<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
STATEMENT ON
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Interlink Computer Sciences, Inc.
(Name of Subject Company)
Sterling Software (Southwest), Inc.
Sterling Software, Inc.
(Bidders)
Common Stock, $.001 par value
(Title of Class of Securities)
458747 10 2
(CUSIP Number of Class of Securities)
Don J. McDermett, Jr., Esq.
Sterling Software, Inc.
300 Crescent Court
Suite 1200
Dallas, Texas 75201
Telephone: (214) 981-1000
Facsimile: (214) 981-1265
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidders)
Copy to:
Richard J. Grossman, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
CALCULATION OF FILING FEE
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Transaction Valuation:* $71,783,208 Amount of Filing Fee:** $14,356.64
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* Estimated for purpose of calculating the filing fee only. The calculation
assumes the purchase of 10,254,744 shares of common stock, $.001 par value
(including the associated Preferred Share Purchase Rights, the "Shares")
(which represents 8,308,107 Shares outstanding, 1,614,896 Shares reserved
for issuance upon the exercise of options, 260,706 Shares reserved for
issuance upon the exercise of warrants, and 71,035 Shares issuable under the
Employee Stock Purchase Plan (the "ESPP") of Interlink Computer Sciences,
Inc. (the "Company")), at a price per Share of $7.00 in cash. Such number of
Shares represents all the Shares outstanding as of March 23, 1999, and
assumes the exercise of all existing options and warrants to acquire Shares
from the Company and the issuance by the Company of 71,035 Shares under the
ESPP.
** The amount of the filing fee, calculated in accordance with rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by Sterling Software
(Southwest), Inc. for such number of Shares.
[_] Check box if any part of the fee is offset has provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not
Applicable
Form or Registration No.: Not Applicable Date Filed: Not
Applicable
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<PAGE>
CUSIP No. 458747102
14D-1/13D
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Sterling Software (Southwest), Inc.
IRS ID No.: Applied for
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
AF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7)SOLE VOTING POWER
NUMBER OF SHARES 0
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
------------------------------------------------------
(8)SHARED VOTING POWER
2,025,118*
------------------------------------------------------
(9) SOLE DISPOSITIVE POWER
0
------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
2,025,118*
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,025,118*
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
**19.75 %
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(14) TYPE OF REPORTING PERSON
CO
* On March 23, 1999, Sterling Software, Inc., a Delaware corporation
("Parent"), and Sterling Software (Southwest), Inc., a Delaware corporation
and an indirect wholly owned subsidiary of Parent ("Purchaser"), entered
into Stockholder Agreements (the "Stockholder Agreements") with certain
significant stockholders and the executive officers and the directors
(collectively, the "Stockholders") of Interlink Computer Sciences, Inc., a
Delaware corporation (the "Company"), pursuant to which the Stockholders,
among other things, granted to Parent an option to purchase an aggregate of
2,025,118 shares of common stock, $.001 par value per share (including the
associated Preferred Share Purchase Rights, the "Shares"), of the Company
owned or which may be acquired upon the exercise of options by them
(representing 1,171,068 owned Shares and options to acquire 854,050
Shares). The Stockholder Agreements are described more fully in Section 11
of the Offer to Purchase, dated March 30, 1999.
** This calculation assumes the purchase of 10,254,744 Shares (which
represents 8,308,107 Shares outstanding, 1,614,896 Shares reserved for
issuance upon the exercise of options, 260,706 Shares reserved for
issuance upon the exercise of warrants, and 71,035 Shares issuable under
the Company's Employee Stock Purchase Plan (the "ESPP")), at a price per
Share of $7.00 in cash. Such number of Shares represents all the Shares
outstanding as of March 23, 1999, and assumes the exercise of all existing
options and warrants to acquire Shares from the Company and the issuance
by the Company of 71,035 Shares under the ESPP.
2
<PAGE>
CUSIP No. 458747102
14D-1/13D
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Sterling Software, Inc.
IRS ID No.: 75-1873956
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7)SOLE VOTING POWER
NUMBER OF SHARES 0
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
------------------------------------------------------
(8)SHARED VOTING POWER
2,025,118*
------------------------------------------------------
(9) SOLE DISPOSITIVE POWER
0
------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
2,025,118*
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,025,118*
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES ( )
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
**19.75 %
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(14) TYPE OF REPORTING PERSON
CO
* On March 23, 1999, Sterling Software, Inc., a Delaware corporation
("Parent"), and Sterling Software (Southwest), Inc., a Delaware corporation
and an indirect wholly owned subsidiary of Parent ("Purchaser"), entered
into Stockholder Agreements (the "Stockholder Agreements") with certain
significant stockholders and the executive officers and the directors
(collectively, the "Stockholders") of Interlink Computer Sciences, Inc., a
Delaware corporation (the "Company"), pursuant to which the Stockholders,
among other things, granted to Parent an option to purchase an aggregate of
2,025,118 shares of common stock, $.001 par value per share (including the
associated Preferred Share Purchase Rights, the "Shares"), of the Company
owned or which may be acquired upon the exercise of options by them
(representing 1,171,068 owned Shares and options to acquire 854,050
Shares). The Stockholder Agreements are described more fully in Section 11
of the Offer to Purchase, dated March 30, 1999.
** This calculation assumes the purchase of 10,254,744 Shares (which
represents 8,308,107 Shares outstanding, 1,614,896 Shares reserved for
issuance upon the exercise of options, 260,706 Shares reserved for issuance
upon the exercise of warrants, and 71,035 Shares issuable under the
Company's Employee Stock Purchase Plan (the "ESPP")), at a price per Share
of $7.00 in cash. Such number of Shares represents all the Shares
outstanding as of March 23,1999, and assumes the exercise of all existing
options and warrants to acquire Shares from the Company and the issuance of
71,035 Shares under the ESPP.
3
<PAGE>
This Tender Offer Statement on Schedule 14D-1 and Statement on Schedule 13D
(the "Schedule 14D-1/13D") relates to the offer by Sterling Software
(Southwest), Inc., a Delaware corporation ("Purchaser") and an indirect wholly
owned subsidiary of Sterling Software, Inc., a Delaware corporation
("Parent"), to purchase all of the outstanding shares of common stock, par
value $.001 per share (the "Common Stock," and including the associated
Preferred Share Purchase Rights, the "Shares"), of Interlink Computer
Sciences, Inc., a Delaware corporation (the "Company"), at a purchase price of
$7.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
March 30, 1999 (the "Offer to Purchase"), a copy of which is attached hereto
as Exhibit (a)(1), and in the related Letter of Transmittal (the "Letter of
Transmittal") (which, as amended or supplemented from time to time, together
constitute the "Offer"), a copy of which is attached hereto as Exhibit (a)(2).
Item 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Interlink Computer Sciences, Inc. The
information set forth in Section 8 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, par value $.001 per share, including the associated
Preferred Share Purchase Rights, of the Company. The information set forth in
the Introduction of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
Item 2. IDENTITY AND BACKGROUND.
(a)--(d) and (g) This Statement is filed by Purchaser and Parent. The
information set forth in Section 9 ("Certain Information Concerning Parent,
Sterling (U.S. of America) and Purchaser") of the Offer to Purchase and in
Schedule I thereto is incorporated herein by reference.
(e) and (f) During the last five years, neither Purchaser nor Parent nor, to
the best knowledge of Purchaser or Parent, none of the persons listed in
Schedule I to the Offer to Purchase, have (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii)
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 9 ("Certain Information
Concerning Parent, Sterling (U.S. and America) and Purchaser") and Section 11
("Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements") of the Offer to Purchase is
incorporated herein by reference.
Item 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Introduction and Section 10 ("Source
and Amount of Funds") of the Offer to Purchase is incorporated herein by
reference.
(b) and (c) Not applicable.
4
<PAGE>
Item 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)--(e) The information set forth in the Introduction, Section 11
("Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements") and Section 12 ("Plans for the
Company; Other Matters") of the Offer to Purchase is incorporated herein by
reference.
(f)--(g) The information set forth in the Introduction and Section 7
("Effect of the Offer on the Market for the Shares; Stock Listing; Exchange
Act Registration; Margin Regulations") of the Offer to Purchase is
incorporated herein by reference.
Item 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning Parent, Sterling (U.S. of America) and
Purchaser") and Section 11 ("Background of the Offer; Purpose of the Offer and
the Merger; the Merger Agreement and Certain Other Agreements") of the Offer
to Purchase and in Schedule I thereto is incorporated herein by reference.
Item 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Parent, Sterling (U.S. of America) and Purchaser"),
Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement and Certain Other Agreements") and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
Item 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
Item 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser or Parent, or to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to the Offer to Purchase, and the
Company, or any of its executive officers, directors, controlling persons or
subsidiaries.
(b)--(c) The information set forth in the Introduction, Section 14
("Conditions to the Offer") and Section 15 ("Certain Legal Matters") of the
Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations") and Section 15 ("Certain Legal Matters") of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, to the extent not otherwise incorporated herein by
reference, is incorporated herein by reference.
5
<PAGE>
Item 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase dated March 30, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Joint Press Release of Parent and the Company dated March 24, 1999.
(a)(8) Press Release of Parent dated March 30, 1999.
(a)(9) Summary Advertisement dated March 30, 1999.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of March 23, 1999, by and among
Parent, Purchaser and the Company.
(c)(2) Stockholder Agreement, dated as of March 23, 1999, by and among Parent,
Purchaser and Adtel Limited Partnership, Adventact Limited Partnership,
Advent International Investors II Limited Partnership, Adwest Limited
Partnership, Global Private Equity II Limited Partnership and Golden
Gate Development and Investment Limited Partnership.
(c)(3) Stockholder Agreement, dated as of March 23, 1999, by and among Parent,
Purchaser and Cisco Systems, Inc.
(c)(4) Form of Stockholder Agreement, dated as of March 23, 1999, by and among
Parent, Purchaser and directors and executive officers of the Company
(together with a schedule indicating the number of Shares and options
to purchase Shares owned by each director and executive officer who
entered into a Stockholder Agreement).
(c)(5) Exclusivity Agreement, dated March 16, 1999, by and between Parent and
the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 30, 1999
Sterling Software, Inc.
By: /s/ Don J. McDermett, Jr.
----------------------------------
Name: Don J. McDermett, Jr.
Title: Senior Vice President and
General Counsel
Sterling Software (Southwest), Inc.
By: /s/ Don J. McDermett, Jr.
----------------------------------
Name: Don J. McDermett, Jr.
Title: Vice President
7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(a)(1) Offer to Purchase dated March 30, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Joint Press Release of Parent and the Company dated March 24, 1999.
(a)(8) Press Release of Parent dated March 30, 1999.
(a)(9) Summary Advertisement dated March 30, 1999.
(b) None
(c)(1) Agreement and Plan of Merger, dated as of March 23, 1999, by and among Parent,
Purchaser and the Company.
(c)(2) Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser
and Adtel Limited Partnership, Adventact Limited Partnership, Advent International
Investors II Limited Partnership, Adwest Limited Partnership, Global Private Equity
II Limited Partnership and Golden Gate Development and Investment Limited
Partnership.
(c)(3) Stockholder Agreement, dated as of March 23, 1999, by and among Parent, Purchaser
and Cisco Systems, Inc.
(c)(4) Form of Stockholder Agreement, dated as of March 23, 1999, by and among Parent,
Purchaser and directors and executive officers of the Company (together with a
schedule indicating the number of Shares and options to purchase Shares owned by
each director and executive officer who entered into a Stockholder Agreement).
(c)(5) Exclusivity Agreement, dated March 16, 1999, by and between Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
8
<PAGE>
EXHIBIT (A)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Interlink Computer Sciences, Inc.
at
$7.00 Net Per Share
by
Sterling Software (Southwest), Inc.
an indirect wholly owned subsidiary of
Sterling Software, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF MARCH 23, 1999, BY AND AMONG STERLING SOFTWARE, INC. ("PARENT"),
STERLING SOFTWARE (SOUTHWEST), INC. ("PURCHASER") AND INTERLINK COMPUTER
SCIENCES, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), AND HAS
UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN)
PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN)
THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY
PARENT, PURCHASER OR ANY SUBSIDIARY OF PARENT, REPRESENTS AT LEAST A MAJORITY
OF THE SHARES OUTSTANDING (ON A FULLY DILUTED BASIS) ON THE DATE SHARES ARE
ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE. THE OFFER IS NOT SUBJECT TO A FINANCING
CONDITION. SEE SECTION 14.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the enclosed Letter of Transmittal
(or facsimile thereof) in accordance with the Instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed (if required
by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of
Transmittal (or a facsimile thereof) and any other required documents to the
Depositary (as defined herein) and either deliver the certificates for such
Shares to the Depositary or tender such Shares pursuant to the procedure for
book-entry transfer set forth in Section 3 of this Offer to Purchase or (ii)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Any stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of
the Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be directed to the Information Agent or brokers, dealers,
commercial banks or trust companies.
---------------
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
March 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
INTRODUCTION............................................................... 3
THE OFFER.................................................................. 6
1. Terms of the Offer................................................. 6
2. Acceptance for Payment and Payment................................. 8
3. Procedures for Tendering Shares.................................... 9
4. Withdrawal Rights.................................................. 11
5. Certain Federal Income Tax Consequences............................ 12
6. Price Range of the Shares; Dividends............................... 13
7. Effect of the Offer on the Market for the Shares; NASDAQ Quotation;
Exchange Act Registration; Margin Regulations..................... 13
8. Certain Information Concerning the Company......................... 14
9. Certain Information Concerning Parent, Sterling (U.S. of America)
and Purchaser..................................................... 18
10. Sources and Amount of Funds........................................ 20
11. Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and
Certain Other Agreements.......................................... 20
12. Plans for the Company; Other Matters............................... 34
13. Dividends and Distributions........................................ 36
14. Conditions to the Offer............................................ 36
15. Certain Legal Matters.............................................. 38
16. Fees and Expenses.................................................. 40
17. Miscellaneous...................................................... 40
SCHEDULE I: Information Concerning Directors and Executive Officers of
Parent, Sterling
(U.S. of America) and Purchaser.................................. I-1
</TABLE>
2
<PAGE>
To the Holders of Common Stock of
Interlink Computer Sciences, Inc.:
INTRODUCTION
Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser"), a
wholly owned subsidiary of Sterling Software (U.S. of America), Inc., a
Delaware corporation ("Sterling (U.S. of America)") and an indirect wholly
owned subsidiary of Sterling Software, Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.001 per share (the "Common Stock"), including the associated
preferred share purchase rights issued pursuant to the Rights Agreement (as
defined below) (the "Rights" and, together with the Common Stock, the
"Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation (the
"Company"), at a price of $7.00 per Share, net to the seller in cash, without
interest (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal
(which, as amended or supplemented from time to time, collectively constitute
the "Offer").
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they will charge any service fees. Purchaser will pay all fees and
expenses of BankBoston, N.A., which is acting as the depositary for the Offer
(in such capacity, the "Depositary") and Georgeson & Company Inc., which is
acting as information agent for the Offer (in such capacity, the "Information
Agent"), incurred in connection with the Offer and in accordance with the
terms of the agreements entered into between Purchaser and/or Parent and each
such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Hambrecht & Quist LLC ("Hambrecht & Quist"), financial advisor to the
Company, has delivered to the Company Board its opinion, dated as of March 23,
1999 (the "Financial Advisor Opinion"), to the effect that, as of such date
and based upon and subject to certain matters stated therein, the cash
consideration to be received by the holders of Shares (other than Purchaser,
Parent and their affiliates) in the Offer and the Merger is fair to such
holders from a financial point of view. A copy of the Financial Advisor
Opinion is attached as an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by
the Company with the Securities and Exchange Commission (the "Commission") in
connection with the Offer and which is being mailed to holders of Shares
herewith. Holders of Shares are urged to, and should, read the Financial
Advisor Opinion carefully.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN)
THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY
PARENT, PURCHASER OR ANY SUBSIDIARY OF PARENT, REPRESENTS AT LEAST A MAJORITY
OF THE SHARES OUTSTANDING (ON A FULLY DILUTED BASIS) ON THE DATE SHARES ARE
ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14. As
used in this Offer to Purchase, "fully diluted basis" takes into account the
exercise of all outstanding options, warrants and other rights and securities
exercisable into shares of Common Stock whether or not vested or then
exercisable and the purchase of all Shares issuable under employee stock
purchase or similar benefit plans. The Company has represented and warranted
to Parent and Purchaser that, as of March 22, 1999, there were 8,308,107
Shares issued and outstanding, not more than 80,000 Shares would be issued
prior to
3
<PAGE>
April 30, 1999 pursuant to the Company's 1996 Employee Stock Purchase Plan
(the "ESPP"), 1,614,896 Shares were issuable pursuant to the exercise of
options to purchase Shares ("Options") granted under the Company's 1992 Stock
Option Plan and 1996 Director Stock Option Plan (collectively, the "Company
Option Plans"), 260,706 Shares were issuable pursuant to the exercise of
outstanding warrants (the "Warrants"), no Shares of preferred stock, par value
$.001 per Share (the "Preferred Stock"), were issued and outstanding and
100,000 shares of Series A Participating Preferred Stock were reserved for
issuance pursuant to the Rights Agreement. The Merger Agreement provides,
among other things, that the Company will not, without the prior written
consent of Parent, issue any additional Shares (except upon the exercise of
outstanding Options and Warrants and pursuant to the ESPP). Pursuant to
separate Stockholder Agreements (as defined herein) entered into by Parent and
Purchaser with certain significant stockholders of the Company and the
executive officers and directors of the Company (each, a "Stockholder"),
Parent and Purchaser have the right to purchase from such Stockholders at a
price of $7.00 per Share (or any higher price offered by Parent or a
subsidiary of Parent to the stockholders of the Company generally) an
aggregate of 2,025,118 Shares (or approximately 19.7% of the Company's Shares
on a fully diluted basis), including 854,050 Shares which may be acquired by
the Stockholders upon exercise of Options. The Stockholders have advised
Parent that they intend to tender their Shares pursuant to the Offer. Based on
the foregoing and assuming the issuance of 71,035 Shares pursuant to the ESPP
and the exercise of all outstanding Options and Warrants, Purchaser believes
that the Minimum Condition will be satisfied if 5,127,373 Shares (including
Shares subject to the Stockholder Agreements) are validly tendered and not
withdrawn prior to the Expiration Date. Accordingly, Purchaser believes that
if 3,102,255 Shares are validly tendered and not withdrawn prior to the
Expiration Date by holders of Shares other than the Stockholders, the Minimum
Condition will be satisfied.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 23, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. Pursuant to the Merger Agreement and the Delaware General
Corporation Law, as amended (the "DGCL"), as soon as practicable, but not
later than the tenth business day, after the completion of the Offer and
satisfaction or waiver, if permissible, of all conditions to the Merger (as
defined below), including the purchase of Shares pursuant to the Offer
(sometimes referred to herein as the "consummation" of the Offer) and the
approval and adoption of the Merger Agreement by the stockholders of the
Company (if required by applicable law), Purchaser shall be merged with and
into the Company (the "Merger") and the Company will be the surviving
corporation in the Merger (the "Surviving Corporation"). At the effective time
of the Merger (the "Effective Time"), each Share then outstanding (other than
Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any
of its subsidiaries, including Purchaser, and (iii) stockholders who properly
perfect their dissenters' rights under the DGCL) will be converted into the
right to receive $7.00 in cash or any higher price per Share paid in the Offer
(the "Merger Consideration"), without interest. The Merger Agreement is more
fully described in Section 11.
The Merger Agreement provides that, promptly after (i) the purchase of and
payment for any Shares by Purchaser or any of its affiliates as a result of
which Purchaser and its affiliates own beneficially at least a majority of the
then outstanding Shares and (ii) compliance with Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-
1 promulgated thereunder, whichever shall occur later, Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board as is equal to the product of the total number of
directors on the Company Board (giving effect to any increase in the size of
such Board) multiplied by the percentage that the number of Shares
beneficially owned by Purchaser at such time (including Shares accepted for
payment) bears to the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of Parent, use its best efforts
promptly either to increase the size of the Company Board or to secure the
resignations of such number of its incumbent directors, or both, as is
necessary to enable such designees of Parent to be so elected or appointed to
the Company Board, and the Company shall take all actions available to the
Company to cause such designees of Parent to be so elected or appointed. At
such time, the Company shall, if requested by Parent, also take all action
necessary to cause persons designated by Parent to constitute at least the
same percentage (rounded up to the next whole number) as Parent is entitled to
designate on the Company Board of (i) each committee of the Company Board,
(ii) each board of directors (or similar body) of each subsidiary of the
Company and (iii) each
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committee (or similar body) of each such board. Notwithstanding the foregoing,
Purchaser, Parent and the Company have agreed to use their respective
reasonable best efforts to ensure that at least two of the members of the
Company Board shall, at all times prior to the Effective Time, be persons who
were directors of the Company on the date of the Merger Agreement.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement, if required by the DGCL, other applicable law or the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation"). Under the DGCL and pursuant to the Certificate of
Incorporation, the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of any class or series of the Company's
capital stock that would be necessary to approve the Merger Agreement and the
Merger at any required meeting of the Company's stockholders. If the Minimum
Condition is satisfied and as a result of the purchase of Shares by Purchaser
pursuant to the Offer (and, if necessary, the Stockholder Agreements),
Purchaser and its affiliates will own at least a majority of the outstanding
Shares, and Purchaser will be able to effect the Merger without the
affirmative vote of any other stockholder. Pursuant to the Merger Agreement,
Parent and Purchaser have agreed to vote the Shares acquired by them pursuant
to the Offer or otherwise in favor of the Merger. See Section 12. The Merger
Agreement is more fully described in Section 11.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, then, at the election of Parent, a
short-form merger could be effected without any further approval of the
Company Board or the stockholders of the Company. The Company agreed in the
Merger Agreement that, in the event that Purchaser or any other subsidiary of
Parent acquires at least 90% of the outstanding Shares in the Offer, it will,
at the request of Purchaser, take all necessary actions to cause the Merger to
become effective as soon as practicable after the expiration of the Offer,
without a meeting of the stockholders of the Company. Even if Purchaser does
not own 90% of the outstanding Shares following consummation of the Offer,
Parent or Purchaser could seek to purchase additional Shares in the open
market or otherwise in order to reach the 90% threshold and employ a short-
form merger. The per Share consideration paid for any Shares so acquired in
open market purchases may be greater or less than the Offer Price. Parent
presently intends to effect a short-form merger, if permitted to do so under
the DGCL, pursuant to which Purchaser will be merged with and into the
Company. See Section 12.
As a condition and inducement to Parent's and Purchaser's entering into the
Merger Agreement and incurring the liabilities therein, the Stockholders, who
collectively have voting power and dispositive power with respect to an
aggregate of 1,171,068 Shares and own Options to acquire an additional 854,050
Shares, concurrently with the execution and delivery of the Merger Agreement
entered into separate Stockholder Agreements (the "Stockholder Agreements"),
dated as of March 23, 1999, with Parent and Purchaser. Pursuant to the
Stockholder Agreements, the Stockholders have agreed, among other things, to
grant Parent an irrevocable proxy with respect to the voting of their Shares
in favor of the Merger upon the terms and subject to the conditions set forth
therein. The Stockholders have also granted to Parent an option to purchase
the Shares subject to the Stockholder Agreements, at an option price of $7.00
per Share (or any higher price offered by Parent or a subsidiary of Parent to
the stockholders of the Company generally), at any time commencing on March
23, 1999 and continuing for varying periods. The Stockholders have advised
Parent that they intend to tender all of their Shares pursuant to the Offer.
The Stockholder Agreements are more fully described in Section 11.
