment
Letter by, such indemnified person. The obligations of the Borrower under this
paragraph shall remain effective whether or not definitive financing
documentation is executed and notwithstanding any termination of this letter.
None of the Administrative Agent, any Syndication Agent, any Underwriter or any
other indemnified person shall be responsible or liable to any other person for
consequential damages which may be alleged as a result of this letter or the
financing contemplated hereby and neither any Underwriter nor any other
indemnified person shall be responsible or liable for any damages which may be
alleged as a result of its failure, in accordance with the terms of this letter,
to provide the Credit Facilities.
You acknowledge that each Underwriter and its respective affiliates
(the term "Underwriter" being understood to refer hereinafter in this paragraph
to include such affiliates) may be providing debt financing, equity capital or
other services (including financial advisory services) to other companies in
respect of which you may have conflicting interests regarding the transactions
described herein and otherwise. No Underwriter will use confidential
information obtained from you by virtue of the transactions contemplated by this
Commitment Letter or their other relationships with you in connection with the
performance by such Underwriter of services for other companies, and such
Underwriter will not furnish any such information to other companies. You also
acknowledge that such Underwriter has no obligation to use in connection with
the transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained by it from other companies.
This Commitment Letter shall not be assignable by you without the
prior written consent of each Underwriter (and any purported assignment without
such consent shall be null and void), is intended to be solely for the benefit
of the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto. This
Commitment Letter may not be changed except pursuant to a writing signed by each
of the parties hereto or thereto, as the case may be. This letter shall be
governed by, and construed in accordance with, the laws of the State of New
York.
3
<PAGE>
You agree that neither this letter, nor any of its terms or substance,
shall be disclosed, directly or indirectly, to any other person except (a) to
Saturn, (b) to such of your employees, agents and advisers who are directly
involved in the consideration of this matter, (c) as disclosure may be compelled
in a judicial or administrative proceeding or as otherwise required by law and
(d) pursuant to your Press Release dated February 11, 1998; provided that you
may freely disclose this letter, and its terms and substance, at any time
following your acceptance hereof.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein shall remain in full force and effect regardless of
whether definitive financing documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or the commitment of
any Underwriter hereunder.
If you are in agreement with the foregoing, please sign and return to
CSFB the enclosed copies of this letter by no later than Sunday, February 15,
1998. This offer shall terminate at such time unless prior thereto we shall
have received signed copies of such letters.
We look forward to working with you on this transaction.
<TABLE>
<CAPTION>
Very truly yours,
<S> <C>
CREDIT SUISSE FIRST BOSTON BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
By: /s/ Ann F. Lopez
------------------------- By: /s/ Roger Fleischmann
Name: Ann F. Lopez ------------------------
Title: Managing Director Name: Roger Fleischmann
Title: Vice President
By: /s/ Marissa Harney
-------------------------
Name: Marissa Harney
Title: Director
THE CHASE MANHATTAN BANK NATIONSBANK, N.A.
By: /s/ B. J. Lillis By: /s/ Sharon Ellis
------------------------- ------------------------
Name: B. J. Lillis Name: Sharon Ellis
Title: Managing Director Title: Vice President
BANCAMERICA ROBERTSON STEPHENS
By: /s/ Jane E. Rawles
-------------------------
Name: Jane E. Rawles
Title: Vice President
Accepted and agreed to as of
the date first above written :
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: /s/ Peter Schwartz
-------------------------
Name: Peter Schwartz
Title: Senior Vice President
</TABLE>
4
<PAGE>
$10.0 Billion Credit Facilities
Statement of Terms and Conditions
February 15, 1998
An acquisition vehicle ("AcquisitionCo") to be organized by Computer Associates
International, Inc., a Delaware corporation (the "Borrower"), intends to acquire
(the "Acquisition") all of the issued and outstanding capital stock of a company
identified as "Saturn" ("Saturn") and, in connection therewith, to merge Saturn
with and into AcquisitionCo (the "Merger"; together with the Acquisition, the
"Transaction"). In order to finance the Transaction and the continuing
operations of the Borrower and its subsidiaries, the Borrower will require up to
$12.75 billion in financing, to be comprised of (a) $10.0 billion in senior
credit facilities (the "Credit Facilities) and (b) $2.75 billion in senior notes
(the "Senior Notes"). Set forth below is a statement of the terms and
conditions for the Credit Facilities:
I. Parties.
Borrower: Computer Associates International, Inc., a Delaware corporation (the
"Borrower").
Guarantors: All direct and indirect Material Subsidiaries (both before and
after giving effect to the Transaction) of the Borrower from time
to time (each, a "Guarantor"; together with the Borrower, the
"Credit Parties") shall guarantee the Credit Facilities.
For purposes hereof, the term "Material Subsidiary" shall mean
AcquisitionCo and each other subsidiary of the Borrower which (a)
holds any capital stock of the Borrower, (b) in the aggregate
with its subsidiaries, has consolidated revenues for the trailing
four quarters which are in excess of 1% of the consolidated
revenues of the Borrower and its subsidiaries taken as a whole or
(c) in the aggregate with its subsidiaries, has consolidated
assets which are material to the business of the Borrower and its
subsidiaries taken as a whole; provided, however, that no such
guarantee shall be provided by any such subsidiary which is
organized under the laws of a jurisdiction outside the United
States if the giving of such guarantee would be reasonably likely
to result in adverse tax consequences to the Borrower or to such
subsidiary.
Administrative Agent
and Arranger: Credit Suisse First Boston (in such capacity, the "Administrative
Agent").
Syndication Agents: BancAmerica Robertson Stephens, Chase Securities Inc. and
NationsBanc Montgomery Securities LLC (the "Syndication
Agents").
Underwriters: Credit Suisse First Boston, Bank of America National Trust &
Savings Association, The Chase Manhattan Bank and NationsBank,
N.A. (the "Underwriters").
Lenders: A syndicate of banks, financial institutions and other entities,
including the Underwriters (collectively, the "Lenders"),
arranged by the Administrative Agent and the Syndication Agents.
II. Type and Amount of Credit Facilities
1. Interim Term Loan Facility
Type of Facility: 1-1/2-year senior, term loan facility in the amount of $3.0
billion (the "Interim Facility").
<PAGE>
Availability: The Interim Facility shall be available in two drawings, with the
first such drawing to occur on the date upon which the conditions
precedent to borrowing are satisfied (the "Closing Date") and the
second drawing to occur on the date (which shall be not later
than 120 days after the Closing Date) upon which the Merger is
consummated. No borrowings shall be permitted under the Interim
Facility unless the Senior Notes have been issued and sold or a
backstopped bridge loan has been made, in either case having
terms reasonably satisfactory to the Lenders.
Amortization: The Interim Facility shall amortize in a single installment on
the date which is 18 months after the date upon which the
definitive Credit Documentation (as hereinafter defined) becomes
effective (the "Effective Date").
Use of Proceeds: The proceeds of the Interim Facility may only be applied to
(a) in the case of the initial drawing, (i) finance a
portion of the consideration to be paid for the Transaction,
(ii) refinance certain outstanding indebtedness of the
Borrower, Saturn and their respective subsidiaries and (iii)
pay fees and expenses relating thereto and (b) in the case
of the second drawing, (i) finance the consideration to be
paid to shareholders upon the consummation of the Merger and
(ii) refinance certain outstanding indebtedness of Saturn
and its subsidiaries.
2. Tranche A Term Loan Facility
Type of Facility: 5-year senior, term loan facility in the amount of $4.5
billion (the "Tranche A Facility"; together with the Interim
Facility, the "Term Loan Facilities").
Availability: The Tranche A Facility shall be available in two drawings, with
the first such drawing to occur on the Closing Date and the
second drawing to occur on the date (which shall be not later
than 120 days after the Closing Date) upon which the Merger is
consummated. No borrowings shall be permitted under the Tranche
A Facility at any time when the Interim Facility has not been
fully drawn.
Amortization: The Tranche A Facility shall amortize in quarterly installments
to be mutually agreed upon, with the final installment thereof
being due and payable on the fifth anniversary of the Effective
Date.