The Company has distributed one Right for each outstanding Share pursuant to
the Preferred Shares Rights Agreement, dated as of February 25, 1998, between
the Company and BankBoston, N.A., as Rights Agent, as amended (the "Rights
Agreement"). The Company has represented in the Merger Agreement that it has
taken all action which may be necessary under the Rights Agreement so that (i)
the Rights will be inoperative with
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respect to the acquisition of Shares by Parent, Purchaser or their affiliates
pursuant to the Merger Agreement, the Offer and/or the Stockholder Agreements,
(ii) the execution and delivery of the Merger Agreement and the Stockholder
Agreements (and any amendments thereto) and the consummation of the Merger and
the other transactions contemplated thereby will not cause (x) Parent and/or
Purchaser to constitute an Acquiring Person (as defined in the Rights
Agreement), (y) the Rights to become exercisable or (z) a Distribution Date,
Section 13 Event, Transaction, Triggering Event or Shares Acquisition Date (as
each such term is defined in the Rights Agreement) to occur, and (iii) the
Rights shall not become exercisable upon or at any time after the acceptance
for payment of Shares pursuant to the Offer and/or the purchase of, or the
right to acquire, Shares pursuant to the Stockholder Agreements and/or the
consummation of the Merger.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Monday, April 26, 1999, unless and until Purchaser, in accordance
with the terms of the Merger Agreement, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. In the Merger Agreement, Parent and Purchaser have
agreed that if all conditions to Purchaser's obligation to accept for payment
and pay for Shares pursuant to the Offer are not satisfied on the scheduled
Expiration Date, Purchaser may, in its sole discretion, extend the Offer for
additional periods; provided, however, that Purchaser may not extend the Offer
beyond July 31, 1999 without the consent of the Company.
The Offer is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
other conditions set forth in Section 14. If such conditions are not satisfied
prior to the Expiration Date, Purchaser reserves the right, subject to the
terms of the Merger Agreement and subject to complying with applicable rules
and regulations of the Commission, to (i) decline to purchase any Shares
tendered in the Offer and terminate the Offer and return all tendered Shares
to the tendering stockholders, (ii) waive any or all conditions to the Offer
(except the Minimum Condition) and, to the extent permitted by applicable law,
purchase all Shares validly tendered, (iii) extend the Offer and, subject to
the right of stockholders to withdraw Shares until the Expiration Date, retain
all Shares which have been tendered during the period or periods for which the
Offer is extended, or (iv) subject to the next paragraph, amend the Offer.
The Merger Agreement provides that, without the prior written consent of the
Company, Purchaser shall not (and Parent shall cause Purchaser not to) (i)
decrease or change the form of the consideration to be paid in the Offer or
decrease the number of Shares sought pursuant to the Offer, (ii) impose
additional conditions to the Offer, (iii) extend the expiration date of the
Offer beyond the initial Expiration Date of the Offer, except (A) as required
by applicable law, (B) that if, immediately prior to the Expiration Date of
the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer constitute more than 75% and less than 90% of the
outstanding Shares, Purchaser may extend the Offer for one or more periods not
to exceed an aggregate of 10 business days, notwithstanding that all
conditions to the Offer are satisfied as of such Expiration Date of the Offer
and (C) that if any condition to the Offer has not been satisfied or waived,
Purchaser may, in its sole discretion, extend the Expiration Date of the Offer
for one or more periods, provided that the Expiration Date of the Offer may
not be extended beyond July 31, 1999, (iv) waive the Minimum Condition, or (v)
amend
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any term or other condition of the Offer in any manner materially adverse to
holders of Shares; provided, however, that, except as set forth above and
subject to applicable legal requirements, Purchaser may waive any condition to
the Offer other than the Minimum Condition in its sole discretion and;
provided, further, that the Offer may be extended in connection with an
increase in the consideration to be paid pursuant to the Offer so as to comply
with applicable rules and regulations of the Commission. Notwithstanding the
foregoing, if all the conditions to the Offer have not been satisfied or
waived at the initial expiration date of the Offer and all such conditions are
reasonably capable of being satisfied within the applicable period set forth
below, the Purchaser has agreed in the Merger Agreement to (i) extend the
Offer for 10 business days from the initial Expiration Date of the Offer or
(ii) extend the Offer for 20 business days from the initial Expiration Date of
the Offer if the condition relating to the HSR Act has not been satisfied and
is reasonably capable of being satisfied.
The Merger Agreement requires Purchaser to accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied on the Expiration Date. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date
in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange
Act. Without limiting the obligation of Purchaser under such Rules or the
manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release
to the Dow Jones News Service.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled
to withdrawal rights as described in Section 4. However, the ability of
Purchaser to delay the payment for Shares which Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated its view that an offer must remain
open for a minimum period of time following a material change in the terms of
the Offer and that waiver of a material condition, such as the Minimum
Condition, is a material change in the terms of the Offer. The release states
that an offer should remain open for a minimum of five (5) business days from
the date a material change is first published, or sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of ten (10) business days may be required to allow
adequate dissemination and investor response. The requirement to extend the
Offer will not apply to the extent that the number of business days remaining
between the occurrence of the change and the then-scheduled Expiration Date
equals or exceeds the minimum extension period that would be required because
of such amendment. If, prior to the Expiration Date, Purchaser increases the
consideration offered to holders of Shares pursuant to the Offer, such
increased consideration will be paid to all holders whose Shares are purchased
in the Offer whether or not such Shares were tendered prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, dealers, banks and similar
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persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. Acceptance for Payment and Payment.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates for such Shares (or a
timely Book Entry Confirmation (as defined below) with respect thereto), (ii)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message (as defined below), and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment may be
made to tendering stockholders at different times if delivery of the Shares
and other required documents occur at different times. The per share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per share consideration paid to any other holder of such Shares
pursuant to the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law. If Purchaser is delayed in its acceptance
for payment of, or payment for, Shares or is unable to accept for payment or
pay for Shares pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer (including such rights as are set forth
in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c) under the
Exchange Act), the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person
as the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined in
Section 3) pursuant to the procedures set forth in Section 3, such Shares will
be credited to such account maintained at the Book-Entry Transfer Facility as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. If no such instructions are given with respect to Shares delivered
by book-entry transfer, any such Shares not tendered or not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility
designated in the Letter of Transmittal as the account from which such Shares
were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will
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not relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Shares.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either certificates evidencing tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered to the
Depositary pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation (as defined below) must be received by the
Depositary, in each case prior to the Expiration Date, or (ii) the tendering
stockholder must comply with the guaranteed delivery procedures described
below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two (2) business days after the
date of this Offer to Purchase. Any financial institution that is a
participant in the Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing the Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, and any other required documents
must, in any case, be transmitted to, and received by, the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-
entry transfer of Shares into the Depositary's account at the Book-Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
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Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, are received by the Depositary within three (3) trading
days after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the NASDAQ National Market (the "NASDAQ
National Market"), operated by the National Association of Securities
Dealers, Inc. (the "NASD"), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Binding Agreement. The valid tender of Shares pursuant to one of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
will irrevocably appoint designees of Parent as such stockholder's attorneys-
in-fact and proxies in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted
for payment by Purchaser and with respect to any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect of such Shares on or after March 23, 1999 (collectively,
"Distributions"). All such proxies will be considered coupled with an interest
in the tendered Shares. Such appointment will be effective if, as and when,
and only to the extent that, Purchaser accepts for payment Shares tendered by
such stockholder as provided herein. All such powers of attorney and proxies
will be irrevocable and will be deemed granted in consideration of the
acceptance for payment by Purchaser of Shares tendered in accordance with the
terms of the Offer. Upon such appointment, all prior powers of attorney,
proxies and consents given by such stockholder with respect to such Shares
(and any and all Distributions) will, without further action, be revoked and
no subsequent powers of attorney, proxies, consents or revocations may be
given by such stockholder (and, if given, will not be deemed effective). The
designees of Parent will thereby be empowered to exercise all voting and other
rights with respect to such Shares (and any and all Distributions), including,
without limitation, in respect of any annual or special meeting of the
Company's stockholders (and any adjournment or postponement thereof), actions
by written consent in lieu of any such meeting or otherwise, as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper. Purchaser
10
<PAGE>
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at
any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, subject to the provisions of the
Merger Agreement, to waive any defect or irregularity in any tender of Shares
of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects or
irregularities relating thereto have been cured or waived. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Subject to the terms of the Merger Agreement, Purchaser's interpretation of
the terms and conditions of the Offer in this regard (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in
either case, the "Payee"), satisfies the conditions described in Instruction
10 of the Letter of Transmittal or is otherwise exempt, the cash payable as a
result of the Offer may be subject to backup withholding tax at a rate of 31%
of the gross proceeds. To prevent backup withholding, each Payee should
complete and sign the Substitute Form W-9 provided in the Letter of
Transmittal. See Instruction 10 to the Letter of Transmittal.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after May 29, 1999.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of
11
<PAGE>
any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
5. Certain Federal Income Tax Consequences.
The following is a general summary of certain federal income tax
consequences of the Offer and the Merger relevant to a beneficial holder of
Shares whose Shares are tendered and accepted for payment pursuant to the
Offer or whose Shares are converted to cash in the Merger (a "Holder"). This
discussion is for general information only and does not purport to consider
all aspects of federal income taxation that may be relevant to holders of
Shares. The discussion is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), existing regulations promulgated thereunder
and administrative and judicial interpretations thereof, all as in effect as
of the date hereof and all of which are subject to change (possibly with
retroactive effect). This discussion applies only to Holders that hold Shares
as "capital assets" within the meaning of Section 1221 of the Code (generally,
property held for investment), and does not apply to Shares acquired pursuant
to the exercise of employee stock options or otherwise as compensation, Shares
held as part of a "straddle," "hedge," "conversion transaction," "synthetic
security" or other integrated investment, or to certain types of Holders
(including, without limitation, financial institutions, insurance companies,
tax-exempt organizations and dealers in securities) that may be subject to
special rules. This discussion does not address the federal income tax
consequences to a Holder that, for federal income tax purposes, is a non-
resident alien individual, a foreign corporation, a foreign partnership or a
foreign estate or trust, nor does it consider the effect of any state, local,
foreign or other tax laws.
EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF THE SALE OF ITS SHARES, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE CHANGES IN
TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local and foreign income and other tax
laws. For federal income tax purposes, a Holder who sells Shares pursuant to
the Offer or receives cash in exchange for Shares pursuant to the Merger will
generally recognize capital gain or loss equal to the difference (if any)
between the amount of cash received and the Holder's adjusted tax basis in
Shares sold or surrendered in the Merger. Gain or loss must be determined
separately for each block of Shares tendered pursuant to the Offer or
surrendered for cash pursuant to the Merger (for example, Shares acquired at
the same cost in a single transaction). Such capital gain or loss will be
long-term capital gain or loss if the Holder has held such Shares for more
than one year at the time of the consummation of the Offer or the Merger. For
federal income tax purposes, net capital gain recognized by individuals (or an
estate or certain trusts) from the sale of property held for more than twelve
months will generally be taxed at a maximum tax rate of 20% (or 10% if the
capital gain would be taxed at only a 15% tax rate if such gain were treated
as ordinary income). There are limitations on the deductibility of capital
losses.
Payments in connection with the Offer or Merger may be subject to "backup
withholding" at a rate of 31% unless a Holder of Shares (i) provides a correct
taxpayer identification number ("TIN") (which, for an individual Holder, is
the Holder's social security number) and any other required information, or
(ii) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, and otherwise complies with applicable
requirements of the backup withholding rules. A Holder that does not provide a
correct TIN may be subject to penalties imposed by the Internal Revenue
Service (the "IRS"). Shareholders may prevent backup withholding by completing
and signing the Substitute Form W-9 included as part of the Letter of
Transmittal. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against the Holder's federal income tax
liability, provided that the required information is given to the IRS. Each
Holder should consult its tax advisor as to such Holder's qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
12
<PAGE>
6. Price Range of the Shares; Dividends.
The Shares are traded through the NASDAQ National Market under the symbol
"INLK." The following table sets forth, for each of the fiscal quarters
indicated, the high and low reported sales price per Share on the NASDAQ
National Market.
<TABLE>
<CAPTION>
Common Stock
----------------
High Low
-------- -------
<S> <C> <C>
Fiscal Year Ended June 30, 1997
First Quarter ended September 30, 1996*..................... $10.2500 $8.0000
Second Quarter ended December 31, 1996...................... 17.0000 8.3750
Third Quarter ended March 31, 1997.......................... 18.2500 10.5000
Fourth Quarter ended June 30, 1997.......................... 11.2500 5.0000
Fiscal Year Ended June 30, 1998
First Quarter ended September 30, 1997...................... $ 7.7500 $4.1250
Second Quarter ended December 31, 1997...................... 5.2813 3.3750
Third Quarter ended March 31, 1998.......................... 5.9375 3.3750
Fourth Quarter ended June 30, 1998.......................... 6.2500 3.2500
Fiscal Year Ending June 30, 1999
First Quarter ended September 30, 1998...................... $ 3.7500 $2.0000
Second Quarter ended December 31, 1998...................... 4.2500 1.8125
Third Quarter ending March 31, 1999 (through March 29,
1999)...................................................... 6.6875 2.7500
</TABLE>
- --------
* Commencing August 15, 1996
On March 23, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent
and Purchaser, the last reported sales price of the Shares on the NASDAQ
National Market was $5.75 per Share. On March 29, 1999, the last full trading
day prior to the commencement of the Offer, the last reported sales price of
the Shares on the NASDAQ National Market was $6.625 per Share. Stockholders
are urged to obtain a current market quotation for the Shares.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. In addition, under the terms of the
Merger Agreement, the Company is not permitted to declare or pay dividends
with respect to the Shares without the prior written consent of Parent, and
Parent does not intend to consent to any such declaration or payment.
7. Effect of the Offer on the Market for the Shares; NASDAQ Quotation;
Exchange Act Registration; Margin Regulations.
Market for the Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly and, which, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or marketability
of, the Shares or whether it would cause future market prices to be greater or
less than the Offer Price.
NASDAQ Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion on the NASDAQ National Market, which requires that an
issuer either (i) have at least 750,000 publicly held shares, held by at least
400 round lot shareholders, with a market value of at least $5,000,000, have
at least 2 market makers, have net tangible assets of at least $4 million, and
have a minimum bid price of $1 or (ii) have at least 1,100,000 publicly held
shares, held by at least 400 round lot shareholders, with a market value of at
least $15,000,000, have a minimum bid price of $5, have at least 4 market
makers and have either (A) a market capitalization of at least $50,000,000 or
(B) total assets and revenues each of at least $50,000,000. If the NASDAQ
National Market were to cease to
13
<PAGE>
publish quotations for the Shares, it is possible that the Shares would
continue to trade in the over-the-counter market and that price or other
quotations would be reported by other sources. The extent of the public market
for such Shares and the availability of such quotations would depend, however,
upon such factors as the number of stockholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below, and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for, or marketability of, the Shares or whether it would
cause future market prices to be greater or lesser than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b),
the requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with stockholders' meetings and the related requirement of
furnishing an annual report to stockholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
Purchaser currently intends to seek delisting of the Shares from the NASDAQ
National Market and the termination of the registration of the Shares under
the Exchange Act as soon after the completion of the Offer as the requirements
for such delisting and termination are met. If the NASDAQ National Market
listing and the Exchange Act registration of the Shares are not terminated
prior to the Merger, then the Shares will be delisted from the NASDAQ National
Market and the registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
8. Certain Information Concerning the Company.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or
based upon publicly available documents and records on file with the
Commission and other public sources. Neither Parent, Purchaser nor the
Information Agent assumes responsibility for the accuracy or completeness of
the information concerning the Company contained in such documents and records
or for any failure by the Company to disclose events which may have occurred
or may affect the significance or accuracy of any such information but which
are unknown to Parent, Purchaser or the Information Agent.
The Company is a supplier of high-performance solutions for enterprise
systems networking. The Company provides software and services which enable
customers to use their IBM and IBM-compatible mainframes running the MVS or
OS/390 operating systems as "enterprise servers" in distributed, heterogeneous
client/server network environments. The Company's products and services enable
customers to transport, access, secure and
14
<PAGE>
manage mission-critical data and applications across distributed network
environments. The Company develops and markets network transport products,
which provide for enterprise server connectivity and network file transfer
using Transmission Control Protocol and Internet Protocol ("TCP/IP"). During
the fiscal year ended June 30, 1998, the Company expanded its product focus to
include management and control of TCP/IP data and network performance, as well
as security of data transmission over intranets, extranets and the Internet.
Revenue from these new product areas was insignificant during that fiscal
year. The Company's principal offices are located at 47370 Fremont Boulevard,
Fremont, California 94538 and its telephone number is (510) 657-9800.
At June 30, 1998, the Company had approximately 1,370 customers worldwide.
The Company markets and sells its software and services primarily through its
direct sales organization in North America and Europe and, to a lesser extent,
through resellers and international distributors.
Selected Financial Information. Set forth on the following page is certain
selected consolidated financial information with respect to the Company,
excerpted or derived from the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1998 and its Quarterly Report on Form 10-Q for the
quarter ended December 31, 1998, each as filed with the Commission pursuant to
the Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports, documents and financial information may be
inspected and copies may be obtained from the Commission in the manner set
forth below.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Six months ended
December 31, Fiscal year ended June 30,
----------------- -----------------------------
1998 1997 1998 1997 1996
------- -------- --------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues:
Product.................... $ 7,939 $ 6,221 $ 15,920 $ 24,978 $ 19,670
Maintenance and
consulting................ 7,563 6,842 13,129 14,856 14,332
------- -------- --------- -------- --------
Total revenues........... 15,502 13,063 29,049 39,834 34,002
------- -------- --------- -------- --------
Cost of revenues:
Product.................... 464 864 1,299 3,025 3,413
Maintenance and
consulting................ 2,095 2,269 4,700 4,712 4,594
------- -------- --------- -------- --------
Total cost of revenues... 2,559 3,133 5,999 7,737 8,007
------- -------- --------- -------- --------
Gross profit................. 12,943 9,930 23,050 32,097 25,995
------- -------- --------- -------- --------
Operating expenses:
Product development........ 5,601 5,551 11,226 7,742 5,241
Sales and marketing........ 7,213 5,798 13,496 14,348 13,316
General and
administrative............ 2,360 3,257 5,746 4,669 3,954
Purchased research and
development and product
amortization.............. 34 3,863 6,564 575 10,479
Loss (recovery) on sale of
HARBOR.................... (3,044) 2,171 2,047 -- --
NetLOCK Restructuring
Charge.................... 1,234 -- -- -- --
------- -------- --------- -------- --------
Total operating
expenses................ 13,398 20,640 39,079 27,334 32,990
------- -------- --------- -------- --------
Operating income (loss)...... (455) (10,710) (16,029) 4,763 (6,995)
Interest and other income
(expense), net.............. 289 520 828 735 (507)
------- -------- --------- -------- --------
Income (loss) before income
taxes and extraordinary
items....................... (166) (10,190) (15,201) 5,498 (7,502)
Benefit from (provision for)
income taxes................ 47 6,000 7,794 (2,138) (114)
------- -------- --------- -------- --------
Net income (loss)............ $ (119) $ (4,190) $ (7,407) $ 3,360 $ (7,616)
======= ======== ========= ======== ========
Net income (loss) per share
Basic...................... $ (0.01) $ (0.55) $ (0.95) $ 0.52 $ (3.11)
Diluted.................... $ (0.01) $ (0.55) $ (0.95) $ 0.44 $ (3.11)
Shares used in per share
calculation
Basic...................... 8,212 7,586 7,791 6,516 2,446
Diluted.................... 8,212 7,586 7,791 7,595 2,446
<CAPTION>
December 31, June 30,
----------------- -----------------------------
1998 1997 1998 1997 1996
------- -------- --------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............... $40,842 $ 44,049 $ 42,782 $ 48,363 $ 25,925
Total Liabilities.......... 17,633 19,184 19,757 19,689 30,510
Stockholders' Equity
(Deficit)................. 23,209 24,865 23,025 28,674 (4,585)
</TABLE>
16
<PAGE>
Certain Information Provided by the Company. In the course of the
discussions described in "Section 11-- Background of the Offer; Purpose of the
Offer and the Merger; the Merger Agreement and Certain Other Agreements"
below, the Company provided Parent with certain business and financial
information which was not publicly available. Such information included, among
other things, forecasted results of operations for the Company's fiscal years
ending June 30, 1999, June 30, 2000 and June 30, 2001 prepared by the
management of the Company (the "Initial Forecasts"). In connection with
Parent's due diligence review of the Company prior to executing the Merger
Agreement, the Company provided Parent with an update of the Initial Forecasts
for the six-month period ending June 30, 1999 (the "Second Half Fiscal Year
1999 Projections" and, together with the Initial Forecasts, the "Company
Forecasts"). The Company Forecasts do not take into account, and have not been
adjusted to reflect, any of the potential effects of the Offer or the Merger.
The information from the Company Forecasts summarized below is included in
this Offer to Purchase solely because such information was provided to Parent
in connection with its evaluation of the Company. Parent did not rely on the
Company Forecasts to any significant degree in formulating the price or other
material terms of the Merger Agreement or the transactions contemplated
thereby. As a matter of course, the Company does not make public projections
or forecasts of its anticipated financial position or results of operations.
Accordingly, the Company does not anticipate that it will, and it disclaims
any obligation to, furnish updated forecasts or projections to any person,
cause such information to be included in documents required to be filed with
the Commission, or otherwise make such information public (irrespective in any
such case of whether the Company Forecasts, in light of events or developments
occurring after the time at which they were originally prepared, shall have
ceased to have a reasonable basis).
The inclusion herein of the summary of the Company Forecasts should not be
regarded as an indication that the Company, Parent, Purchaser or any other
person considers such information to be an accurate prediction of future
events and should not be relied on as such. While presented with numerical
specificity, the information from the Company Forecasts summarized below is
based upon a variety of assumptions relating to general economic conditions
and the business of the Company which may not be realized and is subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company. One cannot predict whether the assumptions used in
preparing the Company Forecasts will be accurate, and, accordingly, there can
be no assurance, and no representation or warranty is made, that actual
results will not vary materially from those set forth in the Company
Forecasts.
The Company Forecasts were not prepared with a view to public disclosure or
compliance with published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants.
The information from the Company Forecasts should be evaluated in
conjunction with the historical financial statements and other information
regarding the Company contained elsewhere in this Offer to Purchase and in the
Company's public filings with the Commission. In light of the foregoing
factors and the uncertainties inherent in the Company Forecasts, holders of
Shares are cautioned not to place undue or significant reliance thereon. A
summary of the Company Forecasts is set forth below.
17
<PAGE>
Company Forecasts
<TABLE>
<CAPTION>
Initial
Forecast Forecast Forecast
FY1999* FY2000 FY2001
-------- -------- --------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C>
Revenue
Product.......................................... $17,690 $33,000 $51,500
Maintenance, Support and Services................ 15,931 17,132 22,154
------- ------- -------
Total Revenue..................................... 33,621 50,132 73,654
Total Cost of Revenues............................ 6,200 9,190 13,421
------- ------- -------
Gross Profit...................................... 27,421 40,942 60,233
Total Operating Expenses.......................... 26,326 33,170 46,205
------- ------- -------
Operating Earnings................................ 1,095 7,772 14,028
Interest (income), net........................... (610) (751) (978)
------- ------- -------
Pre-Tax Profit.................................... 1,705 8,524 15,006
Tax expense--book................................ 682 3,324 5,852
------- ------- -------
Net Income........................................ $ 1,023 $ 5,200 $ 9,154
======= ======= =======
</TABLE>
- --------
*Initial fiscal year 1999 projections were updated and such updated
projections for fiscal year 1999 are set forth in the paragraph below.
The Second Half Fiscal Year 1999 Projections projected the following with
respect to the second half of the Company's fiscal year ending June 30, 1999:
total revenues of $17,922,000, gross profit of $14,580,000, operating earnings
of $1,849,000, pre-tax profit of $2,153,000 and net income of $1,313,000. As a
result of the Company's revised Second Half Fiscal Year 1999 Projections, for
the entire fiscal year 1999 the Company projected: total revenues of
$33,425,000, gross profit of $27,524,000, operating earnings of $1,395,000,
pre-tax profit of $1,988,000 and net income of $1,195,000.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
website on the internet at http://www.sec.gov that contains reports, proxy
statements and other information relating to the Company which have been filed
via the Commission's EDGAR System.
9. Certain Information Concerning Parent, Sterling (U.S. of America) and
Purchaser.
Parent, Sterling (U.S. of America) and Purchaser.