Use of Proceeds: The proceeds of the Tranche A Facility may only be applied
to (a) in the case of the initial drawing, (i) finance a
portion of the consideration to be paid for the Transaction,
(ii) refinance certain outstanding indebtedness of the
Borrower, Saturn and their respective subsidiaries and (iii)
pay fees and expenses relating thereto and (b) in the case
of the second drawing, (i) finance the consideration to be
paid to shareholders upon the consummation of the Merger and
(ii) refinance certain outstanding indebtedness of Saturn
and its subsidiaries.
3. Revolving Credit Facility
Revolving Credit Facility: 5-year senior, revolving credit facility in the
amount of $2.5 billion (the "Revolving Credit
Facility"; together with the Term Loan Facilities,
the "Credit Facilities").
Availability: The Revolving Credit Facility shall be available on a revolving
basis during the period commencing on the Closing Date and ending
on the fifth anniversary of the Effective Date (the "Termination
Date").
Letters of Credit: A portion of the Revolving Credit Facility to be mutually
agreed upon by the Borrower, the Syndication Agents and the
Administrative Agent shall be
2
<PAGE>
available for the issuance of letters of credit (the
"Letters of Credit") by Credit Suisse First Boston or
such other Lender as may be mutually agreed
upon by the Borrower and the Administrative Agent (the
"Issuing Lender"). No Letter of Credit shall have an
expiration date after the date which is five business days
prior to the Termination Date. Drawings under any Letter of
Credit shall be reimbursed by the Borrower (whether with its
own funds or with the proceeds of loans under the Revolving
Credit Facility) on the same business day. To the extent
that the Borrower does not so reimburse the Issuing Lender,
the Lenders under the Revolving Credit Facility shall be
irrevocably and unconditionally obligated to reimburse the
Issuing Lender on a pro rata basis.
Swing Line Loans: A portion of the Revolving Credit Facility not in excess of
$25.0 million shall be available for swing line loans (the
"Swing Line Loans") from Credit Suisse First Boston on
same-day notice. Any such Swing Line Loans will reduce
availability under the Revolving Credit Facility (other than
for purposes of determining the commitment fee) on a
dollar-for-dollar basis. Each Lender under the Revolving
Credit Facility shall acquire, under certain circumstances,
an irrevocable and unconditional pro rata participation in
each such Swing Line Loan.
Maturity: The Termination Date.
Purpose: The proceeds of the loans under the Revolving Credit
Facility shall be used by the Borrower and its subsidiaries
for working capital and other general corporate purposes
(including, without limitation, for the same purposes as the
Term Loan Facilities).
III. General Provisions.
Interest Rate Options:The Borrower may elect that all or a portion of the loans
under the Credit Facilities (collectively, the "Loans"), bear interest
at a rate per annum equal to:
(a) The higher of (1) the rate of interest publicly
announced by Credit Suisse First Boston as its base
lending rate for commercial loans in US Dollars in the
United States and (2) the federal funds rate from time
to time plus 0.5% (such highest rate, the "Base Rate";
the base lending rate is not intended to be the lowest
rate charged by Credit Suisse First Boston to its
borrowers) plus the Applicable Margin (as hereinafter
defined) which is then in effect; or
(b) The rate (grossed-up for maximum statutory reserve
requirements for eurodollar liabilities) reflected on
the Telerate service (other similar service) as the
"British Bankers' Association Settlement Rate" for
eurodollar deposits for one, two, three or six (as
selected by the Borrower)(the "Eurodollar Rate") plus
the Applicable Margin which is then in effect.
For purposes hereof, the term "Applicable Margin" shall mean
(a) initially, 1-3/4% per annum in the case of Eurodollar
Loans and 3/4 of 1% per annum in the case of Base Rate Loans
and (b) for each day from and after the later of the date
which is six months after the Closing Date and the date upon
which the Interim Facility has been repaid in full, the rate
per annum set forth below opposite the lowest public debt
rating then in effect for the senior, unsecured, long-term
indebtedness of the Borrower:
<TABLE>
<S> <C>
Credit Rating Applicable Margin
Eurodollar Base Rate Loans
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
S&P Moody's Loans
BBB- or higher Baa3 or higher 1-1/4% 1/4 of 1%
BB+ Ba1 1-1/2% 1/2 of 1%
BB or lower Ba2 or lower 1-3/4% 3/4 of 1%
</TABLE>
Interest Payment Dates: In the case of loans bearing interest based upon the
Base Rate ("Base Rate Loans"), in arrears on the last
business day of each calendar quarter.
In the case of loans bearing interest based upon the
Eurodollar Rate ("Eurodollar Loans"), on the last day of
each relevant interest period and, in the case of any
interest period longer than three months, on each successive
date three months after the first day of such interest
period.
In addition, any payment of principal of Loans (other than
of Loans under the Revolving Credit Facility) shall be
accompanied by interest then owing on the amount so paid.
Letter of Credit Fees: The Borrower shall pay a commission on all outstanding
Letters of Credit at a per annum rate equal to the
Applicable Margin then in effect with respect to
Eurodollar Loans under the Revolving Credit Facility on
the face amount of each such Letter of Credit. Such
commission shall be shared ratably among the Lenders
participating in the Revolving Credit Facility and
shall be payable quarterly in arrears.
A fronting fee equal to 1/4 of 1% per annum on the face
amount of each Letter of Credit shall be payable quarterly
in arrears to the Issuing Lender for its own account. In
addition, customary administrative, issuance, amendment,
payment and negotiation charges shall be payable to the
Issuing Lender for its own account.
Default Rate: During the continuance of an Event of Default, outstanding
Loans will bear interest at the rate which is 2% over the
rate otherwise applicable thereto.
Reserve Requirements;
Yield Protection: The rate quoted as the Eurodollar Rate will be grossed-up
for the maximum reserve requirements prescribed for
eurocurrency liabilities. In addition, the financing
agreements will contain customary provisions relating to
increased costs, capital adequacy protection, withholding
and other taxes and illegality.
Commitment Fee: The Borrower shall pay a commitment fee quarterly, in
arrears, on the average daily undrawn amount (without giving
effect to any drawings of Swing Line Loans) of the Revolving
Credit Facility. Such commitment fee shall accrue at the
rate equal to (a) initially, 3/8 of 1% per annum and (b) for
each day from and after the later of the date which is six
months after the Closing Date and the date upon which the
Interim Facility has been repaid in full, the rate per annum
set forth below opposite the lowest public debt rating then
in effect for the senior, unsecured, long-term indebtedness
of the Borrower:
<TABLE>
<S> <C> <C>
Credit Rating Commitment Fee
S&P Moody's
BBB- or higher Baa3 or higher 1/4 of 1%
4
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
BB+ or lower Ba1 or lower 3/8 of 1%
</TABLE>
Rate and Fee Basis: 360 days for actual days elapsed, in the case of calculation
of the Eurodollar Rate and any rate based upon the Federal
Funds Rate; otherwise, 365/6 days for actual days elapsed.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be reduced by
the Borrower without premium or penalty (but subject to
Eurodollar breakage indemnities), in minimum amounts to
be agreed upon. Any such optional prepayments of Term
Loans shall be made, first, to the Interim Facility
and, second, to the Tranche A Facility.
Mandatory Prepayments
and Commitment
Reductions: The Credit Facilities shall be reduced with (a) 100% of the
net proceeds of asset sales by the Borrower and its
subsidiaries (subject to a right of reinvestment and other
exceptions to be mutually agreed upon), (b) 100% of the net
proceeds from the incurrence of debt by the Borrower and its
subsidiaries (other than certain working capital
indebtedness for foreign subsidiaries and other exceptions
to be mutually agreed upon) and (c) 100% of the net proceeds
from the offering and sale of equity by the Borrower and its
subsidiaries. All such reductions shall be applied, first,
to prepay the Interim Facility, second, to prepay ratably
the remaining installments of the Tranche A Facility and,
third, to reduce the Revolving Credit Facility (and, to the
extent necessary, to repay the loans and cash collateralize
the Letters of Credit outstanding thereunder). In addition,
the Interim Facility shall be reduced by the amount by which
the aggregate principal amount of the Senior Notes exceeds
$2.75 billion.
Notwithstanding the foregoing, the mandatory prepayments and
commitment reductions described above shall terminate upon
the satisfaction of performance tests to be mutually agreed
upon by the Borrower, the Syndication Agents and the
Administrative Agent.