Purchaser is a Delaware corporation that has not carried on any significant
activities other than in connection with the Offer and the Merger. All of the
outstanding capital stock of Purchaser is owned directly by Sterling (U.S. of
America). Until immediately prior to the time Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in any significant activities
other than those incident to its formation and capitalization and the
transactions contemplated by the Offer and the Merger.
18
<PAGE>
Sterling (U.S. of America) was incorporated in 1993 in the State of
Delaware. All of the outstanding capital stock of Sterling (U.S. of America)
is owned by Parent. Sterling (U.S. of America) is the subsidiary of Parent
through which Parent's Network Management Division conducts business.
Parent was founded in 1981 and became a publicly owned corporation in 1983.
Parent is a worldwide developer and supplier of application development,
information management and systems management software products and services,
as well as a supplier of specialized information technology ("IT") services
for sectors of the federal government. Parent's customer base includes 91 of
the 100 largest U.S. industrial and service corporations, as ranked by 1997
revenues in Fortune magazine. Parent's business segments are as follows:
. The application management business segment provides solutions for both
enterprise-scale application development and information management.
Application development solutions include products and services for
business modeling through code generation. These solutions provide
customers the ability to build component-based applications through
model-based code generation using traditional and object-oriented
techniques, to reuse what they have built through components and to
protect their investment in legacy assets. Information management
solutions include products and services that enable customers to
facilitate enterprise information access and to extend the life and
usefulness of legacy applications. These solutions help enterprises
address issues related to complex implementation challenges such as data
warehousing, intranets and application management, using technologies
that enhance business intelligence, integrate applications and improve
information access through web browsers.
. The systems management business segment provides solutions that enable
customers to simplify the use of multiple computing environments and to
increase the productivity of information systems, ultimately ensuring
that the systems meet the business needs of the organization. These
solutions include enterprise-level network management products,
enterprise-level storage management products and comprehensive VM systems
management products.
. The federal systems business segment provides specialized IT services for
sectors of the federal government, as well as state and local
governments.
At December 31, 1998, Parent employed approximately 3,600 employees in 90
offices worldwide. Parent has direct sales offices in 22 countries and
distributors and agents in an additional 38 countries.
For certain information concerning the executive officers and directors of
Purchaser, Parent and Sterling (U.S. of America) see Schedule I.
The principal offices of Parent and Purchaser are located at 300 Crescent
Court, Suite 1200, Dallas, Texas 75201. The telephone number of Parent and
Purchaser at such location is (214) 981-1000.
The principal office of Sterling (U.S. of America) is located at 1800
Alexander Bell Drive, Reston, Virginia 20191. The telephone number of Sterling
(U.S. of America) at such location is (703) 264-8000.
Except as set forth in this Offer to Purchase, none of Purchaser, Sterling
(U.S. of America) or Parent, or, to the best knowledge of Purchaser, Sterling
(U.S. of America) or Parent, any of the persons listed on Schedule I, or any
associate or majority owned subsidiary of any of the foregoing, beneficially
owns or has a right to acquire any Shares, and none of Purchaser, Sterling
(U.S. of America) or Parent or, to the best knowledge of Purchaser, Sterling
(U.S. of America) or Parent, any of the persons or entities referred to above,
or any of the respective executive officers, directors or subsidiaries of any
of the foregoing, has effected any transaction in the Shares during the past
sixty (60) days.
Except as set forth in this Offer to Purchase, neither Purchaser, Sterling
(U.S. of America) nor Parent has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
securities of the Company, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies.
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Except as set forth in this Offer to Purchase, none of Purchaser, Sterling
(U.S. of America) or Parent, any of their respective affiliates, nor, to the
best knowledge of Purchaser, Sterling (U.S. of America) or Parent, any of the
persons listed on Schedule I, has had, since June 30, 1995, any business
relationships or transactions with the Company or any of its executive
officers, directors or affiliates that would be required to be reported under
the rules of the Commission. Except as set forth in this Offer to Purchase,
since June 30, 1995 there have been no contacts, negotiations or transactions
between Purchaser, Sterling (U.S. of America) or Parent, any of their
respective affiliates or, to the best knowledge of Purchaser, Sterling (U.S.
of America) or Parent, any of the persons listed on Schedule I, and the
Company or its affiliates concerning a merger, consolidation or acquisition,
tender offer or other acquisition of securities, election of directors or a
sale or other transfer of a material amount of assets.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning Parent's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interests of such persons in transactions with
Parent is required to be disclosed in proxy statements distributed to Parent's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information
should be obtainable by mail, upon payment of the Commission's customary
charges, by writing to the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other
information relating to Parent which have been filed via the EDGAR System.
Certain of the materials should also be available at the offices of the New
York Stock Exchange ("NYSE"), 20 Broad Street, New York, NY 10005.
10. Sources and Amount of Funds.
The Offer is not conditioned upon Purchaser obtaining financing. The total
amount of funds required by Purchaser to consummate the Offer and the Merger
(assuming the exercise of all outstanding Options and Warrants and the
issuance of 71,035 Shares pursuant to the ESPP), and pay the fees and expenses
of the Offer and the Merger expected to be incurred by Parent, is estimated to
be approximately $73.9 million. Purchaser will obtain all such funds from
Parent, either directly or indirectly, in the form of capital contributions
and/or loans. Parent will provide such funds, either directly or indirectly,
through its cash and cash equivalents on hand.
11. Background of the Offer; Purpose of the Offer and the Merger; the Merger
Agreement and Certain Other Agreements.
Background of the Offer.
On several occasions during September 1998, representatives of Parent and
its financial advisor contacted Mr. Augustus J. Berkeley, President and Chief
Executive Officer of the Company, to suggest that the companies set up a
meeting to explore the possibility of a potential transaction. In early
October 1998, Mr. Ron Hardy, Vice President, Business Development, of Parent's
Systems Management Group, met with Mr. Berkeley and Mr. James Barth, Chief
Financial Officer of the Company, to explore on a preliminary basis the
possibility of an alliance that could take one of several forms, including an
acquisition of the Company. None of these discussions led to any agreements or
understandings.
In early December 1998, representatives of Parent and the Company had
several telephone conversations regarding a high level business review of the
Company and related logistics for such a review. On December 21, 1998, in
anticipation of such business review, Parent and the Company entered into a
confidentiality agreement for the purpose of permitting Parent to review
certain non-public information relating to the Company in connection with
Parent's evaluation of a possible acquisition of the Company. That same day,
representatives of Parent and its financial advisor met with senior executives
of the Company and representatives of its financial advisor to conduct a high
level business review of the Company.
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In late December 1998, Mr. Geno P. Tolari, Executive Vice President and
Chief Operating Officer of Parent, held discussions with Mr. Berkeley about
setting up a more intensive two-day business review. At such meeting and
subsequently, Mr. Berkeley requested Parent to provide the Company with an
indication of the price range that Parent would be willing to offer for the
Company. Representatives of Parent advised Mr. Berkeley that Parent would not
be in a position to give a price indication until after the two-day business
review.
On February 5 and 6, 1999, senior executives of Parent and representatives
of its financial advisor met with senior executives of the Company and
representatives of its financial advisor for the purpose of conducting a more
detailed business review of the Company, including a review of the Company's
business, operations, technology and prospects, in order to assess the
strategic opportunities of a business combination with the Company. From time
to time following such meeting, representatives of Parent requested and
received certain additional information from the Company.
On February 15, 1999, Parent's senior management met internally to consider
the results of its preliminary business review of the Company and the
strategic opportunities presented by an acquisition of the Company. Parent's
senior management decided to pursue an acquisition of the Company but
determined that Parent would request the Company to first seek a waiver from
Cisco Systems, Inc. ("Cisco") of certain provisions of a Stock Purchase
Agreement between the Company and Cisco, dated December 12, 1996 (the "Cisco
Agreement"), pursuant to which, among other things, Cisco was entitled to
receive 20 days prior notice before the Company could accept an acquisition
proposal (the "Acquisition Notice Provision").
On February 16, 1999, representatives of Broadview International LLC,
Parent's financial advisor ("Broadview"), contacted Hambrecht & Quist, the
Company's financial advisor, to advise Hambrecht & Quist that Parent was
interested in pursuing an acquisition of the Company but would require that
the Company first obtain a waiver from Cisco of the Acquisition Notice
Provision. Broadview also advised Hambrecht & Quist that Parent, although not
making a formal offer, would be prepared to discuss a transaction at a price
at least equal to $5.50 per Share. During the evening of February 16, 1999,
Mr. Mike Harvey, President of Parent's Systems Management Group, had dinner
with Mr. Berkeley, conveyed the same message to Mr. Berkeley and encouraged
him to seek the waiver from Cisco. Mr. Harvey acknowledged his understanding
that management of the Company would not support a transaction unless it was
fair to the Company's stockholders and Mr. Berkeley indicated that he would
discuss pursuit of the waiver from Cisco with the Company Board.
On February 18, 1999, the Company Board met and authorized the Company's
management to seek a waiver from Cisco of the Acquisition Notice Provision.
Thereafter, the Company sought to obtain such a wavier from Cisco and, on
March 3, 1999, the Company and Cisco entered into a letter agreement which
terminated certain provisions of the Cisco Agreement, including the
Acquisition Notice Provision.
On March 6, 1999, Mr. Berkeley telephoned Mr. Tolari and informed him that
the Company was not interested in proceeding with a transaction at the $5.50
per Share level. Mr. Berkeley informed Mr. Tolari that the Company's Board had
directed him to discuss a price of $7.50 per Share, and that the Company was
not presently prepared to consider a price that was lower than $7.50 per
Share.
Between March 6 and March 10, 1999, Mr. Sterling L. Williams, President and
Chief Executive Officer of Parent, and Mr. Tolari had several telephone
conversations with Mr. Berkeley in an effort to set up a meeting. Because of
scheduling difficulties in setting up the meeting, on March 11, 1999, Mr.
Williams telephoned Mr. Berkeley and advised him that Parent was prepared to
proceed with an all cash acquisition transaction at a price of $7.00 per
Share, subject to satisfactory completion of due diligence and negotiation of
other acceptable terms and conditions. Mr. Williams requested that Mr.
Berkeley respond by the close of business on March 12, 1999. Mr. Berkeley
stated that he would consult with the Company Board.
On March 12, 1999, Mr. Berkeley advised Mr. Tolari that the Company Board
had authorized the Company's management to engage in discussions with Parent
with respect to a potential acquisition of the Company by Parent at a price of
$7.00 per Share.
Late in the day on March 12, 1999, Parent furnished to the Company, and
Broadview furnished to Hambrecht & Quist, a summary proposal outlining the
principal terms and conditions of a potential acquisition of the Company by
Parent.
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On March 15, 1999, following its review of the summary proposal, the Company
advised Parent that it was prepared to begin negotiations of definitive
agreements and that Parent's representatives could conduct a detailed due
diligence review of the Company commencing on March 17, 1999.
During the afternoon of March 15, 1999, Parent transmitted to
representatives of the Company a letter agreement providing that the Company
would negotiate exclusively with Parent for a limited period of time (the
"Exclusivity Agreement"), a draft Merger Agreement, a draft form of
Stockholder Agreement and a due diligence request list. Parent advised the
Company that Parent would require Cisco, certain limited partnerships
controlled by Advent International Corp. (collectively "Advent") and the
executive officers and directors of the Company to sign Stockholder Agreements
granting Parent an option to purchase their Shares at a price of $7.00 per
Share in cash and grant Parent a proxy with respect to such Shares.
Commencing on March 16, 1999, representatives of Parent and the Company and
their respective counsel began negotiating the Exclusivity Agreement, the
draft Merger Agreement and the form of Stockholder Agreement. On the evening
of March 16, 1999, Parent and the Company executed the Exclusivity Agreement
which provided, among other things, that until the earlier of 6:00 p.m.,
California time, on March 25, 1999 and the execution of a definitive agreement
relating to a potential acquisition of the Company, the Company and its
affiliates and representatives would discontinue any solicitation efforts,
discussions or negotiations with respect to an acquisition proposal by any
person other than Parent and would not solicit or facilitate other proposals
to acquire the Company. In addition, the Company agreed to notify Parent if it
received any acquisition proposal providing aggregate consideration for all of
the Company's outstanding Shares having a value in excess of $7.00 per Share.
Commencing on March 17, 1999, representatives of Parent conducted an
intensive due diligence review of the Company. The negotiation of the Merger
Agreement and the Stockholder Agreements and Parent's due diligence review
continued until March 23, 1999.
On March 18, 1999, Cisco and Advent were furnished a draft of the form of
Stockholder Agreement and on March 19, 1999 Parent began negotiating the terms
of the Stockholder Agreements with representatives of Cisco and Advent, which
negotiations continued until March 23, 1999.
In the late afternoon of March 23, 1999, Parent was advised that the Company
Board had received a fairness opinion from Hambrecht & Quist and had
authorized the execution of the Merger Agreement. Late in the evening on March
23, 1999, the Merger Agreement was executed and delivered by Parent, Purchaser
and the Company, and Parent, Purchaser and the Stockholders entered into the
Stockholder Agreements. On March 24, 1999, Parent and the Company issued a
joint press release announcing the execution of the Merger Agreement. On March
30, 1999, pursuant to the terms of the Merger Agreement, Parent and Purchaser
commenced the Offer.
Purpose of the Offer and the Merger. The purpose of the Offer and the Merger
is to enable Parent to acquire control of, and the entire equity interest in,
the Company. The Offer is being made pursuant to the Merger Agreement and is
intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer.
Stockholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company or any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 12. Similarly, after selling their Shares in the Offer or
the subsequent Merger, stockholders of the Company will not bear the risk of
any decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell
all of their Shares for cash at a price which represents a premium of
approximately 21.7% over the closing sales price of the Shares on March 23,
1999, the last full trading day prior to the initial public announcement that
the Company, Purchaser and Parent had executed the Merger Agreement.
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Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full
text of the Merger Agreement filed with the Commission as an exhibit to the
Schedule 14D-1 and is incorporated herein by reference. Capitalized terms not
otherwise defined below shall have the meanings set forth in the Merger
Agreement. The Merger Agreement may be examined, and copies obtained, as set
forth in Section 9 of this Offer to Purchase.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Purchaser with
respect to, among other things, corporate organization, subsidiaries,
authority to enter into the Merger Agreement, no conflicts between the Merger
Agreement and the certificate of incorporation and bylaws of the Company,
certain agreements to which the Company or its assets may be subject and
applicable law, required consents, capital stock, options or other rights to
acquire Shares, filings with the Commission, financial statements, absence of
certain changes or events, undisclosed liabilities, disclosures in proxy
statement and tender offer documents, owned and leased real property,
software, Year 2000 computer system preparedness, intellectual property,
material contracts, litigation, compliance with applicable laws, environmental
matters, tax matters, benefit plans, absence of changes in benefit plans,
labor matters, brokers' and finders' fees, receipt of the Financial Advisor
Opinion, votes required to approve the Merger Agreement, the Rights Agreement,
settlement of certain litigation and absence of pending standstill agreements.
In the Merger Agreement, each of Parent and Purchaser has made customary
representations and warranties to the Company with respect to, among other
things, corporate organization, authority to enter into the Merger Agreement,
no conflicts between the Merger Agreement and the certificate of incorporation
and by-laws of Parent and Purchaser, certain agreements to which Purchaser or
Parent or their assets may be subject and applicable law, required consents,
disclosures in proxy statements and tender offer documents, financing and
Purchaser's operating history.
Certain representations and warranties in the Merger Agreement are qualified
as to "materiality" or "Material Adverse Effect". For the purposes of the
Merger Agreement and this Offer to Purchase, "Material Adverse Effect" with
respect to any person means any event, change, occurrence, effect, fact or
circumstance having, or which could reasonably be expected to have, a material
adverse effect on (i) the ability of such person to perform its obligations
under the Merger Agreement or to consummate the transactions contemplated
thereby or (ii) the financial condition, results of operations, value or
business of such person and its subsidiaries taken as a whole; except for
those changes, events and effects that (x) are caused by conditions affecting
the United States or world economy as a whole or affecting the industry in
which such entity competes as a whole, which conditions do not affect such
entity in a materially disproportionate manner, or (y) are related to or
result from announcement or pendency of the Merger or the Offer.
Conditions to the Merger. The respective obligations of Parent and
Purchaser, on the one hand, and the Company, on the other hand, to effect the
Merger are subject to the satisfaction of each of the following conditions,
any and all of which may be waived in whole or in part by the Company, Parent
or Purchaser, as the case may be, to the extent permitted by applicable law:
(i) Parent, Purchaser or their affiliates shall have purchased Shares pursuant
to the Offer; provided, that the condition contained in this clause (i) shall
be deemed to have been satisfied with respect to the obligation of Parent and
Purchaser to effect the Merger if Purchaser fails to accept for payment or pay
for Shares pursuant to the Offer in violation of the terms of the Offer or of
the Merger Agreement; (ii) the Merger Agreement shall have been approved and
adopted by the requisite vote of the holders of Shares, if required by
applicable law or the Certificate of Incorporation, in order to consummate the
Merger; (iii) no temporary restraining order, preliminary or permanent
injunction, or other order, legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties to the Merger Agreement shall have used commercially reasonable
efforts to lift or remove such order, injunction, restraint or prohibition;
and (iv) any waiting period applicable to the Merger under the HSR Act shall
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have expired or been earlier terminated. In addition, the obligation of Parent
and/or Purchaser to effect the Merger is subject to the satisfaction or
written waiver on or prior to the Closing Date of the following condition: no
outstanding Option shall entitle the holder thereof, at the Effective Time or
thereafter, to purchase any capital stock of the Company.
The Company Board. Promptly after (i) the purchase of and payment for any
Shares by Purchaser or any of its affiliates pursuant to the Offer as a result
of which Purchaser and its affiliates own beneficially at least a majority of
the then outstanding Shares and (ii) compliance with Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall occur
later, Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Company Board as is equal to the product
of the total number of directors on such Board (after giving effect to any
increase in the size of such Board) multiplied by the percentage that the
number of Shares beneficially owned by Purchaser at such time (including
Shares so accepted for payment) bears to the total number of Shares then
outstanding. In furtherance thereof, the Company shall, upon request of
Parent, use its best efforts promptly either to increase the size of its Board
of Directors or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be
so elected or appointed to the Company Board, and the Company shall take all
actions available to the Company to cause such designees of Parent to be so
elected or appointed. At such time, the Company shall, if requested by Parent,
also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number)
as Parent is entitled to designate on the Company Board of (i) each committee
of the Company Board, (ii) each board of directors (or similar body) of each
subsidiary of the Company and (iii) each committee (or similar body) of each
such board.
The Merger Agreement provides that the Company shall promptly take all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under the Merger
Agreement, including mailing to stockholders the information required by such
Section 14(f) and Rule 14f-1 (or including such information in the Schedule
14D-9 initially filed with the Commission and distributed to the stockholders
of the Company) as is necessary to enable Parent's designees to be elected to
the Company Board. Parent or Purchaser will supply to the Company in writing
and be solely responsible for any information with respect to either of them
and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The Merger Agreement provides that the foregoing
provisions are in addition to and shall not limit any rights which Purchaser,
Parent or any of their affiliates may have as a holder or beneficial owner of
Shares as a matter of applicable law with respect to the election of directors
or otherwise.
Notwithstanding the foregoing, the parties to the Merger Agreement shall use
their respective reasonable best efforts to ensure that at least two of the
members of the Board shall, at all times prior to the Effective Time, be
directors of the Company who were directors of the Company on the date of the
Merger Agreement (the "Continuing Directors"), provided, that, if the number
of Continuing Directors shall be reduced below two for any reason, the
remaining Continuing Director may designate a person to fill such vacancy who
shall be deemed to be a Continuing Director for all purposes of the Merger
Agreement, or if no Continuing Directors then remain, the other directors of
the Company then in office shall designate two persons to fill such vacancies
who will not be officers or employees or affiliates of the Company, Parent or
either of their subsidiaries and such persons shall be deemed to be Continuing
Directors for all purposes of the Merger Agreement. From and after the time,
if any, that Parent's designees constitute a majority of the Company Board and
prior to the Effective Time, any amendment or modification of the Merger
Agreement, any amendment to the Company's Certificate of Incorporation or By-
Laws inconsistent with the Merger Agreement, any termination of the Merger
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser under the Merger Agreement, any waiver of
any condition to the Company's obligations under the Merger Agreement or any
of the Company's rights under the Merger Agreement or other action by the
Company under the Merger Agreement may be effected only by the action of a
majority of the Continuing Directors of the Company, which action shall be
deemed to constitute the action of any committee specifically designated by
the Company Board to approve the actions contemplated by the Merger Agreement
and the Company Board; provided, that, if there shall be no Continuing
Directors, such actions may be effected by majority vote of the entire Company
Board.
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Stockholders' Meeting. The Merger Agreement provides that, if required by
applicable law to consummate the Merger, the Company, acting through the
Company Board, shall, in accordance with the DGCL, the Exchange Act and other
applicable laws, its Certificate of Incorporation and By-Laws: (i) as promptly
as practicable following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer, take all action necessary to convene and hold
a special meeting of its stockholders (the "Special Meeting") for the purposes
of considering and voting upon the Merger Agreement and to solicit proxies
pursuant to the Proxy Statement (as defined below) in connection therewith;
(ii) if requested by Parent, promptly prepare and file with the Commission a
proxy statement or information statement relating to the Stockholders Meeting
in accordance with the Exchange Act and the rules and regulations thereunder
and (x) use its commercially reasonable efforts to respond to all comments
made by the Commission with respect to the proxy statement or information
statement and, subject to compliance with Commission rules and regulations,
cause a proxy statement or information statement, including any amendment or
supplement thereto (the "Proxy Statement"), to be mailed to its stockholders
at the earliest practicable date, and (y) recommend that the stockholders of
the Company vote in favor of the adoption of the Merger Agreement at the
Stockholders Meeting and cause such recommendation to be included in the Proxy
Statement. Pursuant to the Merger Agreement, Parent and Purchaser have agreed
to: (i) cause, at the Stockholders Meeting, all of the Shares owned by them to
be voted in favor of the adoption of the Merger Agreement; and (ii) promptly
supply to the Company in writing, for inclusion in the Proxy Statement, all
information concerning Parent and Purchaser required under the Exchange Act
and the rules and regulations thereunder to be included in the Proxy
Statement.
Options. The Merger Agreement provides that (i) nothing therein shall
require Purchaser or Parent to assume any outstanding Options or substitute an
option to purchase Parent or Purchaser common stock in respect of such
Options, (ii) Options under the Company Option Plans shall be accelerated and
otherwise treated in accordance with the terms of the applicable Company
Option Plan document and the various agreements evidencing the Options and
(iii) the Company shall take all such action as shall be necessary or
appropriate to cause all Options under the Company Option Plans to expire no
later than the Effective Time. In connection with the Merger Agreement, Parent
has agreed to permit the Company Board to amend the Company Option Plan as
necessary in order to permit a cash-out of any Options held by optionees who
fail or are unable to exercise (conditionally or otherwise) prior to the
completion of the Offer.
Employee Benefit Matters. From and after the Effective Time, Parent has
agreed to honor and provide for payment of all accrued obligations and
benefits under all employee benefit plans of the Company and employment or
severance agreements disclosed to Parent, all in accordance with their
respective terms.
Parent has agreed to provide persons who are employees of the Company at or
prior to the Effective Time ("Covered Employees") who remain in the employ of
the Company or any of its subsidiaries with employee benefits that are
reasonably comparable to the employee benefits provided to similarly situated
employees of Parent or any such subsidiary who are not Covered Employees. To
the extent that Covered Employees are included in any benefit plan of Parent
or its subsidiaries, Parent agrees that the Covered Employees will receive
credit under such plan (other than any such plan providing for sabbaticals)
for service prior to the Effective Time with the Company and its subsidiaries
to the same extent such service was counted under similar plans of the Company
for purposes of eligibility, vesting, eligibility for retirement (but not for
benefit accrual) and, with respect to vacation, disability and severance,
benefit accrual. To the extent that Covered Employees are included in any
medical, dental or health plan other than the plan or plans they participated
in at the Effective Time, Parent has agreed that any such plans shall not
include pre-existing condition exclusions, except to the extent such
exclusions were applicable under the similar plan of the Company at the
Effective Time, and shall provide credit for any deductibles and co-payments
applied or made with respect to each Covered Employee in the calendar year of
the change. Except as set forth above, nothing in the Merger Agreement shall
prevent Parent or the Surviving Corporation from amending or terminating any
plan of the Company in accordance with its terms.