IV. Certain Conditions
Conditions Precedent to
Closing and Initial
Advances: The availability of the Credit Facilities shall be
conditioned upon satisfaction of, among other things, the
following conditions precedent on or before (x) in the case
of clause (a) below, April 30, 1998 and (y) otherwise, the
date which is 180 days after the earlier of (i) the date
upon which the definitive credit agreement with respect to
the Credit Facilities is executed and delivered and (ii) the
date upon which the Borrower commences a tender offer
relating to the Acquisition:
(a) Each Credit Party shall have executed and delivered
definitive financing documentation with respect to the
Credit Facilities (the "Credit Documentation")
satisfactory to the Administrative Agent and the
Syndication Agents.
(b) AcquisitionCo shall have acquired (or, in the case of a
tender offer, there shall have been validly tendered
and AcquisitionCo shall have accepted for purchase) at
least a majority of the issued and outstanding shares
of common stock of Saturn (or such higher percentage of
common and other capital stock as shall be required
under the organizational documents of Saturn and
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applicable law in order to permit the Merger to be
consummated on or prior to the date which is 120 days
after the Closing Date without the affirmative vote of
any other holder of capital stock of Saturn) pursuant
to, and in accordance with, documentation (including,
without limitation, the definitive merger agreement)
satisfactory to the Administrative Agent and the
Syndication Agents, and no provision thereof shall have
been waived, amended, supplemented or otherwise
modified in a manner which could reasonably be expected
to be materially adverse to the rights or interests of
the Administrative Agent or the Lenders; the price per
share to be paid in connection with the Transaction
shall not exceed an amount to be mutually agreed upon
by the Borrower, the Syndication Agents and the
Administrative Agent; and the capital structure of each
Credit Party after giving effect to the Transaction
shall be in all respects satisfactory to the
Administrative Agent and the Syndication Agents.
(c)other than the 2 for 1 stock split announced on
February 2, 1998, there shall have been no material
change in the capital stock of Saturn outstanding as of
September 30, 1997; and the "Rights" (as defined in the
Amended and Restated Rights Agreement, dated as of
August 1, 1996, of Saturn) and any other "poison pill"
rights of Saturn shall have been redeemed by the Board
of Directors of Saturn or the Lenders shall be
satisfied that they have been invalidated or otherwise
will not be triggered.
(d) The Lenders, the Syndication Agents and the
Administrative Agent shall have received all fees
required to be paid, and all expenses for which
invoices have been presented, on or before the Closing
Date.
(e) All governmental and third party approvals
necessary or reasonably requested by the Administrative
Agent in connection with the Transaction, the financing
contemplated hereby and the continuing operations of
the Borrower and its subsidiaries (after giving effect
to the Transaction) shall have been obtained and be in
full force and effect; all applicable waiting periods
shall have expired without any action being taken or
threatened by any competent authority (including,
without limitation, any court acting in connection with
a private litigation) which could reasonably be
expected to restrain, prevent or otherwise impose
material adverse conditions on the Transaction or the
financing thereof; and the consummation of the Merger
prior to the date which is 120 days after the Closing
Date could not reasonably be expected to be restrained,
prevented or otherwise subject to material adverse
conditions (including, without limitation, any right of
Saturn to redeem the capital stock to be purchased by
the Borrower and/or AcquisitionCo with the proceeds of
such borrowing) pursuant to Section 78.438 of the
Nevada Revised Statutes, Section 78.3792 of the Nevada
Revised Statutes or other applicable law (including,
without limitation, any other provision of the Nevada
Revised Statutes).
(f) The Lenders shall have received (i) audited
consolidated financial statements of the Borrower and
Saturn for the three most recent fiscal years ended
prior to the Closing Date as to which such financial
statements are available and (ii) satisfactory
unaudited interim consolidated financial statements of
the Borrower and Saturn for each quarterly period ended
subsequent to the date of the latest financial
statements delivered pursuant to clause (i) of this
paragraph as to which such financial statements are
available.
(g) The Lenders shall have received a satisfactory
pro forma consolidated balance sheet of the Borrower as
at the date of the most recent consolidated balance
sheet delivered pursuant to the immediately preceding
paragraph, adjusted to give effect to the consummation
of the Transaction and the
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financings contemplated hereby as if such transactions
had occurred on such date. The aggregate amount of
indebtedness of the Borrower and its subsidiaries
(immediately after giving effect to the consummation of
the Transaction) shall not exceed an amount to be
mutually agreed upon by the Borrower, the Syndication
Agents and the Administrative Agent.