The Company has agreed that "Offering Periods" (as defined in the ESPP)
under the ESPP will terminate on the earlier to occur of (i) April 30, 1999,
or (ii) the Expiration Date of the Offer, and no further Offering Period under
the ESPP will be created.
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Interim Operations. The Merger Agreement provides that after the date of the
Merger Agreement and prior to the Effective Time, subject to certain
exceptions, the Company shall, and shall cause each of its subsidiaries to,
act and carry on its business only in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, use
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current key officers and
employees and preserve the goodwill of those engaged in material business
relationships with the Company, and to that end, without limiting the
generality of the foregoing, the Company shall not, and shall not permit any
of its subsidiaries to, without the prior consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, securities or other property) in respect
of, any of its outstanding capital stock (other than, with respect to a
subsidiary of the Company, to its corporate parent), (ii) split, combine or
reclassify any of its outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its outstanding capital stock, or (iii)
purchase, redeem or otherwise acquire any shares of outstanding capital
stock or any rights, warrants or options to acquire any such shares,
except, in the case of this clause (iii), for the acquisition of Shares
from holders of Options in full or partial payment of the exercise price
payable by such holder upon exercise of Options;
(b) issue, sell, grant, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible
into or exchangeable for, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible or exchangeable
securities, other than upon the exercise of Options and Warrants
outstanding on the date of the Merger Agreement;
(c) amend its Certificate of Incorporation, By-Laws or other comparable
charter or organizational documents or amend or redeem the Rights
Agreement;
(d) directly or indirectly acquire, make any investment in, or make any
capital contributions to, any person other than in the ordinary course of
business consistent with past practice;
(e) make any new capital expenditure or expenditures in excess of $50,000
individually, or $250,000 in the aggregate, other than as specified in the
Company's budget for capital expenditures made available to Parent or the
specific capital expenditures disclosed on a schedule to the Merger
Agreement;
(f) except for software licenses in the ordinary course of business,
enter into, amend or terminate any material contract, or waive, release or
assign any material rights or claims;
(g) directly or indirectly sell, pledge or otherwise dispose of or
encumber any of its properties or assets that are material to its business,
except for sales, pledges or other dispositions or encumbrances in the
ordinary course of business consistent with past practice;
(h) (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, other than indebtedness owing to or
guarantees of indebtedness owing to the Company or any direct or indirect
wholly owned subsidiary of the Company or (ii) make any loans or advances
to any other person, other than to the Company or to any direct or indirect
wholly owned subsidiary of the Company and other than routine advances to
employees consistent with past practice, except, in the case of clause (i),
for borrowings, in the ordinary course of business consistent with past
practice, under existing credit facilities described in documents filed by
the Company with the Commission and publicly available prior to the date of
the Merger Agreement;
(i) grant or agree to grant to any officer, employee or consultant any
increase in wages or bonus, severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, or establish any
new compensation or benefit plans or arrangements, or amend or agree to
amend any existing Company Option Plans, except as may be required under
existing agreements or by law;
(j) accelerate the payment, right to payment or vesting of any bonus,
severance, profit sharing, retirement, deferred compensation, stock option,
insurance or other compensation or benefits;
(k) enter into or amend any employment, consulting, severance or similar
agreement with any individual;
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(l) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization or any agreement relating to an Acquisition
Proposal (as defined herein), except as provided for in the Merger
Agreement;
(m) make or rescind any tax election or settle or compromise any income
tax liability of the Company or of any of its subsidiaries involving on an
individual basis more than $100,000;
(n) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (i) of any such claims,
liabilities or obligations in the ordinary course of business and
consistent with past practice or (ii) of claims, liabilities or obligations
reflected or reserved against in, or contemplated by, the consolidated
financial statements (or the notes thereto) of the Company and its
consolidated subsidiaries;
(o) except as required by generally accepted accounting principles, make
any change in any method of accounting or accounting practice or policy;
(p) settle any action, suit, claim, investigation or proceeding (legal,
administrative or arbitrative) in an amount in excess of $50,000 except in
connection with certain litigation between Selesta Integrazioni (a former
distributor of the Company's products) and certain affiliates of Selesta
Integrazioni, and the Company;
(q) permit any material insurance policy naming it as a beneficiary or a
loss payable payee to be cancelled or terminated without notice to Parent,
except in the ordinary course of business and consistent with past
practice;
(r) enter into any agreement, understanding or commitment that restrains,
limits or impedes the Company's ability to compete with or conduct any
business or line of business, including, but not limited to, geographic
limitations on the Company's activities;
(s) plan, announce, implement or effect any reduction in force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or its
subsidiaries (excluding routine employee terminations for cause);
(t) accelerate the collection of any account receivable or delay the
payment of any account payable, or otherwise reduce the assets or increase
the liabilities of the Company or any of its subsidiaries otherwise than in
the ordinary course of business consistent with past practice, in any such
case with the purpose or effect of using the resulting increase in the cash
flow of the Company or any of its subsidiaries to reduce the total
indebtedness of the Company and its subsidiaries for money borrowed;
(u) willfully take any action that would result in (i) any of its
representations and warranties set forth in the Merger Agreement that are
qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) except to the extent such action is otherwise
expressly contemplated by the Merger Agreement, any of the conditions to
the Offer not being satisfied; or
(v) authorize any of, or commit or agree to take any of, the foregoing
actions, except to the extent such action is otherwise expressly
contemplated by the Merger Agreement.
No Solicitation. The Merger Agreement provides that the Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize (and
shall use its best efforts not to permit) any officer, director or employee
of, or any investment banker, attorney or other advisor or representative of,
the Company or any of its subsidiaries to, (i) solicit or initiate, or
intentionally encourage, directly or indirectly, any inquiries relating to, or
the submission of, any Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal, or, in
connection with any Acquisition Proposal, furnish to any person any
information or data with respect to or access to the properties of the Company
or any of its subsidiaries, or take any other action, to knowingly facilitate
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal or approve or resolve to approve any
Acquisition Proposal; provided, that nothing contained in the Merger Agreement
shall prohibit the Company or the Company Board from (i) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the
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good faith judgment of the Company Board, after consultation with outside
counsel, is required under, or is necessary to comply with, applicable law;
provided, further, that the Company may not, except as otherwise permitted by
the Merger Agreement, withdraw or modify, or propose to withdraw or modify,
its position with respect to the Offer or the Merger or approve or recommend,
or propose to approve or recommend, any Acquisition Proposal, or enter into
any agreement with respect to, any Acquisition Proposal. Upon execution of the
Merger Agreement, the Company agreed to immediately cease any existing
activities, discussions or negotiations with any parties conducted theretofore
with respect to any of the foregoing. Notwithstanding the foregoing, prior to
the time of acceptance of Shares for payment pursuant to the Offer, the
Company may furnish information concerning its and/or its subsidiaries'
business, properties or assets to any person or group and may negotiate and
participate in discussions and negotiations with such person or group
concerning an Acquisition Proposal, provided that such person or group shall
have entered into a confidentiality agreement, the confidentiality provisions
of which shall be no more favorable to such third party than those provided
for in the letter agreement, dated December 21, 1998, between Parent and the
Company with respect to confidentiality and other matters, if: (x) such Person
or group has submitted a Superior Proposal (as defined herein); and (y) in the
opinion of the Company Board such action is required to discharge the Company
Board's fiduciary duties to the Company's stockholders under applicable law,
determined only after consultation with independent legal counsel to the
Company.
The Merger Agreement provides that the Company will promptly (but in no case
later than 24 hours) notify Parent in writing of the existence of any
proposal, discussion, negotiation or inquiry received by the Company regarding
any Acquisition Proposal, and the Company will promptly communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry which it may
receive regarding any Acquisition Proposal (and will promptly provide to
Parent copies of any written materials received by the Company in connection
with such proposal, discussion, negotiation or inquiry) and the identity of
the party making such proposal or inquiry or engaging in such discussion or
negotiation. The Company will promptly provide to Parent any non-public
information concerning the Company provided to any other person in connection
with any Acquisition Proposal which was not previously provided to Parent. The
Company will keep Parent informed of the status and details of any such
Acquisition Proposal and of any amendments or proposed amendments to any
Acquisition Proposal and of the status of any discussions or negotiations
relating to any Acquisition Proposal and will promptly (but in no case later
than 24 hours) notify Parent of any determination by the Company Board that a
Superior Proposal has been made.
The Merger Agreement provides that, except as set forth in this paragraph,
neither the Company Board nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Company Board of the Offer,
the Merger Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing or anything else in the Merger Agreement, subject to compliance with
applicable provisions of the Merger Agreement, prior to the time of acceptance
for payment of Shares pursuant to the Offer, the Company Board may withdraw or
modify its approval or recommendation of the Offer, the Merger Agreement or
the Merger, approve or recommend a Superior Proposal, or enter into an
agreement with respect to a Superior Proposal, in each case at any time after
the third business day following Parent's receipt of written notice (including
by facsimile) from the Company advising Parent that the Company Board has
received a Superior Proposal which it intends to accept, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal, but only if the Company shall have
caused its financial and legal advisors to negotiate with Parent to make such
adjustments to the terms and conditions of the Merger Agreement as would
enable the Company to proceed with the transactions contemplated hereby on
such adjusted terms.
The Merger Agreement provides that nothing contained therein, and no action
taken by the Company Board pursuant to the foregoing, will (i) permit the
Company to enter into any agreement providing for any transaction contemplated
by an Acquisition Proposal for as long as the Merger Agreement remains in
effect or (ii) affect in any manner any other obligation of the Company under
the Merger Agreement.
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For purposes of the Merger Agreement, "Acquisition Proposal" means any bona
fide offer, proposal or other indication of interest regarding any of the
following (other than the transactions provided for in the Merger Agreement
involving the Company): (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction involving
the Company or any of its subsidiaries; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of a significant portion of
the assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or series of related transactions (other than sales of inventory
or used equipment in the ordinary course of business); (iii) any purchase of,
or tender offer or exchange offer for, 20% percent or more of the outstanding
shares of capital stock of the Company by any person or the filing of a
registration statement under the Securities Act in connection therewith; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing. For purposes of
the Merger Agreement, "Superior Proposal" means an unsolicited Acquisition
Proposal on terms which the Company Board determines in good faith to be more
favorable to the Company's stockholders than the Offer and the Merger (based
on advice of the Company's independent financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Offer and the Merger) for which financing,
to the extent required, is then committed or which, in the good faith
reasonable judgment of the Company Board (based on advice from the Company's
independent financial advisor) is reasonably capable of being financed by such
third party; provided, that the Company Board has also, among other things,
duly considered the timing of such Acquisition Proposal and the likelihood
that such Acquisition Proposal will be consummated.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) By the mutual written consent of Parent and the Company; provided,
that if Parent shall have a majority of the directors, such consent of the
Company may only be given if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting
the transactions contemplated by the Merger Agreement on the terms
contemplated by the Merger Agreement or (ii) any governmental entity shall
have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties to the Merger Agreement
shall use their commercially reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order, decree,
ruling or other action shall have become final and non-appealable.
(c) By either of Parent or the Company if the consummation of the Offer
shall not have occurred on or before July 31, 1999; provided, that the
party seeking to terminate the Merger Agreement shall not have breached in
any material respect its obligations under the Merger Agreement.
(d) By the Company: (i) if the Company has entered into an agreement with
respect to a Superior Proposal or the Company or the Company Board has
approved or recommended a Superior Proposal; provided, the Company has
complied with all applicable provisions of the Merger Agreement relating to
the prohibition on solicitation of Acquisition Proposals, including the
notice provisions therein, and that it simultaneously terminates the Merger
Agreement and makes simultaneous payment to Parent of the Termination Fee
(as defined herein) and the Expenses (as defined herein); or (ii) if Parent
or Purchaser shall have terminated the Offer or the Offer expires without
Parent or Purchaser, as the case may be, purchasing any Shares in the
Offer; provided, that the Company may not terminate the Merger Agreement if
the Company is in material breach of the Merger Agreement; or (iii) if
Parent, Purchaser or any of their affiliates shall have failed to commence
the Offer on or prior to five business days following the date of the
initial public announcement of the Offer; provided, that the Company may
not terminate the Merger Agreement if the Company is in material breach of
the Merger Agreement; or (iv) if there shall be a material breach by either
Parent or Purchaser of any of their representations, warranties, covenants
or agreements contained in the Merger Agreement, except where such breach
does not have a material adverse effect on the ability of Parent or
Purchaser to consummate the Offer or the Merger.
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(e) By Parent or Purchaser: (i) (A) if, prior to the purchase of the
Shares pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser, its
approval or recommendation of the Offer, the Merger Agreement or the Merger
or shall have recommended or approved, or announced a neutral position with
respect to, an Acquisition Proposal or upon request of Parent, shall fail
to reaffirm its approval and recommendation of the Offer, the Merger
Agreement or the Merger; or (B) if there shall have been a material breach
by the Company of any provision of the Merger Agreement relating to the
prohibition on solicitation of Acquisition Proposals; or (ii) if the Offer
has expired or terminated without Parent or Purchaser purchasing any Shares
and, pursuant to the conditions of the Offer and the Merger Agreement, the
Purchaser is neither required to accept and pay for the Shares tendered in
the Offer nor extend the expiration date of the Offer; provided, that
Parent or Purchaser may not terminate the Merger Agreement if Parent or
Purchaser is in material breach of the Merger Agreement; or (iii) if, due
to an occurrence that if occurring after the commencement of the Offer
would result in a failure to satisfy any of the conditions to the Offer
which occurrence is incapable of being cured or remediated prior to the
initial expiration date of the Offer, Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer; provided, that Parent or Purchaser may not terminate the Merger
Agreement if Parent or Purchaser is in material breach of the Merger
Agreement; or (iv) if any Person or "group" (as defined in Section 13(d)(3)
of the Exchange Act), other than Parent, Purchaser or their affiliates or
any group of which any of them is a member, shall have acquired beneficial
ownership (as determined under the Exchange Act) of 20% or more of the
Shares; or (v) if there shall be a breach by the Company of any of its
representations or warranties contained in the Merger Agreement (without
reference to any "Material Adverse Effect" or "materiality" qualifications
contained therein) which causes a Material Adverse Effect on the Company
and is incapable of being cured prior to the twentieth business day
following the initial expiration date of the Offer or there shall be a
material breach by the Company of any of its covenants or agreements
contained in the Merger Agreement.
Termination Fee. If (i) Parent or Purchaser terminates the Merger Agreement
pursuant to clauses (e)(i)(A) or (B) under the heading "Termination" above or
(ii) the Company terminates the Merger Agreement pursuant to clause (d)(i)
under the heading "Termination" above, then in each case, the Company shall
pay, or cause to be paid to Parent, at the time of termination, an amount
equal to $2,870,000 (the "Termination Fee") plus an amount equal to Parent's
and Purchaser's actual and reasonably documented out-of-pocket expenses
incurred by Parent or Purchaser in connection with the Offer, the Merger, the
Merger Agreement and the consummation of the transactions contemplated thereby
up to a maximum expense reimbursement amount of $718,000 (the "Expenses"). In
addition, if the Merger Agreement is terminated by Parent or Purchaser
pursuant to clause (e)(ii) under the heading "Termination" above solely as a
result of the failure of the Minimum Condition or by the Company pursuant to
clause (d)(ii) under the heading "Termination" above and, in each case at the
time of such termination, Parent is not in material breach of the Merger
Agreement, and there has been previously publicly announced, and not
withdrawn, an Acquisition Proposal, and, if the Company shall thereafter,
within nine months after such termination, enter into an agreement with
respect to such Acquisition Proposal, then the Company shall pay the
Termination Fee concurrently with entering into any such agreement. If the
Merger Agreement is terminated by Parent or Purchaser pursuant to clause
(e)(v) under the heading "Termination" above, then the Company shall pay
Parent the Expenses.
Indemnification. Pursuant to the Merger Agreement, Parent and Purchaser have
agreed that, for a period of four years after the Effective Time, the
provisions with respect to indemnification set forth in the certificate of
incorporation and by-laws of Purchaser as in effect on the date of the Merger
Agreement shall not be amended, repealed or otherwise modified in any manner
that would adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were directors or officers of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including without limitation the transactions contemplated by the Merger
Agreement), unless such modification is required by law.
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The Merger Agreement also provides that, from and after the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date of the Merger Agreement or who becomes prior to the Effective Time, an
officer or director of the Company (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including reasonable attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld) incurred in connection with any threatened or actual
action, suit or proceeding based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of
the Company ("Indemnified Liabilities"), including all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, the
Merger Agreement or the transactions contemplated thereby, in each case, to
the full extent that a corporation is permitted under the DGCL to indemnify
its own directors or officers, as the case may be. In the event any such
claim, action, suit, proceeding or investigation is brought against any
Indemnified Party, the indemnifying party shall assume and direct all aspects
of the defense thereof, including settlement, and the Indemnified Party shall
cooperate in the vigorous defense of any such matter. The Indemnified Party
shall have a right to participate in (but not control) the defense of any such
matter with its own counsel and at its own expense. The indemnifying party
shall not settle any such matter unless (i) the Indemnified Party gives prior
written consent, which shall not be unreasonably withheld, or (ii) the terms
of the settlement provide that the Indemnified Party shall have no
responsibility for the discharge of any settlement amount and impose no other
obligations or duties on the Indemnified Party and the settlement discharges
all rights against the Indemnified Party with respect to such matter. In no
event shall the indemnifying party be liable for any settlement effected
without its prior written consent. Any Indemnified Party wishing to claim
indemnification under the Merger Agreement, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent and
the Surviving Corporation (but the failure so to notify shall not relieve the
indemnifying party from any liability which it may have under the Merger
Agreement except to the extent such failure prejudices such indemnifying
party), and shall deliver to Parent and the Surviving Corporation the
undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group will be represented by a single law firm with respect to
each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. The rights to indemnification under the Merger
Agreement shall continue in full force and effect for a period of four years
from the Effective Time; provided, however, that all rights to indemnification
in respect of any Indemnified Liabilities asserted or made within such period
shall continue until the disposition of such Indemnified Liabilities.
The Merger Agreement provides that, for a period of two years after the
Effective Time, Parent shall cause to be maintained in effect policies of
directors' and officers' liability insurance, for the benefit of those persons
who are covered by the Company's directors' and officers' liability insurance
policies at the Effective Time, providing coverage with respect to matters
occurring prior to the Effective Time that is at least equal to the coverage
provided under the Company's current directors' and officers' liability
insurance policies, to the extent that such liability insurance can be
maintained at an annual cost to Parent not greater than 150 percent of the
premium for the current Company directors' and officers' liability insurance;
provided that if such insurance cannot be so maintained at such cost, Parent
shall maintain as much of such insurance as can be so maintained at a cost
equal to 150 percent of the current annual premiums of the Company for such
insurance.
Stockholder Agreements
The following is a summary of certain provisions of the Stockholder
Agreements. This summary is not a complete description of the terms and
conditions of the Stockholder Agreements and is qualified in its entirety by
reference to the full text of the Stockholder Agreement with respect to Cisco,
the Stockholder Agreement with respect to Advent, and the form of Stockholder
Agreement with respect to directors and executive officers of the Company,
each as filed with the Commission as an exhibit to the Schedule 14D-1 and
incorporated herein by reference. Capitalized terms not otherwise defined
below shall have the meanings set forth in the Merger Agreement or the
Stockholder Agreements, as the context may require. The Stockholder Agreements
may be examined, and copies obtained, as set forth in Section 9 of this Offer
to Purchase.
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As a condition and inducement to Parent's entering into the Merger Agreement
and incurring the liabilities therein, the Stockholders, who collectively have
voting power and dispositive power with respect to an aggregate of 1,171,068
Shares and hold Options to acquire 854,050 Shares, concurrently with the
execution and delivery of the Merger Agreement entered into the Stockholder
Agreements with Parent. Pursuant to the Stockholder Agreements, the
Stockholders have agreed, among other things, to grant Parent an irrevocable
proxy with respect to the voting of their Shares in favor of the Merger and
against any other Acquisition Proposal with respect to such Shares upon the
terms and subject to the conditions set forth therein. The Stockholders have
also granted to Parent an option to purchase the Shares subject to the
Stockholder Agreements, at an option price of $7.00 per Share (or any higher
price offered by Parent or a subsidiary of Parent to the stockholders of the
Company generally), during the period commencing on March 23, 1999 and
continuing for varying periods (each an "Option Period"). With respect to the
options granted to Parent by the directors and executive officers of the
Company, "Option Period" means the period between March 23, 1999 and the
earlier of (i) 120 days after the purchase of Shares pursuant to the Offer or
(ii) the date that the Merger Agreement is terminated for any reason,
provided, however, that such options shall terminate with respect to any
Shares that are tendered pursuant to the Offer and purchased by Purchaser.
With respect to the options granted by Advent, "Option Period" means the
period between March 23, 1999 and the earlier of (i) 120 days after the
purchase of Shares pursuant to the Offer or (ii) 120 days after the date on
which the Merger Agreement is terminated for any reason, provided, however,
that such option shall terminate, (x) with respect to any Shares that are
tendered pursuant to the Offer and purchased by Purchaser, (y) if the Merger
Agreement is terminated by the Company because of a material breach by Parent
or Purchaser and at the time of such termination the Company is not in breach
of the Merger Agreement, and (z) if the Merger Agreement is terminated because
the condition requiring termination of all necessary waiting periods under the
HSR Act is incapable of being fulfilled. With respect to the option granted by
Cisco, "Option Period" means the period between March 23, 1999 and the earlier
of (i) 120 days after the purchase of Shares pursuant to the Offer or (ii) 120
days after the date on which the Merger Agreement is terminated (A) by the
Company because the Company has entered into an agreement with respect to (or
the Company or the Company Board has approved or recommended) a Superior
Proposal in compliance with the applicable provisions in the Merger Agreement,
including notice provisions and the payment to Parent of the termination fee
and expenses or (B) by Parent or Purchaser if, prior to the purchase of the
Shares pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall have
recommended or approved, or announced a neutral position with respect to, an
Acquisition Proposal or, upon request of Parent, shall fail to reaffirm its
approval and recommendation of the Offer, the Merger Agreement or the Merger,
or if there shall have been a material breach by the Company of certain
provisions of the Merger Agreement relating to solicitation of Acquisition
Proposals by the Company, or (iii) 30 days after the date on which the Merger
Agreement is terminated by Parent or Purchaser because of a breach by the
Company of any of its representations or warranties contained in the Merger
Agreement which breach causes a material adverse effect on the Company and is
incapable of being cured prior to the twentieth business day following the
initial expiration date of the Offer or because of a material breach by the
Company of any of its covenants or agreements contained in the Merger
Agreement, or (iv) the date on which the Merger Agreement is terminated other
than for reasons described in clauses (ii) or (iii) of this sentence,
provided, however, that such option shall terminate with respect to any Shares
that are tendered pursuant to the Offer and purchased by Purchaser. The
Stockholders have advised Parent that they intend to tender their Shares
pursuant to the Offer. If Purchaser purchases Shares pursuant to the Offer,
Purchaser intends to exercise its option pursuant to the Stockholder
Agreements to purchase all Shares that are not tendered by any Stockholder.
During the period (the "Restricted Period") from March 23, 1999 through and
including the earlier of (i) the Effective Time and (ii) the end of the
applicable Option Period, each Stockholder has agreed not to: (A) except
pursuant to the terms of the Stockholder Agreement and except for the tender
of Shares in the Offer, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option
or other arrangement to do so; (B) except pursuant to the terms of the
Stockholder Agreement, grant any proxies (other than proxies relating to the
election of management's slate of directors at an annual meeting of Company's
stockholders, and other routine matters which would not require the filing of
a preliminary proxy statement under
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Rule 14a-6(a) of the Exchange Act), or powers of attorney, deposit any of
their Shares into a voting trust or enter into a voting agreement with respect
to any of their Shares; or (C) take any action that would make any
representation or warranty contained in the Stockholder Agreement untrue or
incorrect or have the effect of impairing the ability of the Stockholder to
perform the Stockholder's obligations under the applicable Stockholder
Agreement or preventing or delaying the consummation of any of the
transactions contemplated by the applicable Stockholder Agreement and the
Merger Agreement. Notwithstanding the foregoing, Advent will have the right
(i) to transfer Shares subject to the option to an affiliate, as long as,
before any such transfer, such affiliate enters into a written agreement (an
"Acknowledgment Agreement") with Parent whereby such affiliate agrees to be
bound by all of the terms and provisions of Advent's Stockholder Agreement
with respect to the Shares received by such affiliate, (ii) prior to the
exercise by Parent of its option and following the termination of the Merger
Agreement (other than a termination which requires the payment of the
Termination Fee), to sell Shares subject to the option in open market
transactions, provided that any such sale shall not limit or relieve Advent of
its obligation to deliver Shares to Parent in the event Parent exercises the
option to purchase such Shares, and (iii) transfer or sell Shares subject to
the option to one or more third parties in privately-negotiated transactions
as long as each such third party enters into an Acknowledgment Agreement with
Parent.
Each of the directors and executive officers of the Company entering into a
Stockholder Agreement has agreed to unconditionally release, as of the
Effective Time, any and all claims and causes of action that such directors
and officers may have against the Company or any of its subsidiaries or any
present or former director, officer, employee or agent of the Company or any
of its subsidiaries (collectively, the "Released Parties") resulting from any
act, omission or occurrence prior to the Effective Time; provided, however,
that such release shall not apply to any claim or cause of action insofar as
it relates to any entitlement to indemnification or to compensation or
benefits earned or accrued by or for the benefit of such directors and
officers prior to the Effective Time in respect of services performed by such
directors and officers to the Company as a director, officer, consultant or
employee of the Company. Advent has agreed to unconditionally release, as of
the Effective Time, any and all claims and causes of action that Advent may
have against the Released Parties resulting from any act, omission or
occurrence prior to the Effective Time. Cisco has agreed to unconditionally
release, as of the Effective Time, any and all claims and causes of action
that Cisco may have against the Released Parties resulting from any alleged
breach of fiduciary duty by any officer or director of the Company occurring
prior to the Effective Time; provided, however, that such release will not
apply to any currently effective contract or agreement between Cisco and the
Company or any claim or cause of action arising therefrom.
Each Stockholder has agreed that, in the capacity as a stockholder, it will
not respond to any inquiries or the making of any proposal by any person or
entity (other than Parent or any affiliate of Parent) concerning any business
combination, merger, tender offer, exchange offer, sale of assets, sale of
shares of capital stock or debt securities or similar transactions involving
the Company or any subsidiary, division or operating or principal business
unit of the Company. If any Stockholder, in the capacity as a stockholder,
receives any such inquiry or proposal, then the Stockholder has agreed to
promptly inform Parent of the existence thereof. Each Stockholder, in the
capacity as a stockholder, has agreed to immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties previously conducted with respect to any of the foregoing.
Exclusivity Agreement
The following is a summary of certain provisions of the Exclusivity
Agreement. This summary is not a complete description of the terms and
conditions of the Exclusivity Agreement and is qualified in its entirety by
reference to the full text of the Exclusivity Agreement filed with the
Commission as an exhibit to the Schedule 14D-1 and incorporated herein by
reference. Capitalized terms not otherwise defined below shall have the
meanings set forth in the Exclusivity Agreement. The Exclusivity Agreement may
be examined, and copies obtained, as set forth in Section 9 of this Offer to
Purchase.
In connection with the negotiation of the Merger Agreement, on March 16,
1999, Parent and the Company entered into a letter agreement (the "Exclusivity
Agreement") in order to induce Parent to continue negotiations with the
Company with respect to the terms of a potential acquisition transaction. The
Exclusivity Agreement provided that until the earlier of 6:00 p.m., California
time, on March 25, 1999 and the execution of a definitive
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agreement relating to a potential acquisition of the Company (the "Exclusivity
Period"), the Company and its affiliates and representatives will discontinue
any solicitation efforts, discussions or negotiations with respect to, and
will not solicit, intentionally encourage or facilitate, an acquisition
proposal with any person other than Parent. The Company also agreed during the
Exclusivity Period not to enter into discussions or negotiations with any
other person concerning an acquisition proposal or to endorse such other
proposal. The Company also agreed to provide Parent with notice if it received
certain acquisition proposals.
Pursuant to the Exclusivity Agreement, Parent agreed that for a period of
one year from the date of the Exclusivity Agreement, it will not, directly or
indirectly, solicit for employment or attempt to hire or recruit any employee
of the Company (or any subsidiary thereof) with whom Parent has had contact or
who became known to Parent in connection with Parent's consideration of a
potential acquisition. However, Parent will not breach such restriction solely
(a) as a result of generic employment advertising by Parent (including,
without limitation, "open position" and similar listings in Parent's various
World Wide Web pages), (b) as a result of the efforts of an executive
recruitment or similar firm generally engaged to recruit employees for Parent
(without targeting of the Company or its specific employees) or (c) if any
employee of Company (or any subsidiary thereof) approaches and obtains
employment with Parent after the date of the Exclusivity Agreement solely as a
result of any advertising or recruitment effort contemplated in clause (a) or
(b) above.
12. Plans for the Company; Other Matters.
Plans for the Company
Parent is conducting a detailed review of the Company and its business,
operations, assets, corporate structure, capitalization, properties, policies,
management and personnel with a view towards determining how to optimally
realize the potential synergies that exist between the operations of the
Company and those of Parent's Network Management Division. In that regard,
Parent plans to combine the Company's business with Parent's worldwide network
management business. Such review may not be completed until after the
consummation of the Merger. Following such review, Parent will consider what,
if any, changes would be desirable in light of the circumstances then
existing. Such changes could include, among other things, changes in the
Company's business, corporate structure (including a merger of the Company
with Sterling (U.S. of America)), certificate of incorporation, by-laws,
capitalization or management.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Parent intends to exercise promptly its rights under
the Merger Agreement to obtain majority representation on, and control of, the
Company Board. See "Section 11-Merger Agreement-The Company Board" above.
Parent will exercise such rights by causing the Company to elect to the
Company Board Geno P. Tolari, R. Logan Wray and Don J. McDermett, Jr.
Information with respect to such directors is contained in Schedule I hereto
and in Schedule I to the Schedule 14D-9. The Merger Agreement provides that,
upon the purchase of and payment for any Shares by Parent or any of its
subsidiaries pursuant to the Offer, Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Company Board
such that the percentage of its designees on the Company Board shall equal the
percentage of the outstanding Shares beneficially owned by Parent and its
affiliates at such time. See Section 11. The Merger Agreement provides that
the directors of Purchaser and the officers of the Company at the Effective
Time of the Merger will, from and after the Effective Time, be the initial
directors and officers, respectively, of the Surviving Corporation.
Purchaser or an affiliate of Purchaser may, following the consummation or
termination of the Offer, seek to acquire additional Shares through open
market purchases, privately negotiated transactions, a tender offer or
exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. Purchaser and its affiliates also reserve the right to dispose of any
or all Shares acquired by them, subject to the terms of the Merger Agreement.
Except as disclosed in this Offer to Purchase, and except as may be effected
in connection with the integration of operations referred to above, none of
Parent, Sterling (U.S. of America) or Purchaser has any present plans or
proposals that would result in an extraordinary corporate transaction, such as
a merger, reorganization, liquidation, relocation of operations, or sale or
transfer of a material amount of assets, involving the Company or any of its
subsidiaries, or any material changes in the Company's capitalization,
corporate structure, business or composition of its management or the Company
Board.
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Other Matters
Stockholder Approval. Under the DGCL, the approval of the Company Board and
the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. The Company has also approved the
Merger Agreement and the Stockholder Agreements for purposes of Section 203 of
the DGCL and has represented to Parent and Purchaser that the restrictions on
certain business combinations contained in Section 203 of the DGCL are not
applicable to the Merger Agreement, the Stockholder Agreements and the
transactions contemplated thereby. In addition, the Company has represented
that the affirmative vote of the holders of a majority of the outstanding
Shares is the only vote of the holders of any class or series of the Company's
capital stock which is necessary to approve the Merger Agreement and the
transactions contemplated thereby, including the Merger. Therefore, unless the
Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the Shares. The Merger Agreement provides
that Parent will vote, or cause to be voted, all of the Shares then owned by
Parent, Purchaser or any of Parent's other subsidiaries and affiliates in
favor of the approval of the Merger and the adoption of the Merger Agreement.
In the event that Parent, Purchaser and Parent's other subsidiaries acquire in
the aggregate at least a majority of the Shares entitled to vote on the
approval of the Merger and the Merger Agreement, they would have the ability
to effect the Merger without the affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Parent, Purchaser and any other subsidiaries of Parent acquire in
the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the Company Board or the stockholders of the
Company, subject to compliance with the provisions of Section 253 of the DGCL.
Additionally, if, immediately prior to the Expiration Date of the Offer (as it
may be extended), the Shares tendered and not withdrawn pursuant to the Offer
constitute more than 75% and less than 90% of the outstanding Shares,
Purchaser may extend the Offer for one or more periods not to exceed an
aggregate of 10 business days, notwithstanding that all conditions to the
Offer are satisfied as of such Expiration Date of the Offer, in order to
obtain tenders of a sufficient number of additional Shares to allow it to
effect a short-form merger. Even if Parent and Purchaser do not own 90% of the
outstanding Shares following consummation of the Offer, Parent and Purchaser
could seek to purchase additional Shares in the open market or otherwise in
order to reach the 90% threshold and employ a short-form merger. The per Share
consideration paid for any Shares so acquired may be greater or less than that
paid in the Offer. Parent presently intends to effect a short-form merger if
permitted to do so under the DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of
the Shares at the Effective Time will have certain rights pursuant to the
provisions of Section 262 of the DGCL including the right to dissent and
demand appraisal of, and to receive payment in cash of the fair value of,
their Shares. Under Section 262 of the DGCL, dissenting stockholders of the
Company who comply with the applicable statutory procedures will be entitled
to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the price per Share to be paid in the Merger or
the market value of the Shares. The value so determined could be more or less
than the price per Share to be paid in the Merger.
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THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may
under certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer in which
Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes, however, that Rule 13e-3 will not be applicable to the Merger
because it is anticipated that the Merger would be effected within one year
following consummation of the Offer and in the Merger stockholders would
receive the same price per Share as paid in the Offer. If Rule 13e-3 were
applicable to the Merger, it would require, among other things, that certain
financial information concerning the Company, and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such a transaction, be filed with the Commission and
disclosed to minority stockholders prior to consummation of the transaction.
13. Dividends and Distributions.
As described above, the Merger Agreement provides that during the period
from the date of the Merger Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior
consent of Parent, (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, securities or other property) in respect
of, any of its outstanding capital stock (other than, with respect to a
subsidiary of the Company, to its corporate parent), (B) split, combine or
reclassify any of its outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its outstanding capital stock, or (C) purchase, redeem or
otherwise acquire any shares of outstanding capital stock or any rights,
warrants or options to acquire any such shares, except, in the case of this
clause (C), for the acquisition of Shares from holders of Options in full or
partial payment of the exercise price payable by such holder upon exercise of
Options.
14. Conditions to the Offer.
Notwithstanding any other provision of the Offer and subject to the terms of
the Merger Agreement, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any
tendered Shares, and may amend the Offer consistent with the terms of the
Merger Agreement or terminate the Offer and not accept for payment any
tendered Shares, if (i) the Minimum Condition is not satisfied by the
Expiration Date, (ii) any applicable waiting period under the HSR Act has not
expired or been terminated, or (iii) at any time on or after the date of the
Merger Agreement and prior to the Expiration Date, any of the following events
shall occur and be continuing and shall not have resulted from the breach by
Parent or Purchaser of any of their obligations under the Merger Agreement:
(a) there shall be pending any suit, action or proceeding brought by any
third party that has a high likelihood of success on the merits or by any
governmental entity before any court of competent jurisdiction (i) seeking
to prohibit or impose any material limitations on Parent's or Purchaser's
ownership or operation (or that of any of their respective subsidiaries or
affiliates) of all or a material portion of their or the Company's
businesses or assets, (ii) seeking to compel Parent or Purchaser or their
respective subsidiaries and affiliates to dispose of or hold separate any
material portion of the business or assets of the Company or
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Parent and their respective subsidiaries, in each case taken as a whole, as
a result of the Merger Agreement, (iii) challenging the acquisition by
Parent or Purchaser of any Shares pursuant to the Offer, (iv) seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or the performance of any of the transactions contemplated by the Merger
Agreement, (v) seeking to obtain from the Company any damages (including
damages against the Company's directors or officers for which they may seek
indemnification from the Company) that would be reasonably likely to have a
material adverse effect on the Company, (vi) seeking to impose material
limitations on the ability of Purchaser, or rendering Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant
to the Offer and the Merger, or (vii) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation, the
right to vote the Shares purchased by Purchaser or Parent on all matters
properly presented to the Company's stockholders; or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
governmental entity, other than the application to the Offer or the Merger
of applicable waiting periods under the HSR Act, that is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (vii) of paragraph (a) above; or
(c) (i) the representations and warranties of the Company contained in
Sections 4.1(b) (authority), 4.1(u) (opinion of financial advisor), 4.1(v)
(voting requirements), 4.1(w) (Rights Agreement), 4.1(x) (settlement of
certain litigation) and the first five sentences of Section 4.1(d)
(capitalization) of the Merger Agreement shall not be true and correct in
all material respects as of the date of consummation of the Offer as though
made on or as of such date (other than any such representations and
warranties that by their terms address only matters as of another specified
date, which shall be true and correct only as of such other specified date)
and (ii) all other representations and warranties of the Company contained
in the Merger Agreement, which representations and warranties shall be
deemed for purposes of this condition not to include any qualification or
limitation with respect to materiality (whether by reference to "Material
Adverse Effect" or otherwise), shall not be true and correct as of the date
of consummation of the Offer as though made on or as of such date (other
than representations and warranties that by their terms address matters
only as of another specified date, which shall be true and correct only as
of such other specified date), except in the case of this clause (ii) where
the matters in respect of which such representations and warranties are not
true and correct, in the aggregate, have not had and could not reasonably
be expected to have a Material Adverse Effect on the Company, with the same
effect as though such representations and warranties were made as of the
date of consummation of the Offer; or
(d) there shall have occurred a Material Adverse Effect on the Company;
or
(e) the Company Board (i) shall have withdrawn, or modified or changed in
a manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement or
the Merger, (ii) shall have recommended or announced a neutral position
with respect to an Acquisition Proposal, (iii) shall have adopted any
resolution to effect any of the foregoing, or (iv) upon request of Parent,
shall fail to reaffirm its approval or recommendation of the Offer, the
Merger Agreement or the Merger; or
(f) any Person or "group" (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or announced its
intention to acquire (including by commencement of a tender or exchange
offer) beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the Shares; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
which in the sole good faith judgment of Parent or Purchaser, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payments
for Shares.
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The foregoing conditions are for the sole benefit of Parent and Purchaser
and may (except for the Minimum Condition) be waived by Parent or Purchaser,
in whole or in part, at any time and from time to time, in the sole discretion
of Parent or Purchaser. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any right
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
15. Certain Legal Matters.
General. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser or Parent is aware of
(i) any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or Purchaser
pursuant to the Offer, the Merger or otherwise, or (ii) except as set forth
herein, any approval or other action by any governmental, administrative or
regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Antitakeover Statutes."
While, except as otherwise described in this Offer to Purchase, Purchaser does
not presently intend to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained
or such other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment, or
pay for, any Shares tendered. See Section 14 for certain conditions to the
Offer, including conditions with respect to governmental actions.
State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a "Business
Combination" (defined as a variety of transactions, including mergers) with an
"Interested Stockholder" (defined generally as a person that is the beneficial
owner of 15% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an Interested Stockholder unless, prior to the date such person became
an Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The provisions of Section 203
of the DGCL are not applicable to any of the transactions contemplated by the
Merger Agreement or the Stockholder Agreements, because the Merger Agreement,
the Stockholder Agreements and the transactions contemplated thereby were
approved by the Company Board prior to the execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquirer from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as set forth above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any
state antitakeover statute or
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regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer and nothing in
this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state
antitakeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable
to accept for payment or pay for Shares tendered pursuant to the Offer or may
be delayed in consummating the Offer. In such case, Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered pursuant to
the Offer. See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
Parent filed its Notification and Report Form with respect to the Offer
under the HSR Act on March 24, 1999. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on April
8, 1999, the fifteenth day after the date Parent's form was filed, unless
early termination of the waiting period is granted. However, the DOJ or the
FTC may extend the waiting period by requesting additional information or
documentary material from Parent or the Company. If such a request is made,
such waiting period will expire at 11:59 p.m., New York City time, on the
tenth day after substantial compliance by Parent with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the DOJ or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to
the Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws (as defined below) of transactions such as Purchaser's acquisition of
Shares pursuant to the Offer and the Merger. At any time before or after
Purchaser's acquisition of Shares, the DOJ or the FTC could take such action
under the Antitrust Laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to
the Offer or otherwise seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Parent or its subsidiaries. Private
parties, as well as state governments, may also bring legal action under the
Antitrust Laws under certain circumstances. Based upon an examination of
information provided by the Company relating to the businesses in which Parent
and the Company are engaged, Parent and Purchaser believe that the acquisition
of Shares by Purchaser will not violate the Antitrust Laws. Nevertheless,
there can be no assurance that a challenge to the Offer or other acquisition
of Shares by Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation and certain
governmental actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or
restraint of trade.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an
amount that exceeds the maximum loan value of all the direct and indirect
collateral securing the credit, including margin stock and other collateral.
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16. Fees and Expenses.
Parent has engaged Broadview International LLC ("Broadview") to act as its
financial advisor in connection with the Offer and the Merger. Parent will pay
Broadview customary compensation for its financial advisory services in
connection with the Offer and the Merger. Parent has agreed to reimburse
Broadview for all reasonable out-of-pocket fees, expenses and costs, including
reasonable fees and expenses of legal counsel, and to indemnify Broadview and
certain related persons against certain liabilities and expenses in connection
with the Offer and the Merger, including certain liabilities under the federal
securities laws. Broadview has from time to time provided financial advisory
services to Parent.
Purchaser and Parent have retained Georgeson & Company Inc. to serve as the
Information Agent and BankBoston, N.A. to serve as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by personal interview, mail, telephone, telex, telegraph and other methods of
electronic communication and may request brokers, dealers, commercial banks,
trust companies and other nominees to forward the Offer materials to
beneficial holders. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities in connection with their services, including certain liabilities
and expenses under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees or
commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding the
Offer materials to their customers.
17. Miscellaneous.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto,
Purchaser shall make a good faith effort to comply with such statute or seek
to have such statute declared inapplicable to the Offer. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) holders of
Shares in such state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed with the Commission the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the same manner set forth in
Section 9 of this Offer to Purchase (except that such material will not be
available at the regional offices of the Commission).
Sterling Software (Southwest), Inc.
March 30, 1999
40
<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT, STERLING (U.S. OF AMERICA) AND PURCHASER
1. Directors and Executive Officers of Parent. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Parent. Unless otherwise indicated,
each such person is a citizen of the United States of America and the business
address of each such person is c/o Sterling Software, Inc., 300 Crescent
Court, Suite 1200, Dallas, Texas 75201. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at
Parent for the past five years.
Present Principal Occupation or Employment;
NameMaterial Positions Held During the Past Five Years
------------------------------------------------------
Mr. Wyly has served as Chairman of the Board of
Directors of Parent since co-founding Parent in 1981.
Mr. Wyly currently serves as a director of Sterling
Commerce, Inc., a provider of electronic commerce
SAM WYLY............... software and network services ("Sterling Commerce"),
as Chairman of the Board of Directors of Michael
Stores, Inc., a specialty retail chain ("Michaels"),
as Chairman of the Board of Directors of Scottish
Annuity & Life Holdings, Ltd., a variable life
insurance and reinsurance company ("Scottish
Annuity"), and as a partner of the general partner of
Maverick Capital. Ltd., an investment fund management
company founded by Mr. Wyly ("Maverick"). Mr. Wyly is
a member of both the Executive Committee and the 1996
Stock Option Committee of the Board of Directors of
Parent.
CHARLES J. WYLY, JR.... Mr.Wyly has served as a director of Parent since co-
founding Parent in 1981, and as Vice Chairman of the
Board of Directors of Parent since 1984. Mr. Wyly
currently serves as Vice Chairman of the Board of
Directors of Michaels, as a director of Scottish
Annuity and as a director of Sterling Commerce. Mr.
Wyly is a member of both the Executive Committee and
the 1996 Stock Option Committee of the Board of
Directors of Parent.
STERLING L. WILLIAMS... Mr. Williams has served as President, Chief Executive
Officer and a director of Parent since co-founding
Parent in 1981. Mr. Williams has served as Chairman
of the Board of Directors of Sterling Commerce since
December 1995. Mr. Williams served as Chief Executive
Officer of Sterling Commerce from December 1995 to
October 1996. Mr. Williams is a member of both the
Executive Committee and the 1996 Stock Option
Committee of the Board of Directors of Parent.
GENO P. TOLARI......... Mr. Tolari has served as an Executive Vice President
of Parent since March 1990 and as Chief Operating
Officer of Parent since April 1996. Mr. Tolari served
as President of Parent's Systems Management Group
from December 1994 to February 1997 and as President
of Parent's Federal Systems Group from October 1985
to December 1994.
M. GENE KONOPIK........ Mr. Konopik has served as an Executive Vice President
of Parent and as President of Parent's Federal
Systems Group since December 1994. Mr. Konopik served
as President of Parent's Information Technology
Division from July 1993 to December 1994.
I-1
<PAGE>
JOHN R. COOK...........
Mr. Cook has served as Senior Vice President,
Business Development of Parent since December 1997.
Mr. Cook served as Vice President, Business
Development of Parent's former Applications
Management Group from July 1997 to December 1997. Mr.
Cook served as Vice President and General Manager-The
Americas of the Software Division ("TI Software") of
Texas Instruments Incorporated, an electronics
company ("Texas Instruments"), from January 1997 to
July 1997 and as Vice President-Strategy and New
Business Creation of TI Software from June 1995 to
December 1996. Mr. Cook served as the Chief Executive
Officer of the BankA Enterprise of Andersen
Consulting from October 1993 to June 1995.
F.L. "MIKE" HARVEY..... Mr. Harvey has served as a Senior Vice President of
Parent since June 1997 and as President of Parent's
Systems Management Group since October 1998. Mr.
Harvey served as President of Parent's former
Applications Management Group from October 1996 to
October 1998. Mr. Harvey served as President of Omega
Consulting Group Inc., a software consulting company,
from March 1993 to June 1997.
DON J. MCDERMETT, Mr. McDermett has served as Senior Vice President and
JR. ................... General Counsel of Parent since May 1997 and as
Secretary of Parent since October 1998. Mr. McDermett
served as Vice President, Legal of Parent from July
1996 to May 1997. Prior to that time Mr. McDermett
was employed by Thompson & Knight, P.C., a Dallas-
based law firm, having been a senior shareholder in
that firm's corporate practice group since 1993.
B. CAROLE MORTON.......
Ms. Morton has served as a Senior Vice President of
Parent since October 1996, as President of Parent's
Information Management Group since October 1998 and
as President of Parent's Information Management
Division since October 1995. Ms. Morton served as
President of Parent's former Information Management
Group from October 1996 to June 1997. Ms. Morton
served as President of Parent's former Applications
Engineering Division from December 1994 to October
1995 and as President of Parent's former Applications
Management Division from July 1993 to November 1994.