(h) The Lenders shall have received a business plan
for each year prior to the final maturity of the Term
Loan Facilities and a written analysis of the business
and prospects of the Borrower and its subsidiaries for
the period from the Closing Date through the final
maturity of the Term Loan Facilities, each in form and
substance reasonably satisfactory to the Administrative
Agent and the Syndication Agents.
(i) The aggregate fees and expenses to be incurred in
connection with the Transaction and the financing
thereof shall not exceed an amount to be agreed upon by
the Borrower, the Administrative Agent and the
Syndication Agents.
(j) The Lenders shall have received such legal
opinions (including opinions (i) from independent
counsel to the Borrower and its subsidiaries, (ii) to
the extent practicable, delivered to the Borrower by
counsel to Saturn, accompanied by reliance letters in
favor of the Lenders and (iii) from such special and
local counsel as may be required by the Administrative
Agent), documents and other instruments as are
customary for transactions of this type or as they may
reasonably request.
(k) All material existing credit facilities (subject
to exceptions to be mutually agreed upon) of the
Borrower and its subsidiaries shall have been paid in
full and terminated.
Conditions Precedent to
All Advances: The making of each extension of credit (including,
without limitation, the initial extension of credit)
shall be conditioned upon (a) all representations and
warranties in the Credit Documentation (including,
without limitation, the material adverse change and
litigation representations) being true and correct in
all material respects and (b) there being no default or
event of default in existence at the time of, or after
giving effect to the making of, such extension of
credit.
As used herein and in the Credit Documentation a
"material adverse change" shall mean any event,
development or circumstance that has had or could
reasonably be expected to have a material adverse
effect on (a) the Transaction, (b) the business,
assets, property, condition (financial or otherwise) or
prospects of the Borrower and its subsidiaries taken as
a whole or of Saturn and its subsidiaries taken as a
whole or (c) the validity or enforceability of any of
the Credit Documentation or the rights and remedies of
the Administrative Agent and the Lenders thereunder.
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V. Representations, Warranties,
Covenants and Events of Default
The Credit Documentation shall contain representations, warranties, covenants
and events of default customary for financings of this type and other terms
deemed appropriate by the Lenders, including, without limitation:
Representations
and Warranties: Accuracy of financial statements (including pro forma
financial statements); absence of material undisclosed
liabilities; no material adverse change; corporate
existence; compliance with law (including, without
limitation, applicable Federal Reserve regulations and
margin rules); corporate power and authority;
enforceability of Credit Documentation; no conflict
with law or material contractual obligations; no
material litigation not previously disclosed; no
default; ownership of property; liens; intellectual
property; taxes; ERISA; Investment Company Act;
subsidiaries; and accuracy of disclosure.
Affirmative Covenants: Delivery of audited and unaudited financial statements,
reports, accountants' letters, officers' certificates
and other information requested by the Lenders; payment
of other obligations; continuation of business and
maintenance of existence and material rights and
privileges; compliance with laws and material
contractual obligations; maintenance of property and
insurance; maintenance of books and records; right of
the Lenders to inspect property and books and records;
notices of defaults, litigation and other material
events; and compliance with environmental laws.
Certain of the affirmative covenants shall be subject
to customary "baskets" and exceptions to be agreed upon
by the Borrower, the Syndication Agents and the
Administrative Agent.
Financial Covenants: Minimum interest coverage ratio and maximum leverage
ratio (in each case with definitions and levels to be
mutually agreed upon by the Borrower, the Syndication
Agents and the Administrative Agent).
Negative Covenants: Limitations on: indebtedness (including preferred
stock, but excluding up to $3.0 billion in aggregate
principal amount of publicly issued or privately placed
senior notes or backstopped bridge loans to be issued
on the Closing Date); liens; guarantee obligations;
mergers, consolidations, liquidations and dissolutions;
investments, loans and advances; dividends and other
restricted payments; payments and modifications of the
senior notes described above; modifications of the
documentation relating to the Transaction in any manner
which could adversely affect the rights or interests of
the Administrative Agent or the Lenders; transactions
with affiliates; changes in fiscal year; negative
pledge clauses; and changes in lines of business
conducted after giving effect to the Transaction.