MARK A. THEEL.......... Mr. Theel has served as a Senior Vice President of
Parent since November 1998, as President of Parent's
Application Development Group since October 1998 and
as President of Parent's Application Development
Division since January 1996. Mr. Theel served as Vice
President, Labs of Parent's Application Development
Division from December 1994 to December 1995 and as
Vice President, Labs of Parent's former Applications
Management Division from July 1993 to November 1994.
R. LOGAN WRAY..........
Mr. Wray has served as Senior Vice President and
Chief Financial Officer of Parent since May 1997.
Prior to that time Mr. Wray was employed by Ernst &
Young LLP, a national accounting firm, having been a
partner in that firm since 1994.
I-2
<PAGE>
ROBERT J. DONACHIE.....
Mr. Donachie has served as a director of Parent since
May 1983. Mr. Donachie has been principally employed
as a private business consultant since March 1981.
Mr. Donachie is Chairman of the Audit Committee and a
member of the 1996 Special Stock Option Committee of
the Board of Directors of Parent. Mr. Donachie's
business address is: c/o The Donachie Company, 4925
Greenville Avenue, Suite 730, Dallas, Texas 75206.
MICHAEL C. FRENCH...... Mr. French has served as a director of Parent since
July 1992. Mr. French currently serves as Chief
Executive Officer, President and a director of
Scottish Annuity. Mr. French is also a partner of
Maverick and a consultant to the international law
firm of Jones, Day, Reavis & Pogue. Mr. French was a
partner of the law firm of Jackson & Walker, L.L.P.
from 1976 to 1995. Mr. French's business address is:
300 Crescent Court, Suite 1000, Dallas, Texas 75201.
DONALD R. MILLER, Mr. Miller has served as a director of Parent since
JR. ................... September 1993. Mr. Miller has served as Vice
President-Market Development of Michaels since
November 1990 and also serves as a member of the
Board of Directors of Michaels. Mr. Miller's business
address is: c/o Michael's Stores, 8000 Bent Branch
Drive, Irving, Texas 75063.
PHILLIP A. MOORE.......
Mr. Moore has served as a director of Parent since
co-founding Parent in 1981. Mr. Moore served as
Executive Vice President of Parent from July 1993 to
September 1997, serving also as Chief Technology
Officer of Parent from October 1995 to April 1996.
ALAN W. STEELMAN....... Mr. Steelman has served as a director of Parent since
February 1997. Mr. Steelman has been a senior
principal of Monitor Company, a leading international
management and consulting firm, since 1993. Mr.
Steelman also currently serves as a director of
Aristocrat Leisure Ltd., a software and machine
manufacturing firm based in Sydney, Australia, on the
Advisory Board of Richmont-Parly Investment Company,
a Dallas- and Hong Kong- based private investment
trust devoted to investments in listed Asian
companies and on the Advisory Board of Asia
Information Services, a Beijing-based information
technology company. Mr. Steelman is a member of the
Audit Committee and the 1996 Special Stock Option
Committee of the Board of Directors of Parent. Mr.
Steelman's business address is: 7112 Round Hill Road,
McKinney, Texas 75070.
EVAN A. WYLY...........
Mr. Wyly has served as a director of Parent since
July 1992. Mr. Wyly has served as the managing
partner of Maverick since 1991. Mr. Wyly also serves
as a director and officer of Michaels and as a
director of Sterling Commerce. Mr. Wyly's business
address is: 300 Crescent Court, Suite 1000, Dallas,
Texas 75201.
I-3
<PAGE>
2. Directors and Executive Officers of Sterling (U.S. of America). The
following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for
the past five years, of each director and executive officer of Sterling (U.S.
of America). Unless otherwise indicated, each such person is a citizen of the
United States of America, and the business address of each such person is c/o
Sterling Software (U.S. of America), Inc., 1800 Alexander Bell Drive, Reston,
Virginia 20191 or, if applicable, as set forth in Part 1 of this Schedule I.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to employment with Sterling (U.S. of America). Unless otherwise
indicated, each such person has held his or her present occupation as set
forth below, or has been an executive officer of Sterling (U.S. of America),
or the organization indicated, for the past five years.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
RANDALL K. DAVIS.. Mr. Davis has served as President of Sterling (U.S. of America) since April 1997. Mr.
Davis served as Vice President, Labs of Sterling (U.S. of America) from October 1995
to March 1997 and as Vice President, Labs of Parent's VM Software Division from April
1994 to September 1995.
LEE McELRATH...... Mr. McElrath has served as Vice President, Finance of Sterling (U.S. of America)
since November 1998. Mr. McElrath served as Vice President, Finance of the Europe
Division of Parent's Systems Management Group from July 1997 to November 1998. Mr.
McElrath served as Controller of the Federal Systems Business Unit of TI Software
from November 1995 to June 1997 and as Controller of the Management Information
Systems Business Unit of Texas Instruments from October 1993 to November 1995.
DAN BECKETT....... Mr. Beckett has served as Vice President, North American Sales of Sterling (U.S. of
America) since October 1995. Mr. Beckett served as Vice President, Sales of Parent's
VM Software Division from October 1994 to September 1995.
DOUG BERTINSHAW... Mr. Bertinshaw has served as Vice President, Labs of Sterling (U.S. of America) since
April 1997. Mr. Bertinshaw served as Director of Development of Sterling (U.S. of
America) from December 1994 to April 1997 and as Director of Marketing of Sterling
(U.S. of America) from July 1992 to December 1994.
DAVID HODGSON..... Mr. Hodgson has served as Vice President, Customer Services of Sterling (U.S. of
America) since May 1995. Mr. Hodgson served as Director of Customer Services of
Sterling (U.S. of America) from October 1994 to May 1995. Mr. Hodgson served as
Customer Services Manager of Sterling (U.S. of America) from July 1993 to October
1994.
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
GUY DALEY............... Mr. Daley has served as Vice President, Business Development of Sterling (U.S.
of America) since April 1998. Mr. Daley served as Director of International
Marketing of Sterling (U.S. of America) from October 1997 to March 1998 and as
International Marketing Manager of Sterling (U.S. of America) from May 1996 to
October 1997. Mr. Daley served as General Manager, Professional Services of GEC
Alsthon Information Technology, a network systems integrator ("GEC"), from
January 1996 to May 1996 and as Strategic Marketing Manager of GEC from
September 1994 to January 1996.
GENO P. TOLARI.......... Vice President of Sterling (U.S. of America). See Part 1 of this Schedule I.
DON J. McDERMETT, JR. .. Director, Vice President and Secretary of Sterling (U.S. of America). See Part
1 of this Schedule I.
R. LOGAN WRAY........... Director, Vice President and Assistant Secretary of Sterling (U.S. of America).
See Part 1 of this Schedule I.
</TABLE>
3. Directors and Executive Officers of Purchaser. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each director and executive officer of Purchaser. Unless otherwise indicated,
each such person is a citizen of the United States of America, and the
business address of each such person is c/o Sterling Software, Inc., 300
Crescent Court, Suite 1200, Dallas, Texas 75201. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to employment
with Parent. Unless otherwise indicated, each such person has held his or her
present occupation as set forth below, or has been an executive officer at
Parent, or the organization indicated, for the past five years.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
GENO P. TOLARI.......... President of the Purchaser. See Part I of this Schedule I.
DON J. McDERMETT, JR. .. Director, Vice President and Secretary of the Purchaser. See Part 1 of this
Schedule I.
R. LOGAN WRAY........... Director, Vice President and Treasurer of the Purchaser. See Part 1 of this
Schedule I.
</TABLE>
I-5
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
The Depositary for the Offer is:
BANKBOSTON, N.A.
By Mail: By Hand: By Overnight, Certified
BankBoston, N.A. Securities Transfer & or Express Mail Delivery:
Attention: Reporting BankBoston, N.A.
Corporate Actions Services, Inc. Attention:
P.O. Box 8029 c/o Boston EquiServe L.P. Corporate Actions
Boston, MA 02266-8029 100 William Street, 150 Royall Street
Galleria Canton, MA 02021
New York, NY 10038
By Facsimile Transmission: (781) 575-2233 or (781) 575-2232
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (781) 575-3120
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at
its address and telephone number set forth below. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
GEROGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
INTERLINK COMPUTER SCIENCES, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 30, 1999
OF
STERLING SOFTWARE (SOUTHWEST), INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
STERLING SOFTWARE, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
BANKBOSTON, N.A.
By Mail: By Hand: By Overnight, Certified
BankBoston, N.A. or Express Mail
Delivery:
Securities Transfer & Reporting Services, Inc.
Attention: c/o Boston EquiServe L.P.
Corporate Actions 100 William Street, Galleria BankBoston, N.A.
P.O. Box 8029 New York, NY 10038 Attention:
Boston, MA 02266-8029 Corporate Actions
150 Royall Street
Canton, MA 02021
By Facsimile Transmission: (781) 575-2233 or (781) 575-2232
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (781) 575-3120
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Interlink
Computer Sciences, Inc. if certificates for Shares (as such term is defined
below) are to be forwarded herewith or, unless an Agent's Message (as defined
in Instruction 2 below) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by the Depositary at the Book-
Entry Transfer Facility (as defined in, and pursuant to the procedures set
forth in, Section 3 of the Offer to Purchase). Stockholders who deliver Shares
by book-entry transfer are referred to herein as "Book-Entry Stockholders" and
other stockholders who deliver Shares are referred to herein as "Certificate
Stockholders."
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
<PAGE>
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution that Guaranteed Delivery _______________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank, exactly
as name(s) Shares Tendered
appear(s) on Share certificate(s)) (Attach additional signed list if necessary)
- -----------------------------------------------------------------------------------------
Total Number of Number
Certificate Shares Represented of Shares
Number(s)(1) by Certificate(s)(1) Tendered(2)
-----------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share certificates delivered to the Depositary are
being tendered hereby. See Instruction 4.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Sterling Software (Southwest), Inc., a
Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of
Sterling Software, Inc., a Delaware corporation ("Parent"), the above-
described shares of common stock, par value $.001 per share (the "Common
Stock"), including the associated preferred share purchase rights (the
"Rights" and, together with the Common Stock, the "Shares"), of Interlink
Computer Sciences, Inc., a Delaware corporation (the "Company"), pursuant to
Purchaser's offer to purchase all of the outstanding Shares at a price of
$7.00 per Share, net to the seller in cash, without interest thereon (the
"Offer Price") upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 30, 1999 and in this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"). The undersigned understands that
Purchaser reserves the right to transfer or assign, in whole at any time, or
in part from time to time, to one or more of its affiliates, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer. Receipt of the Offer is hereby acknowledged.
The Company has distributed one Right for each outstanding Share pursuant to
the Rights Agreement (as defined in the Offer to Purchase). The Rights are
currently evidenced by and trade with certificates evidencing the Common
Stock. The Company has taken such action so as to make the Rights Agreement
inapplicable to Parent, Purchaser and their respective affiliates and
associates in connection with the transactions contemplated by the Merger
Agreement and the Stockholder Agreements (as such terms are defined in the
Offer to Purchase).
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 23, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
March 23, 1999 (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints R. Logan Wray and Don J. McDermett, Jr. in their respective
capacities as officers of Purchaser, and any individual who shall thereafter
succeed to any such office of Purchaser, and each of them, as the attorneys-
in-fact and proxies of the undersigned, each with full power of substitution
and resubstitution, to vote at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, all of the Shares (and any
and all Distributions) tendered hereby and accepted for payment by Purchaser.
This appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with
3
<PAGE>
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if
given, will not be deemed effective). Purchaser reserves the right to require
that, in order for Shares (or other Distributions) to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at
any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price, the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase this tender is
irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the Merger Agreement, the
price to be paid to the undersigned will be the amended price notwithstanding
the fact that a different price is stated in this Letter of Transmittal. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
4
<PAGE>
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
Number of Shares represented by lost, destroyed or stolen certificates: _______
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the To be completed ONLY if certifi-
check for the purchase price of cates for Shares not tendered or
Shares accepted for payment is to not accepted for payment and/or
be issued in name of someone the check for the purchase price
other than the undersigned, if of Shares accepted for payment is
certificates for Shares not ten- to be sent to someone other than
dered or not accepted for payment the undersigned or to the under-
are to be issued in the name of signed at an address other than
someone other than the under- that shown under "Description of
signed or if Shares tendered Shares Tendered."
hereby and delivered by book-en-
try transfer that are not ac- Mail check and/or Share certifi-
cepted for payment are to be re- cates to:
turned by credit to an account
maintained at a Book-Entry Trans- Name _____________________________
fer Facility other than the ac- (Please Print)
count indicated above.
Address __________________________
Issue check and/or Share certifi-
cate(s) to: __________________________________
(Include Zip Code)
Name _____________________________
(Please Print) __________________________________
(Taxpayer Identification or
Address __________________________ Social Security Number)
(See Substitute Form W-9)
__________________________________
(Include Zip Code)
__________________________________
(Taxpayer Identification or
Social Security Number)
(See Substitute Form W-9)
Credit Shares delivered by book-
entry transfer and not purchased
to the Book-Entry Transfer Facil-
ity account:
__________________________________
(Account Number)
5
<PAGE>
SIGN HERE
(Also Complete Substitute Form W-9 Below)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
Dated: ______________ , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s) ____________________________________________________________________
----------------------------------------------------------------------------
(Please Print)
Name of Firm _______________________________________________________________
Capacity (full title) ______________________________________________________
(see Instruction 5)
Address ____________________________________________________________________
----------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number _____________________________________________
Taxpayer Identification or Social Security Number __________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature _______________________________________________________
Name(s) ____________________________________________________________________
----------------------------------------------------------------------------
(Please Print)
Title ______________________________________________________________________
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
----------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number _____________________________________________
6
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction 1, includes
any participant in any of the Book-Entry Transfer Facility's systems whose
name appears on a security position listing as the owner of the Shares) of
Shares tendered herewith, unless such registered holder(s) has completed
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (b) if such
Shares are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is
a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of
the Company either if Share certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made by
book-entry transfer pursuant to the procedures set forth herein and in Section
3 of the Offer to Purchase. For a stockholder to validly tender Shares
pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees or an Agent's Message (in connection with book-entry
transfer) and any other required documents, must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date and
either (i) certificates for tendered Shares must be received by the Depositary
at one of such addresses prior to the Expiration Date or (ii) Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must
be received by the Depositary prior to the Expiration Date or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the NASDAQ National Market is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
7
<PAGE>
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such Share
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of,
and/or Share certificates for Shares not accepted for payment or not tendered
are to be issued in the name of and/or returned to, a person other than the
signer of this Letter of Transmittal or if a check is to be sent, and/or such
certificates are to be returned, to a person other than the signer of this
Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Shares by book-entry transfer may request that
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
"Special Payment Instructions." If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-
Entry Transfer Facility designated above as the account from which such Shares
were delivered.
8
<PAGE>
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone numbers set forth
below, or from brokers, dealers, commercial banks or trust companies.
9. Waiver of Conditions. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time
to time, any of the specified conditions of the Offer (other than the Minimum
Condition), in whole or in part, in the case of any Shares tendered.
10. Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify,
under penalties of perjury, that such TIN is correct and that such stockholder
is not subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. Lost, Destroyed or Stolen Share Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary by checking the box immediately preceding the
special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct taxpayer identification number on Substitute Form
W-9 below. If such stockholder is an individual, the taxpayer identification
number is his or her social security number. If a tendering stockholder is
subject to backup withholding, such stockholder must cross out item (2) of the
Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct taxpayer identification number, the stockholder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations, and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
What Number to Give the Depositary
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
such stockholder should write "Applied For" in the space provided for in the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
until a TIN is provided to the Depositary.
10
<PAGE>
PAYOR'S NAME: BANKBOSTON, N.A.
- -------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND ----------------------
Form W-9 CERTIFY BY SIGNING AND Social Security
DATING BELOW. Number(If awaiting TIN
Department of the write""Applied For")
Treasury Internal OR
Revenue Service ----------------------
Employer Identification
Number(If awaiting TIN
write "Applied For")
Payer's Request for
Taxpayer
Identification
Number ("TIN")
--------------------------------------------------------
Part 2--Certificate--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued for me), and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup -
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has no-
tified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS- You must cross out item (2)
above if you have been notified by the IRS that you
are currently subject to backup witholding because of
under reporting interest or dividends on your tax
returns. However, if after being notified by the IRS
that you are subject to backup withholding, you receive
another notification from the IRS that you are no longer
subject to backup withholding, do not cross out such
item (2). (Also see instructions in the enclosed
Guidelines).
--------------------------------------------------------
SIGNATURE: _____________ DATE: _____ , Part 3--
1999 Awaiting
TIN [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the
Depositary by the time of payment, 31% of all reportable payments made to
me thereafter will be withheld, but that such amounts will be refunded to
me if I provide a certified Taxpayer Identification Number to the
Depositary within sixty (60) days.
Signature ___________________________________ Date ________________ , 1999
11
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone numbers set
forth below:
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, NY 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
ALL OTHERS CALL TOLL FREE (800) 223-2064
12
<PAGE>
EXHIBIT (A)(3)
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Interlink Computer Sciences, Inc.
to
Sterling Software (Southwest), Inc.
an indirect wholly owned subsidiary of
Sterling Software, Inc.
(Not to Be Used for Signature Guarantees)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of Common Stock, par value $.001 per share (the "Common
Stock"), including the associated preferred share purchase rights (the
"Rights" and, together with the Common Stock, the "Shares"), of Interlink
Computer Sciences, Inc., a Delaware corporation, are not immediately
available, if the procedure for book-entry transfer cannot be completed prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or
if time will not permit all required documents to reach the Depositary prior
to the Expiration Date. Such form may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary. See Section 3 of the Offer
to Purchase.
The Depositary for the Offer is:
BANKBOSTON, N.A.
By Hand:
Securities Transfer & Reporting
Services, Inc.
c/o Boston EquiServe L.P.
100 William Street, Galleria
New York, NY 10038
By Mail: Facsimile Transmission: By Overnight, Certified
BankBoston, N.A. (781) 575-2233 or Express Mail Delivery:
Attention: (781) 575-2232 BankBoston, N.A.
Corporate Actions (For Eligible Attention:
P.O. Box 8029 Institutions Only) Corporate Actions
Boston, MA 02266-8029 Confirm Facsimile by Telephone: 150 Royall Street
(781) 575-3120 Canton, MA 02021
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via facsimile number other
than as set forth above will not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Sterling Software (Southwest), Inc., a
Delaware corporation and an indirect wholly owned subsidiary of Sterling
Software, Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated March 30, 1999 and
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, constitute the "Offer"), receipt of which is hereby
acknowledged, the number of shares set forth below of common stock, par value
$.001 per share (the "Common Stock"), including the associated preferred share
purchase rights (the "Rights" and, together with the Common Stock, the
"Shares"), of Interlink Computer Sciences, Inc., a Delaware corporation,
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
Number of Shares: ________________ Name(s) of Record Holder(s):
Certificate Nos. (if available): __________________________________
__________________________________ __________________________________
Please Print
__________________________________
Address(es): _____________________
Check box if Shares will be ten-
dered by book-entry transfer: [_]
__________________________________
Account Number: __________________ __________________________________
Zip Code
Dated: _____________________, 1999
Area Code and Tel. No.:
__________________________________
__________________________________
Signature(s): ____________________
__________________________________
GUARANTEE
(Not to Be Used for Signature Guarantees)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program, guarantees to deliver to the
Depositary either certificates representing the Shares tendered hereby, in
proper form for transfer, or confirmation of book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, in
each case with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message (as defined in the Offer to Purchase), and any other
documents required by the Letter of Transmittal, within three trading days
(as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown
herein. Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: ______________________ _____________________________________
Authorized Signature
Address: ___________________________ _____________________________________
Please Print
____________________________________ _____________________________________
Zip Code
Area Code and Tel. No.: ____________ Dated: ________________________, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT (A)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Interlink Computer Sciences, Inc.
at
$7.00 Net per Share
by
Sterling Software (Southwest), Inc.
an indirect wholly owned subsidiary of
Sterling Software, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED.
March 30, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by Sterling Software (Southwest), Inc., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Sterling
Software, Inc., a Delaware corporation ("Parent"), to act as Information Agent
in connection with Purchaser's offer to purchase all outstanding shares of
common stock, par value $.001 per share (the "Common Stock"), including the
associated preferred share purchase rights (the "Rights" and, together with
the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a
Delaware corporation (the "Company"), at $7.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated March 30, 1999 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer") enclosed herewith. Please furnish copies of
the enclosed materials to those of your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the
Offer to Purchase) that number of Shares which, when added to the Shares
beneficially owned by Parent, Purchaser or any subsidiary of Parent,
represents at least a majority of the Shares outstanding (on a fully diluted
basis) on the date Shares are accepted for payment. The Offer is also subject
to other conditions set forth in the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase dated March 30, 1999;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date (as defined in the Offer to
Purchase);
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. A letter to stockholders of the Company from Augustus J. Berkeley,
Chief Executive Officer and Chairman of the Board of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 dated March
30, 1999, which has been filed by the Company with the Securities and
Exchange Commission;
<PAGE>
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to BankBoston, N.A. (the "Depositary").
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to
the Offer. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) certificates
for such Shares, or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, pursuant
to the procedures described in Section 3 of the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or a properly
completed and manually signed facsimile thereof) or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) all other documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Information Agent and the Depositary as described
in the Offer to Purchase) for soliciting tenders of Shares pursuant to the
Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of
the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent at its address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
Georgeson & Company Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE
DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT (A)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Interlink Computer Sciences, Inc.
at
$7.00 Net per Share
by
Sterling Software (Southwest), Inc.
an indirect wholly owned subsidiary of
Sterling Software, Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED.
March 30, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated March 30,
1999 and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer") in
connection with the offer by Sterling Software (Southwest), Inc., a Delaware
corporation ("Purchaser"), and an indirect wholly owned subsidiary of Sterling
Software, Inc., a Delaware corporation ("Parent"), to purchase for cash all
outstanding shares of common stock, par value $.001 per share (the "Common
Stock"), including the associated preferred share purchase rights (the
"Rights" and, together with the Common Stock, the "Shares"), of Interlink
Computer Sciences, Inc., a Delaware corporation (the "Company"). We are the
holder of record of Shares held for your account. A tender of such Shares can
be made only by us as the holder of record and pursuant to your instructions.
The enclosed Letter of Transmittal is furnished to you for your information
only and cannot be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $7.00 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (as defined in the
Offer to Purchase), and has unanimously determined that the Offer and the
Merger are fair to, and in the best interests of, the Company's
stockholders and unanimously recommends that stockholders accept the Offer
and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, April 26, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the
Offer to Purchase) that number of Shares which, when added to the Shares
beneficially owned by Parent, Purchaser or any other subsidiary of Parent
(if any), represents at least a majority of the Shares outstanding (on a
fully diluted basis) on the date Shares are accepted for payment. The Offer
is also subject to other conditions set forth in the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in sufficient time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
INTERLINK COMPUTER SCIENCES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated March 30, 1999 and the related Letter of Transmittal in
connection with the Offer by Sterling Software (Southwest), Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Sterling Software,
Inc., a Delaware corporation, to purchase all outstanding shares of common
stock, par value $.001 per share (the "Common Stock"), including the
associated preferred share purchase rights (the "Rights" and together with the
Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a Delaware
corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:* Shares
Dated: , 1999
_____________________________________
_____________________________________
Signature(s)
____________________________________,
Print Name(s)
____________________________________,
____________________________________,
Address(es)
____________________________________,
Area Code and Telephone Number
____________________________________,
Tax ID or Social Security Number
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT (A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen, i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
Give the
SOCIAL SECURITY
For this type of account: number of--
- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
IDENTIFICATION
For this type of account: number of--
- ----------------------------------------------
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- --------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
number or employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for Social Security Number Card or Form SS-4,
Application for Employer Identification Number at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(A) or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
properly include any portion of an includible payment for interest, dividends,
or patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) Civil Penalty for False Information with Respect To Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (A)(7)
[LOGO OF STERLING SOFTWARE APPEARS HERE]
NEWS RELEASE
- --------------------------------------------------------------------------------
STERLING SOFTWARE TO ACQUIRE
INTERLINK COMPUTER SCIENCES
DALLAS, TX and FREMONT, CA, March 24, 1999 - Sterling Software, Inc. (SSW-
NYSE), one of the 20 largest independent software companies in the world, today
announced that it had entered into a definitive agreement to acquire Interlink
Computer Sciences, Inc. (INLK-NASDAQ), a leading supplier of high-performance
solutions for enterprise systems networking, headquartered in Fremont,
California. The transaction is valued at approximately $64 million (net of
exercise proceeds from outstanding options and warrants) and will be structured
as a $7.00 per share first-step cash tender offer, followed by a second-step
merger at the same price per share. The companies anticipate closing the
acquisition in late April or early May 1999 and at that time combining
Interlink's business with Sterling Software's worldwide network management
business.
Interlink's software solutions allow enterprise servers to inter-operate
with TCP/IP networks and enable customers to provide secure, managed access to
their enterprise applications and data over public and private connections.
These offerings are in direct support of growing customer requirements to allow
internal and external access to their enterprise servers, where most enterprise-
scale applications continue to reside, for e-commerce and other network-centric
business strategies.
"This acquisition brings us tremendous opportunities to strengthen our
strategic position in the marketplace and capitalize on the explosive growth of
the Internet as a cost-effective, open network for enterprise computing," said
Sterling L. Williams, president and chief executive officer of Sterling
Software. "With the addition of Interlink's network management technology, we
will be able to extend our lead in OS/390 TCP/IP management and enhance our
ability to manage specific applications running on TCP/IP networks. This
acquisition also gives us a significant customer base and an excellent
opportunity to leverage our SOLVE family of network management products."
<PAGE>
Mr. Williams noted that, when completed, this will be Sterling Software's
33rd acquisition -- and the second systems management acquisition announced
in less than three weeks. Earlier this month, the company announced it was
acquiring the storage management software business of Spectra Logic Corporation.
He added the acquisition of Interlink would be accretive to earnings per share.
A.J. Berkeley, president and chief executive officer of Interlink, said:
"Interlink's software solutions are a perfect fit with Sterling Software's
network management products. Sterling Software will be able to broaden its
TCP/IP network management solutions, and Interlink's products will now reach the
very large corporations that need the performance and reliability that our
products provide. With our common heritage and focus, I think this union will
produce one of the best network management teams in the world. I am excited for
our customers and employees."
Under the merger agreement, Sterling Software will commence a first-step
tender offer to purchase all outstanding shares of Interlink for $7.00 per share
in cash. Following completion of the tender offer, Interlink would be merged
with a wholly-owned subsidiary of Sterling Software and the remaining Interlink
shares would be converted into the right to receive $7.00 per share. The tender
offer and merger were unanimously approved by Interlink's Board of Directors.
The tender offer is scheduled to commence on or prior to March 30, 1999.
In connection with the merger agreement, Sterling Software has entered into
Stockholder Agreements with certain major stockholders of Interlink owning an
aggregate of approximately 19.7% of Interlink's shares, calculated on a fully-
diluted basis, under which such stockholders have, among other things, granted
Sterling Software an option to purchase their shares at a price of $7.00 per
share.
The tender offer will be conditioned, among other things, on the valid
tender of Interlink shares which, together with shares subject to the
Stockholder Agreements or owned by Sterling Software, represent a majority of
Interlink's outstanding shares on a fully diluted basis, and the expiration or
termination of the Hart-Scott-Rodino Act's waiting period.
Interlink Computer Sciences, Inc. is an international supplier of solutions
that enable its customers to securely manage and control their business
environments over intranets and public
<PAGE>
networks. The company's products and services focus on TCP/IP-centric operations
in the data center that enable customers to securely use their IBM and IBM-
compatible OS/390 mainframes as "enterprise servers" in distributed,
heterogeneous client/server network environments. For the fiscal year ended June
30, 1998, Interlink reported revenues of $29 million. For more information, you
can visit the company's Web site at www.interlink.com.
Sterling Software is a leading provider of software and services for the
application development, information management, systems management and federal
systems markets. The company is ranked among Business Week's 1998 "Info Tech
100" as one of the world's best performing information technology companies.
Headquartered in Dallas, Sterling Software has a worldwide installed base of
more than 20,000 customer sites and 3,600 employees in 90 offices worldwide. For
more information on Sterling Software, visit the company's Web site at
www.sterling.com.
This news release contains certain forward-looking statements that reflect
the current views and expectations of Sterling Software and Interlink with
respect to future events. Such statements are subject to a number of risks,
uncertainties and assumptions, including those mentioned in the two companies'
periodic reports filed with the Securities and Exchange Commission. Actual
results may vary significantly.
CONTACTS:
Julie Kupp A.J. Berkeley Cindy Foor
VP, Investor Relations President & CEO Director, Corporate
Communications
Sterling Software, Inc. Interlink Computer
Sciences, Inc. Sterling Software, Inc.
(214) 981-1000 (510) 657-9800 (214) 981-1000
[email protected] [email protected] [email protected]
<PAGE>
EXHIBIT (A)(8)
[LOGO] STERLING
SOFTWARE
NEWS RELEASE
- -------------------------------------------------------------------------------
STERLING SOFTWARE COMMENCES PREVIOUSLY ANNOUNCED
CASH TENDER OFFER
FOR INTERLINK COMPUTER SCIENCES
AT $7 PER SHARE
Dallas, TX, March 30, 1999 - Sterling Software, Inc. (SSW-NYSE) announced
today that Sterling Software (Southwest), Inc., its indirect wholly owned
subsidiary, has commenced a cash tender offer for all outstanding shares of
common stock of Interlink Computer Sciences, Inc. (INLK-NASDAQ) at $7.00 per
share. The offer is being made pursuant to the previously announced Merger
Agreement between Sterling Software and Interlink.
The offer is conditioned upon, among other things, the valid tender of a
number of Interlink shares which, together with the shares beneficially owned by
Sterling Software, represent a majority of Interlink's outstanding shares on a
fully diluted basis, and the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act. The offer and
withdrawal rights are scheduled to expire at midnight on Monday, April 26, 1999.
Georgeson & Company Inc. is acting as the Information Agent for the offer.
Sterling Software is a leading provider of software and services for the
application development, information management, systems management and federal
systems markets. The company is ranked among Business Week's 1998 "Info Tech
100" as one of the world's best performing information technology companies.
Headquartered in Dallas, Sterling Software has a worldwide installed base of
more than 20,000 customer sites and 3,600 employees in 90 offices worldwide.
For more information on Sterling Software, visit the company's Web site at
www.sterling.com.
Contact:
Julie Kupp
VP, Investor Relations
Sterling Software, Inc.
(214) 981-1000
[email protected]
1
<PAGE>
EXHIBIT (A)(9)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated March
30, 1999 and the related Letter of Transmittal, and is being made to all holders
of Shares. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statue prohibiting the
making of the Offer or the acceptance of the Shares pursuant thereto. Purchaser
shall make a good faith effort to comply with such statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) holders of Shares in such
state.
Notice of Offer to Purchase for Cash All of the
Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Interlink Computer Sciences, Inc. at
$7.00 Net Per Share by
Sterling Software (Southwest), Inc.
an indirect wholly owned subsidiary of
Sterling Software, Inc.
Sterling Software (Southwest), Inc., a Delaware corporation ("Purchaser")
and an indirect wholly owned subsidiary of Sterling Software, Inc., a Delaware
corporation ("Parent"), is offering to purchase all of the outstanding shares of
common stock, par value $.001 per share (the "Common Stock"), including the
associated preferred share purchase rights issued pursuant to the Rights
Agreement (as defined in the Offer to Purchase) (the "Rights" and, together with
the Common Stock, the "Shares"), of Interlink Computer Sciences, Inc., a
Delaware corporation (the "Company"), at a price of $7.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated March 30, 1999 (the "Offer
to Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:000 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 26, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined below) that
number of Shares which, together with the Shares beneficially owned by Parent
and Purchaser, constitutes at least a majority of the Shares outstanding on a
fully diluted basis and (ii) the expiration or termination of any applicable
waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. The Offer is not subject to a financing
condition. See Section 14 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 23, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides that, following the completion
of the Offer and satisfaction or waiver, if permissible, of all conditions
contained in the Merger Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Purchaser will be merged
with and into the Company (the "Merger"). Following the consummation of the
Merger, the Company will continue as the surviving corporation and will be an
indirect wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each Share issued and outstanding immediately prior to
the Effective Time (other than Shares held by any subsidiary of the Company or
in the treasury of the Company, or by Parent, Purchaser or any other subsidiary
of Parent, which Shares will be cancelled, and other than Shares, if any, held
by stockholders who perfect their appraisal rights under the DGCL) will be
converted into the right to receive $7.00 in cash (or any higher price paid
pursuant to the Offer), without interest thereon.
The Board of Directors of the Company has unanimously determined that the
Offer and the Merger are fair to, and in the best interests of, the Company and
its stockholders, has unanimously approved each of the Merger Agreement, the
Offer and the Merger and unanimously recommends that stockholders accept the
Offer and tender their Shares pursuant to the Offer.
As a condition and inducement to Parent's entering into the Merger
Agreement and incurring the liabilities therein, certain stockholders of the
Company (each, a "Stockholder"), who together have voting power and dispositive
power with respect to an aggregate of 1,171,068 Shares and own options to
acquire 854,050 Shares, concurrently with the execution and delivery of the
Merger Agreement entered into separate Stockholder Agreements (the "Stockholder
Agreements"), dated as of March 23, 1999, with Parent and Purchaser. Pursuant
to the Stockholder Agreements, the Stockholders have agreed, among other things,
to grant Parent and Purchaser a proxy with respect to the voting of the Shares
subject to the Stockholder Agreements in favor of the Merger upon the terms and
subject to the conditions set forth therein. The Stockholders have also granted
to Parent an option to purchase the Shares subject to the Stockholder
Agreements, at an option price of $7.00 per Share (or any higher price offered
by Parent or any subsidiary of Parent to the stockholders of the Company
generally).
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase
of Shares by Purchaser pursuant to the Offer. Stockholders who hold their
Shares through a bank or broker should check with such institution as to whether
they charge any service fees. Purchaser will pay all fees and expenses of
BankBoston, N.A., which is acting as the Depositary (in such capacity, the
"Depositary") and Georgeson & Company Inc., which is acting as the Information
Agent (in such capacity, the "Information Agent"), incurred in connection with
the Offer and in accordance with the terms of the agreements entered into
between Purchaser and/or Parent and each such person.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of its acceptance for payment of such Shares. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tenant pursuant to the Offer
will be made by deposit of the purchase price therefor with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from Purchaser and transmitting payment to tendering stockholders. In
all cases, payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
Shares (or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase), and (iii) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any stockholder pursuant to
the Offer will be the highest per Share consideration paid to any other
stockholder pursuant to the Offer. Under no circumstances will interest be paid
on the purchase price to be paid by Purchaser for such Shares, regardless of any
extension of the Offer or any delay in making such payment.
The term "Expiration Date" shall mean 12:00 Midnight, New York City time,
on Monday, April 26, 1999, unless and until Purchaser (in accordance with the
terms of the Merger Agreement), shall have extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the applicable rules and regulations of the Securities and
Exchange Commission and to applicable law, Purchaser expressly reserves the
right, in its sole discretion (subject to the terms of the Merger Agreement), at
any time and from time to time, to extend for any reason the period of time
during which the Offer is open, including the occurrence of any of the events
specified in Section 14 of the Offer to Purchase, by giving oral or written
notice of such extension to the Depositary; provided, however, that Purchaser
cannot extend the Offer beyond July 31, 1999 without the consent of the Company.
Any such extension will be followed by a public announcement thereof by no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
Without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than by issuing a press
release to the Dow Jones News Service or otherwise as may be required by
applicable law.
Except as otherwise provided below, tenders of Shares made pursuant to the
Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment pursuant to the Offer, may also be withdrawn at any time after May 29,
1999, or such later time as may apply if the Offer is extended. For a
withdrawal to be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth in the Offer to Purchase. Any such notice of withdrawal
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates evidencing such Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered for the account of an Eligible Institution (as defined in the
Offer to Purchase), the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 of the Offer to Purchase at any time prior
to the Expiration Date. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by Purchase, in its
sole discretion, whose determination will be final and binding.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant documents will be mailed to record holders of Shares whose names appear
on the stockholder list, and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the Company's stockholder lists, or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent, at the address and telephone number set forth below,
and copies will be furnished promptly at Purchaser's expense. Neither Parent
nor Purchaser will pay any fees or commissions to any broker or dealer or other
person (other than the Information Agent and the Depositary) for soliciting
tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Bank and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
March 30, 1999
================================================================================
DRAFT F766-0326991303141-B-CITN.QXP Friday, March 26, 1999 4:42:12 PM
Citigate Albert Frank for
New York Times
<PAGE>
EXHIBIT (C)(1)
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
among
STERLING SOFTWARE, INC.
STERLING SOFTWARE (SOUTHWEST), INC.
and
INTERLINK COMPUTER SCIENCES, INC.
dated as of March 23, 1999
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I THE OFFER....................................................................... 2
Section 1.1 The Offer..................................................... 2
---------
Section 1.2 Offer Documents.................................................3
---------------
Section 1.3 Company Actions.................................................4
---------------
Section 1.4 Directors.......................................................6
---------
ARTICLE II THE MERGER........................................................................8
Section 2.1 The Merger......................................................8
----------
Section 2.2 Closing.........................................................8
-------
Section 2.3 Effective Time..................................................8
--------------
Section 2.4 Effects of the Merger...........................................9
---------------------
Section 2.5 Certificate of Incorporation; Bylaws............................9
------------------------------------
Section 2.6 Directors; Officers.............................................9
-------------------
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE
OF CERTIFICATES...................................................................9
Section 3.1 Effect on Capital Stock.........................................9
-----------------------
Section 3.2 Stock Options and Warrants.....................................11
--------------------------
Section 3.3 Payment for Shares.............................................11
------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................................13
Section 4.1 Representations and Warranties of Company......................13
-----------------------------------------
Section 4.2 Representations and Warranties of Parent and
--------------------------------------------
Purchaser......................................................33
---------
ARTICLE V CONDUCT OF BUSINESS OF COMPANY...................................................36
Section 5.1 Conduct of Business of Company.................................36
------------------------------
ARTICLE VI ADDITIONAL COVENANTS.............................................................40
Section 6.1 Company Stockholders Meeting; Preparation of
--------------------------------------------
the Proxy Statement; Short-Form Merger.........................40
--------------------------------------
Section 6.2 Access to Information; Confidentiality.........................41
--------------------------------------
Section 6.3 Commercially Reasonable Efforts................................41
-------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 6.4 Public Announcements...........................................42
--------------------
Section 6.5 No Solicitation; Acquisition Proposals.........................42
--------------------------------------
Section 6.6 Consents, Approvals and Filings................................45
-------------------------------
Section 6.7 Employee Benefit Matters.......................................45
------------------------
Section 6.8 Indemnification; Directors' and Officers' Insur-
------------------------------------------------
ance...........................................................46
----
ARTICLE VII CONDITIONS PRECEDENT.............................................................48
Section 7.1 Conditions to Each Party's Obligation to Effect
-----------------------------------------------
the Merger.....................................................48
----------
Section 7.2 Conditions to Parent's or Purchaser's Obligation
------------------------------------------------
to Effect the Merger...........................................49
--------------------
ARTICLE VIII TERMINATION......................................................................49
Section 8.1 Termination....................................................49
-----------
Section 8.2 Effect of Termination..........................................52
---------------------
ARTICLE IX GENERAL PROVISIONS...............................................................52
Section 9.1 Nonsurvival of Representations and Warranties..................52
---------------------------------------------
Section 9.2 Fees and Expenses..............................................52
-----------------
Section 9.3 Definitions....................................................53
-----------
Section 9.4 Amendment and Modification.....................................55
---------------------------
Section 9.5 Extension; Waiver..............................................55
-----------------
Section 9.6 Notices........................................................55
-------
Section 9.7 Interpretation.................................................56
--------------
Section 9.8 Entire Agreement; No Third-Party Beneficia-
-------------------------------------------
ries...........................................................56
----
Section 9.9 Governing Law..................................................57
-------------
Section 9.10 Assignment.....................................................57
----------
Section 9.11 Enforcement....................................................57
-----------
Section 9.12 Severability...................................................58
------------
Section 9.13 Counterparts...................................................58
------------
</TABLE>
EXHIBIT A - Conditions to the Offer
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of March 23, 1999 (this
"Agreement"), is made and entered into among Sterling Software, Inc., a Delaware
corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware
corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and
Interlink Computer Sciences, Inc., a Delaware corporation ("Company").
RECITALS:
A. The Executive Committee of the Board of Directors of Parent and the
respective Boards of Directors of Purchaser and Company have determined that it
would be advisable and in the best interests of their respective stockholders
for Parent to acquire Company by means of a merger of the Purchaser with and
into Company (the "Merger"), on the terms and subject to the conditions set
forth in this Agreement.
B. To effectuate the acquisition, Parent and Company each desire that
Parent cause Purchaser to commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.001 per share, of Company (the
"Shares") (including the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Preferred Shares Rights Agreement between
Company and BANKBOSTON, N.A., dated as of February 25, 1998 (the "Company Rights
Agreement")) on the terms and subject to the conditions set forth in this
Agreement and the Offer Documents (as defined in Section 1.2) and the Board of
Directors of Company has unanimously approved such tender offer and is
recommending (subject to the limitations contained herein) that Company's
stockholders accept the tender offer and tender their Shares pursuant thereto.
C. Concurrently with the execution and delivery of this Agreement and as
a condition to Parent's and Purchaser's willingness to enter into this
Agreement, Parent and Purchaser have entered into separate Stockholder
Agreements, dated as of the date hereof (the "Stockholder Agreements"), with
each of the Principal Stockholders (as defined in Section 9.3), pursuant to
which each Principal Stockholder has (x) agreed, among other things, to vote all
Shares owned by such Principal Stockholder in favor of the Merger and (y)
granted to Parent an option to purchase all Shares owned by such Principal
Stockholder.
<PAGE>
D. Parent, Purchaser and Company desire to make certain representations
and warranties and to enter into certain covenants in connection with the Offer
(as defined in Section 1.1) and the Merger and also to prescribe various
conditions to the consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and covenants contained in this Agreement, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that none of the events set forth in
---------
Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the public
announcement of the execution and delivery of this Agreement), Parent shall
cause Purchaser to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer to
purchase (the "Offer") all outstanding Shares at a price of $7.00 per share, net
to the seller in cash (as paid pursuant to the Offer, the "Offer
Consideration"). The obligation of Parent and Purchaser to commence the Offer,
to consummate the Offer and to accept for payment and to pay for Shares validly
tendered in the Offer and not withdrawn shall be subject only to those
conditions set forth in Exhibit A hereto.
(b) Without the prior written consent of Company, Purchaser shall
not (and Parent shall cause Purchaser not to) (i) decrease or change the form of
the Offer Consideration or decrease the number of Shares sought pursuant to the
Offer, (ii) impose additional conditions to the Offer, (iii) extend the
expiration date of the Offer beyond the initial expiration date of the Offer
(which shall be the 20th business day after commencement of the Offer), except
(A) as required by applicable law, (B) that if, immediately prior to the
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer constitute more than 75% and less than 90%
of the outstanding Shares, Purchaser may extend the Offer for one or more
periods not to exceed an aggregate of ten business days, notwithstanding that
all conditions to the Offer are satisfied as of such expiration date of the
Offer and (C) that if any condition to the Offer has not been satisfied or
waived, Purchaser may, in its sole discretion, extend the expiration date of the
Offer
2
<PAGE>
for one or more periods provided, that the expiration date of the Offer may not
be extended beyond July 31, 1999, (iv) waive the condition (the "Minimum
Condition") that there shall be validly tendered and not withdrawn prior to the
time the Offer expires a number of Shares which, when added to the number of
Shares which Parent, Purchaser or any other Subsidiary of Parent "beneficially
owns" (within the meaning of Rule 13d-3 under the Exchange Act), constitutes at
least a majority of the Shares outstanding on a fully-diluted basis on the date
of purchase ("on a fully-diluted basis" meaning, as of any date, the number of
Shares outstanding, together with the Shares which Company may be required to
issue pursuant to warrants, options or obligations outstanding at that date
under employee stock or similar benefit plans or otherwise whether or not vested
or then exercisable), or (v) amend any term or other condition of the Offer in
any manner materially adverse to holders of Shares; provided, however, that,
except as set forth above and subject to applicable legal requirements,
Purchaser may waive any condition to the Offer other than the Minimum Condition
in its sole discretion; and provided further that the Offer may be extended in
connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the United States
Securities and Exchange Commission (the "SEC"). Purchaser shall, on the terms
and subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment, and pay for, in accordance with the terms and subject to the
conditions of the Offer, all Shares validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after the expiration date thereof.
Notwithstanding the foregoing, if all the conditions to the Offer have not been
satisfied or waived at the initial expiration date of the Offer and all such
conditions are reasonably capable of being satisfied within the applicable
period set forth below, the Purchaser shall (i) extend the Offer for 10 business
days from the initial expiration date of the Offer or (ii) extend the Offer for
20 business days from the initial expiration date of the Offer if the condition
contained in Section 7.1(d) hereof has not been satisfied and is reasonably
capable of being satisfied.
Section 1.2 Offer Documents. (a) On the date of commencement of the Offer,
---------------
Parent and Purchaser shall file or cause to be filed with the SEC a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer
which shall contain the offer to purchase and related letter of transmittal and
other ancillary Offer documents and instruments pursuant to which the Offer will
be made (collectively, and with any supplements or amendments thereto, the
"Offer Documents"). Company will promptly supply to Parent and Purchaser in
writing, for inclusion in the Offer Documents, all information concerning
Company required
3
<PAGE>
under the Exchange Act and the rules and regulations thereunder to be included
in the Offer Documents.
(b) The Offer Documents will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed with
the SEC and on the date first published, sent or given to Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information supplied by Company in writing for
inclusion in the Offer Documents. Each of Parent and the Purchaser further
agrees to take all steps necessary to cause the Offer Documents to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Each of Parent, Purchaser
and Company shall promptly correct any information provided by them for use in
the Offer Documents if and to the extent that such information shall be or have
become false or misleading in any material respect, and Parent and Purchaser
shall take all lawful action necessary to cause the Offer Documents as so
corrected to be filed promptly with the SEC and to be disseminated to holders of
Shares as and to the extent required by applicable law. Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents and any amendments thereto prior to the filing thereof with the SEC.
Parent and Purchaser agree to provide the Company and its counsel any comments
Parent, Purchaser or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Purchaser on a
timely basis the funds necessary to accept for payment and pay for any Shares
that the Purchaser becomes obligated to accept for payment and pay for pursuant
to the Offer.
Section 1.3 Company Actions. (a) Company hereby approves of and consents
---------------
to the Offer and represents and warrants that (i) its Board of Directors (at a
meeting duly called and held) has (A) unanimously determined that each of this
Agreement, the Stockholder Agreements, the Offer and the Merger are fair to and
in the best interests of Company and its stockholders, (B) unanimously approved
this Agreement, the Stockholder Agreements and the transactions contemplated
hereby, including the Offer and the Merger, and such approval is sufficient to
render Section 203 of the Delaware General Corporation Law (the "DGCL")
inapplicable to this
4
<PAGE>
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, and (C) resolved (subject to the limitations herein contained) to
recommend acceptance of the Offer and adoption of this Agreement by the holders
of Shares, and (ii) Hambrecht & Quist has delivered to the Board of Directors of
Company its opinion that the Offer Consideration to be received by the holders
of Shares in the Offer is fair, from a financial point of view, to such holders.
(b) Company shall file with the SEC, simultaneously with the filing
by Parent and Purchaser of the Schedule 14D-1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any supplements or amendments
thereto, the "Schedule 14D-9") containing, subject to the terms of Section 6.5,
such recommendations of the Board of Directors of Company in favor of the Offer
and the adoption of this Agreement. Each of Parent and Purchaser will promptly
supply to Company in writing, for inclusion in the Schedule 14D-9, all
information concerning Parent's Designees (as such term is defined in Section
1.4 hereof), as required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder, and Company shall include such information in the Schedule 14D-9.