Certain of the negative covenants shall be subject to
customary "baskets" and exceptions to be agreed upon by
the Borrower, the Syndication Agents and the
Administrative Agent.
Events of Default: Nonpayment of principal when due; nonpayment of
interest, fees or other amounts within 5 business days
after the date when due; material inaccuracy of
representations and warranties; violation of covenants
(subject, in the case of certain covenants, to a 30-day
grace period); cross-default; bankruptcy; certain ERISA
events; material judgments; actual or asserted
invalidity of any guarantee by any Credit Party; a
change of control to be mutually agreed upon; and
failure of the Merger to have been consummated on or
prior to the date which is 120 days after the Closing
Date. Certain of the events of default shall include
customary grace periods and/or baskets to be mutually
agreed upon by the Borrower, the Syndication Agents and
the Administrative Agent.
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VI. Certain Other Terms.
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate
amount of the Credit Facilities, except that (a) the
consent of each Lender directly affected thereby shall
be required with respect to (i) reductions in the
amount, or extensions of the scheduled date of any
scheduled installment or the final maturity, of any
Loan, (ii) reductions in the rate of interest or any
fee or extensions of any due date thereof, (iii)
increases in the amount or extensions of the expiry
date of any Lender's commitment and (iv) modifications
to the pro rata provisions of the Credit Documentation,
(b) the consent of 80% in interest of the Lenders shall
be required with respect to releases of all or
substantially all of the Guarantors and (c) the consent
of all Lenders shall be required with respect to
modifications to any of the voting percentages.
Assignments
and Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments, subject,
in the case of assignments (other than to another
Lender or to an affiliate of a Lender), to the consent
of the Administrative Agent and the Borrower (which
consent in each case shall not be unreasonably
withheld) and to the payment to the Administrative
Agent of a $3,500 registration and processing fee.
Non-pro rata assignments shall be permitted. In the
case of partial assignments (other than to another
Lender or to an affiliate of a Lender), the minimum
assignment amount shall be $5.0 million unless
otherwise agreed by the Borrower and the Administrative
Agent. Participants shall have the same benefits as
the Lenders with respect to yield protection and
increased cost provisions. Voting rights of
participants shall be limited to those matters with
respect to which the affirmative vote of the Lender
from which it purchased its participation would be
required as described under "Voting" above. Pledges of
Loans in accordance with applicable law shall be
permitted without restriction. Promissory notes shall
be issued under the Credit Facilities only upon request
of the relevant Lender and will be provided 45 days
after the Closing Date.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against increased
costs or loss of yield resulting from changes in
reserve, tax, capital adequacy and other requirements
of law and from the imposition of or changes in
withholding or other taxes and (b) indemnifying the
Lenders for "breakage costs" incurred in connection
with, among other things, any prepayment of a
Eurodollar Loan on a day other than the last day of an
interest period with respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable out-of-pocket
expenses of the Administrative Agent and the
Syndication Agents associated with the syndication of
the Credit Facilities and the preparation, execution,
delivery and administration of the Credit Documentation
and any amendment or waiver with respect thereto
(including the reasonable fees, disbursements and other
charges of a single counsel to the Administrative Agent
and the Syndication Agents and any necessary local
counsel) and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders (including the
fees, disbursements and other charges of counsel) in
connection with the enforcement of the Credit
Documentation.
The Administrative Agent, the Syndication Agents and
the Lenders (and their affiliates and their respective
officers, directors, employees, advisors and agents)
will have no liability for, and will be indemnified and
held harmless against, any loss, liability, cost or
expense incurred in respect of the financing
contemplated hereby or the use or the proposed use of
proceeds
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thereof (except to the extent resulting from the gross
negligence or willful misconduct of the indemnified
party).
Confidentiality: No Lender shall disclose non-public information
provided to it pursuant to the credit documents which
has been marked "confidential."
Governing Law and Forum: State of New York (including submission to New York
jurisdiction and waiver of jury trial).
Counsel to the
Administrative Agent
and Syndication Agents. Simpson Thacher & Bartlett.
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