Parent will promptly supply to the Company in writing, for inclusion in the
Schedule 14D-9, any information concerning Parent or Purchaser required under
the Exchange Act and the rules and regulations thereunder to be included in the
Schedule 14D-9. The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to Company's shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Company with respect to
information supplied by Parent or the Purchaser in writing for inclusion in the
Schedule 14D-9. Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Company, Parent and Purchaser shall promptly correct
any information provided by them for use in the Schedule 14D-9 if and to the
extent that such information shall be or have become false or misleading in any
material respect and Company shall take all lawful action necessary to cause the
Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Shares as and to the extent required by
applicable law. Parent, Purchaser and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 and any amendments
thereto prior to the filing thereof with the SEC. Company agrees to provide the
Parent and its counsel any comments Company or its counsel receive
5
<PAGE>
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
receipt of such comments.
(c) In connection with the Offer, Company shall promptly furnish
Parent and Purchaser with mailing labels, security position listings and all
available listings or computer files containing the names and addresses of the
record holders of Shares as of the latest practicable date and shall furnish
Parent and Purchaser with such information and assistance (including updated
lists of stockholders, mailing labels and lists of security positions) as Parent
and Purchaser or their agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent and Purchaser shall, and shall use commercially reasonable
efforts to cause each of their affiliates, associates, partners, employees,
agents and advisors to, hold in confidence the information contained in such
labels, lists and files, and all other information delivered pursuant to this
Section 1.3(c), shall use such information only in connection with the Offer and
the Merger and, if this Agreement is terminated in accordance with its terms,
shall deliver promptly to Company all copies of such information (and any
copies, compilations or extracts thereof or based thereon) then in their
possession or under their control.
Section 1.4 Directors. (a) Promptly after (i) the purchase of and payment
---------
for any Shares by Purchaser or any of its affiliates pursuant to the Offer as a
result of which Purchaser and its affiliates own beneficially at least a
majority of then outstanding Shares and (ii) compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, whichever shall occur
later, Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on Company's Board of Directors as is equal to the
product of the total number of directors on such Board (after giving effect to
any increase in the size of such Board pursuant to this Section 1.4) multiplied
by the percentage that the number of Shares beneficially owned by Purchaser at
such time (including Shares so accepted for payment) bears to the total number
of Shares then outstanding. In furtherance thereof, Company shall, upon request
of Parent, use its best efforts promptly either to increase the size of its
Board of Directors or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be so
elected or appointed to Company's Board of Directors, and Company shall take all
actions available to Company to cause such designees of Parent to be so elected
or appointed. At such time, Company shall, if requested by
6
<PAGE>
Parent, also take all action necessary to cause persons designated by Parent to
constitute at least the same percentage (rounded up to the next whole number) as
is on Company's Board of Directors of (i) each committee of Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary (as
defined in Section 9.3) of Company and (iii) each committee (or similar body) of
each such board.
(b) Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.4(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 (or
including such information in the Schedule 14D-9 initially filed with the SEC
and distributed to the stockholders of Company) as is necessary to enable
Parent's designees to be elected to Company's Board of Directors. Parent or
Purchaser will supply to Company in writing and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of this Section 1.4 are in addition to and shall not limit any rights
which Purchaser, Parent or any of their affiliates may have as a holder or
beneficial owner of Shares as a matter of applicable law with respect to the
election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 1.4, the parties
hereto shall use their respective reasonable best efforts to ensure that at
least two of the members of the Board shall, at all times prior to the Effective
Time (as defined in Section 1.6 hereof) be, directors of the Company who were
directors of the Company on the date hereof (the "Continuing Directors"),
provided that, if the number of Continuing Directors shall be reduced below two
for any reason, the remaining Continuing Director may designate a person to fill
such vacancy who shall be deemed to be a Continuing Director for all purposes of
this Agreement, or if no Continuing Directors then remain, the other directors
of Company then in office shall designate two persons to fill such vacancies who
will not be officers or employees or affiliates of Company, Parent or either of
their subsidiaries and such persons shall be deemed to be Continuing Directors
for all purposes of this Agreement. From and after the time, if any, that
Parent's designees constitute a majority of Company's Board of Directors and
prior to the Effective Time, any amendment or modification of this Agreement,
any amendment to Company's Certificate of Incorporation or By-Laws inconsistent
with this Agreement, any termination of this Agreement by Company, any extension
of time for performance of any of the obligations of Parent or Purchaser
hereunder, any waiver of any condition to Company's obligations
7
<PAGE>
hereunder or any of Company's rights hereunder or other action by Company
hereunder may be effected only by the action of a majority of the Continuing
Directors of Company, which action shall be deemed to constitute the action of
any committee specifically designated by the Board of Directors of Company to
approve the actions contemplated hereby and the full Board of Directors of
Company; provided, that, if there shall be no Continuing Directors, such actions
-------- ----
may be effected by majority vote of the entire Board of Directors of Company.
ARTICLE II
THE MERGER
Section 2.1 The Merger. On the terms and subject to the conditions set
----------
forth in this Agreement, and in accordance with the DGCL, the Merger shall be
effected and the Purchaser shall be merged with and into Company at the
Effective Time. At the Effective Time, the separate existence of Purchaser shall
cease and Company shall continue as the surviving corporation (as such, the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware.
Section 2.2 Closing. Unless this Agreement shall have been terminated and
-------
the transactions contemplated hereby shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of all of the conditions
set forth in Article VII, the closing of the Merger (the "Closing") will take
place as soon as practicable, but in no event later than 10:00 a.m. on the tenth
business day (the "Closing Date") following satisfaction or waiver of all of the
conditions set forth in Article VII, other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions, at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York, 10022, unless another date, time
or place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. On the Closing Date (or on such other date as
--------------
Parent and Company may agree), the parties hereto shall file with the Secretary
of State of the State of Delaware (the "Delaware State Secretary") a certificate
of merger and any other appropriate documents, executed in accordance with the
relevant provisions of the DGCL, and shall make all other filings or recordings
required under the DGCL and other applicable law in connection with the Merger.
The Merger shall become effective upon the filing of the certificate of merger
with the Delaware State Secretary, or at such later time as is specified in the
certificate of
8
<PAGE>
merger (the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all property of
Company and Purchaser shall vest in the Surviving Corporation, and all
liabilities and obligations of Company and Purchaser shall become liabilities
and obligations of the Surviving Corporation.
Section 2.5 Certificate of Incorporation; Bylaws. At the Effective Time,
------------------------------------
(a) the certificate of incorporation of Company as in effect at the Effective
Time shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
in accordance with the provisions thereof and applicable law and (b) the bylaws
of Purchaser as in effect at the Effective Time shall, from and after the
Effective Time, be the bylaws of the Surviving Corporation until thereafter
changed or amended in accordance with the provisions thereof and applicable law.
Section 2.6 Directors; Officers. From and after the Effective Time, (a)
-------------------
the directors of Purchaser shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be, and (b) the
officers of Company shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of
-----------------------
the Merger and without any action on the part of any holder of Shares or any
other shares of capital stock of Company or Purchaser:
(a) Common Stock of Purchaser. Each share of common stock, par
-------------------------
value $0.01 per share, of Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued, fully
paid and
9
<PAGE>
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Shares and Parent-Owned Shares. Each
-------------------------------------------------------
Share issued and outstanding immediately prior to the Effective Time that is
owned by Company or any Subsidiary (as defined in Section 9.3) of Company or by
Parent, Purchaser or any other Subsidiary of Parent (other than shares in trust
accounts, managed accounts, custodial accounts and the like that are
beneficially owned by third parties) shall automatically be canceled and retired
and shall cease to exist, and no cash or other consideration shall be delivered
or deliverable in exchange therefor.
(c) Conversion of Shares. Each share of Company Common Stock
--------------------
(including the associated Rights) issued and outstanding immediately prior to
the Effective Time (other than Shares to be canceled and retired in accordance
with Section 3.1(b) and any Dissenting Shares (as defined in Section 3.1(d))
shall be converted into the right to receive the Offer Consideration, payable to
the holder thereof, without any interest thereon (the "Merger Consideration"),
less any required withholding taxes, upon surrender and exchange of a
Certificate (as defined in Section 3.3).
(d) Dissenting Shares. Notwithstanding anything in this Agreement to
-----------------
the contrary, Shares issued and outstanding immediately prior to the Effective
Time held by any person who has the right to demand, and who properly demands,
an appraisal of such Shares ("Dissenting Shares") in accordance with Section 262
of the DGCL (or any successor provision) shall not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect or
otherwise loses such holder's right to such appraisal, if any. If, after the
Effective Time, such holder fails to perfect or loses any such right to
appraisal, each such Share of such holder shall be treated as a Share that had
been converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 3.1(c). At the Effective Time, any
holder of Dissenting Shares shall cease to have any rights with respect thereto,
except the rights provided in Section 262 of the DGCL (or any successor
provision) and as provided in the immediately preceding sentence. Company shall
give prompt notice to Parent of any demands received by Company for appraisal of
Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands.
10
<PAGE>
Section 3.2 Stock Options and Warrants.
--------------------------
(a) The parties hereby agree that (i) neither Purchaser nor
Parent shall assume the outstanding options to purchase shares of Company Common
Stock (collectively, the "Options") under Company's 1992 Stock Option Plan and
1996 Director Stock Option Plan (collectively, the "Stock Option Plans") or
substitute an option to purchase Parent or Purchaser common stock in respect of
such Options, (ii) Options under the Stock Option Plans shall be accelerated and
otherwise treated in accordance with the terms of the applicable Stock Option
Plan document and the various agreements evidencing the Options and (iii)
Company shall take all such action as shall be necessary or appropriate to cause
all Options under the Stock Option Plans to expire no later than the Effective
Time.
(b) Parent and Purchaser shall not assume or continue any
outstanding warrants to purchase shares of Company Common Stock (the
"Warrants"). The parties hereto shall take all appropriate action to provide
that, in accordance with the respective terms of the Warrants, at or prior to
the Effective Time, each holder of an outstanding Warrant shall be entitled to
receive an amount in cash equal to the product of (i) the excess, if any, of the
Offer Consideration over the per share exercise price of such Warrant and (ii)
the number of shares subject to such Warrant.
Section 3.3 Payment for Shares.
------------------
(a) Payment Fund. Concurrently with the Effective Time,
------------
Parent shall deposit, or shall cause to be deposited, with or for the account of
a bank or trust company having net capital of not less than $100,000,000
designated by Parent, which shall be reasonably satisfactory to Company (the
"Paying Agent"), for the benefit of the holders of Shares, cash in an amount
sufficient to pay the aggregate Merger Consideration payable upon the conversion
of Shares pursuant to Section 3.1(c) (the "Payment Fund").
(b) Letters of Transmittal; Surrender of Certificates.
-------------------------------------------------
As soon as reasonably practicable after the Effective Time, Parent shall
instruct the Paying Agent to mail to each holder of record (other than Company
or any of its Subsidiaries or Parent, Purchaser or any other Subsidiary of
Parent) of a certificate or certificates that, immediately prior to the
Effective Time, evidenced outstanding Shares (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent, and shall be in such form
11
<PAGE>
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such instructions,
the holder of such Certificate shall be entitled to receive in exchange therefor
cash in an amount equal to the product of (i) the number of Shares theretofore
represented by such Certificate and (ii) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. No interest shall be
paid or accrued on any cash payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a person other
than the registered holder of the surrendered Certificate or established to the
satisfaction of Parent and the Surviving Corporation that such taxes have been
paid or are not applicable.
(c) Cancellation and Retirement of Shares; No Further Rights. As of
--------------------------------------------------------
the Effective Time, all Shares (other than Shares to be canceled in accordance
with Section 3.1(b)) issued and outstanding immediately prior to the Effective
Time shall cease to be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of any such Shares shall cease
to have any rights with respect thereto or arising therefrom (including without
limitation the right to vote), except the right to receive the Merger
Consideration, without interest, upon surrender of such Certificate in
accordance with Section 3.3(b), and until so surrendered, each such Certificate
shall represent for all purposes only the right to receive the Merger
Consideration, without interest. The Merger Consideration paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Section 3.3 shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates.
(d) Investment of Payment Fund. The Paying Agent shall invest the
---------------------------
Payment Fund, as directed by Parent, in (i) direct obligations of the United
States of America, (ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates
of deposit, bank repurchase agreements or bankers' acceptances of commercial
banks with capital exceeding
12
<PAGE>
$500 million. Any net earnings with respect to the Payment Fund shall be the
property of and paid over to Parent as and when requested by Parent.
(e) Termination of Payment Fund. Any portion of the Payment Fund
---------------------------
which remains undistributed to the holders of Certificates for 180 days after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Certificates that have not theretofore complied with this Section 3.3 shall
thereafter look only to Parent, and only as general creditors thereof, for
payment of their claim for any Merger Consideration.
(f) No Liability. None of Parent, Purchaser, the Surviving
------------
Corporation or the Paying Agent shall be liable to any person in respect of any
payments or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to five years after
the Effective Time (or immediately prior to such earlier date on which any
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as defined in Section
4.1(c)), any amounts payable in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(g) Withholding Rights. Parent shall be entitled to deduct and
------------------
withhold, or cause to be deducted or withheld, from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares, Options or
Certificates such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of
applicable state, local or foreign tax law. To the extent that amounts are so
deducted and withheld, such deducted and withheld amounts shall be treated for
all purposes of this Agreement as having been paid to such holders in respect of
which such deduction and withholding was made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Company. Except as set
-----------------------------------------
forth in the Disclosure Schedule, Company represents and warrants to Parent and
Purchaser that all of the statements contained in this Article IV are true and
correct as
13
<PAGE>
of the date of this Agreement (or, if made as of a specified date, as of such
date). Each exception set forth in the Disclosure Schedule and each other
response to this Agreement set forth in the Disclosure Schedule is identified by
reference to, or has been grouped under a heading referring to, a specific
individual Section of this Agreement and relates only to such Section, except to
the extent that one section of the Disclosure Schedule specifically refers to
another section thereof.
(a) Organization, Standing and Corporate Power. Each of Company and
------------------------------------------
each Subsidiary of Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Company and each Subsidiary of Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (as defined in Section 9.3) on Company. Company has delivered or
made available to Parent true, complete and correct copies of the certificate of
incorporation and bylaws or comparable governing documents of Company and each
material Subsidiary of Company, in each case as amended to the date of this
Agreement. Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1998 sets forth a true, correct and complete list of all
material Subsidiaries of Company. Except as set forth in Section 4.1(a) of the
Disclosure Schedule and except for directors' qualifying shares, all
Subsidiaries of the Company are wholly owned directly or indirectly by the
Company.
(b) Authority; Noncontravention. Company has the requisite corporate
---------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Company and the consummation by Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Company, subject, in the case of the Merger, to the adoption of this
Agreement by its stockholders as contemplated by Section 6.1(a). This Agreement
has been duly executed and delivered by Company and, assuming that this
Agreement constitutes a valid and binding obligation of Parent and Purchaser,
constitutes a valid and binding obligation of Company, enforceable against
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to
14
<PAGE>
general principles of equity. Except as specified in Section 4.1(b) of the
Disclosure Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby and compliance with
the provisions hereof will not, (i) conflict with any of the provisions of the
certificate of incorporation or bylaws of Company or the comparable governing
documents of any Subsidiary of Company, in each case as amended to the date of
this Agreement, (ii) subject to the governmental filings and other matters
referred to in Section 4.1(c), conflict with, result in a breach of or default
(with or without notice or lapse of time, or both) under, or give rise to a
material obligation, a right of termination, cancellation or acceleration of any
obligation or a loss of a material benefit under, or require the consent of any
person under, any indenture or other agreement, permit, concession, franchise,
license or similar instrument or undertaking to which Company or any of its
Subsidiaries is a party or by which Company or any of its Subsidiaries or any of
their respective assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in Section 4.1(c), contravene
any domestic or foreign law, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, in the
case of clauses (ii) and (iii) above could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company.
(c) Consents and Approvals. No consent, approval or authorization of,
----------------------
or declaration or filing with, or notice to, any domestic or foreign
governmental agency or regulatory authority (a "Governmental Entity"), which has
not been received or made is required by or with respect to Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Company or the consummation by Company of the transactions contemplated
hereby, except for (i) the filing of premerger notification and report forms
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9 and, if
required by applicable law, the Proxy Statement (as defined in Section 6.1(b)),
(B) such reports under the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby, (iii) the filing of the
certificate of merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which Company is
qualified to do business, and (iv) any other consents, approvals,
authorizations, filings or notices the failure to make or obtain which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company.
(d) Capital Structure. The authorized capital stock of Company
-----------------
15
<PAGE>
consists solely of (i) 20,000,000 Shares and (ii) 5,000,000 shares of preferred
stock, par value $.001 per share, ("Preferred Shares"). At the close of business
on March 22, 1999: (i) 8,308,107 Shares were issued and outstanding, (ii) no
Preferred Shares were issued and outstanding, (iii) 1,614,896 Shares were
reserved for issuance pursuant to outstanding Options granted under the Stock
Option Plans, (iv) 260,706 Shares were reserved for issuance upon exercise of
the Warrants, (v) no Shares were held by Company in its treasury, (vi) 100,000
shares of Series A Participating Preferred Stock were reserved for issuance
pursuant to the Company Rights Agreement and (vii) 600,000 Shares have been
reserved for issuance under the 1996 Employee Stock Purchase Plan, of which no
more than an additional 80,000 Shares will be issued prior to April 30, 1999.
Except as set forth in the immediately preceding sentence, at the close of
business on March 22, 1999, no shares of capital stock or other equity
securities of Company were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of Company are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as specified above or in Section 4.1(d) of the Disclosure Schedule,
neither Company nor any Subsidiary of Company has or is subject to or bound by
or, at or after the Effective Time will have or be subject to or bound by, any
outstanding option, warrant, call, subscription or other right (including any
preemptive right), agreement or commitment which (i) obligates Company or any
material Subsidiary of Company to issue, sell or transfer, or repurchase, redeem
or otherwise acquire, any shares of the capital stock of Company or any
Subsidiary of Company, (ii) restricts the transfer of any shares of capital
stock of Company or any of its Subsidiaries, or (iii) relates to the voting of
any shares of capital stock of Company or any of its Subsidiaries. No bonds,
debentures, notes or other indebtedness of Company or any Subsidiary of Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the stockholders of Company or
any Subsidiary of Company may vote are issued or outstanding. Section 4.1(d) of
the Disclosure Schedule accurately sets forth information as of the date hereof
regarding the exercise price, date of grant and number of granted Options for
each holder of Options pursuant to any Stock Option Plan. Except as specified in
Section 4.1(d) of the Disclosure Schedule, all of the outstanding shares of
capital stock of each Subsidiary of Company have been duly authorized, validly
issued, fully paid and nonassessable and are owned by Company, by one or more
Subsidiaries of Company or by Company and one or more such Subsidiaries, free
and clear of Liens (as defined in Section 9.3).
(e) SEC Documents. Company has filed all required reports, schedules,
-------------
forms, statements and other documents with the SEC since June 5, 1996
16
<PAGE>
(such reports, schedules, forms, statements and other documents being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents as of
such dates, contained any untrue statements of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may otherwise be indicated in the notes
thereto) and fairly present the consolidated financial position of Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end audit
adjustments).
(f) Absence of Certain Changes or Events; No Undisclosed Material
-------------------------------------------------------------
Liabilities.
- -----------
(i) Except as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed SEC Documents") or
specified in Section 4.1(f) of the Disclosure Schedule, since the date of the
most recent financial statements included in the Filed SEC Documents, Company
and its Subsidiaries have conducted their businesses only in the ordinary
course, and there has not been: (A) a Material Adverse Effect on Company; (B)
any declaration, setting aside or payment of any dividend or other distribution
in respect of shares of Company's capital stock, or any redemption or other
acquisition by Company of any shares of its capital stock; (C) any increase in
the rate or terms of compensation payable or to become payable by Company or its
Subsidiaries to their directors, officers or key employees, except increases
occurring in the ordinary course of business consistent with past practice; (D)
any entry into, or increase in the rate or terms of, or amendment or
modification to, any bonus, insurance, severance, pension or other employee or
retiree benefit plan, payment, agreement or arrangement made to, for or with any
such directors, officers or key employees, except increases occurring in the
ordinary course of business consistent with past practices or as
17
<PAGE>
required by applicable law; (E) any entry into any agreement, commitment or
transaction by Company or any of its material Subsidiaries which is material to
Company and its Subsidiaries taken as a whole, except for agreements,
commitments or transactions entered into in the ordinary course of business
consistent with past practice; (F) any change by Company in accounting methods,
principles or practices, except as required or permitted by generally accepted
accounting principles; (G) any write-off or write-down of, or any determination
to write-off or write-down, any asset of Company or any of its Subsidiaries or
any portion thereof which write-off, write-down or determination exceeds $75,000
individually or $250,000 in the aggregate; (H) any announcement or
implementation of any reduction in force, lay-off, early retirement program,
severance program or other program or effort concerning the termination of
employment of employees of Company or its Subsidiaries; or (I) any announcement
of or entry into any agreement, commitment or transaction by Company or any of
its Subsidiaries to do any of the things described in the preceding clauses (A)
through (H) otherwise than as expressly provided for herein.
(ii) Except as disclosed in the Filed SEC Documents or specified
in Section 4.1(f) of the Disclosure Schedule and liabilities incurred in the
ordinary course of business consistent with past practice since the date of the
most recent financial statements included in the Filed SEC Documents, there are
no liabilities of Company or its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, due, to become due, determined, determinable or
otherwise, having or which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Company.
(g) Certain Information. Subject to Parent's and Purchaser's
-------------------
fulfillment of their respective obligations with respect thereto, the Schedule
14D-9 and the Proxy Statement will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law and will conform in all material
respects with the requirements of the Exchange Act and any other applicable law,
and neither the Schedule 14D-9 nor the Proxy Statement will, at the respective
times they are filed with the SEC or published, sent or given to Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading; provided, however, that no representation or warranty is hereby
made by Company with respect to any information supplied by Parent or Purchaser
in writing for inclusion in, or with respect to Parent or Purchaser informa-
18
<PAGE>
tion derived from Parent's public SEC filings which is included or incorporated
by reference in, the Schedule 14D-9 or the Proxy Statement. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in, or which may be deemed to be incorporated by reference in, any
of the Offer Documents will, at the respective times the Offer Documents are
filed with the SEC or published, sent or given to Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event with respect to Company, or with
respect to any information supplied by Company for inclusion in any of the Offer
Documents, shall occur which is required to be described in an amendment of, or
a supplement to, any of the Offer Documents, Company shall so describe the event
to Parent.
(h) Real Property; Other Assets. (i) Section 4.1(h)(i) of the
---------------------------
Disclosure Schedule sets forth all of the real property owned in fee by Company
and its Subsidiaries (the "Owned Real Property").
(ii) Company or one of its Subsidiaries has good and
marketable title to each parcel of Owned Real Property and to each other asset
reflected in the latest balance sheet of Company included in the Filed SEC
Documents (other than any such other asset disposed of or consumed in the
ordinary course of business or as specified in Section 4.1(h)(ii) of the
Disclosure Schedule) free and clear of all Liens except (A) those reflected or
reserved against in the latest balance sheet of Company included in the Filed
SEC Documents, (B) taxes and general and special assessments not in default and
payable without penalty and interest, and (C) other Liens that individually or
in the aggregate would not have a Material Adverse Effect on Company.
(iii) Company has heretofore made available to Parent true,
correct and complete copies of all leases, subleases and other agreements
requiring annual payments of $50,000 or more (the "Real Property Leases"), under
which Company or any of its material Subsidiaries uses or occupies or has the
right to use or occupy, now or in the future, any real property or facility (the
"Leased Real Property"), including all modifications, amendments and supplements
thereto. Except in each case where the failure could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Company:
(A) Company or one of its Subsidiaries has a valid and subsisting leasehold
interest in each parcel of Leased Real Property free and clear of all Liens and
each Real
19
<PAGE>
Property Lease is in full force and effect, (B) all rent and other sums and
charges payable by Company or its Subsidiaries as tenants thereunder are current
in all material respects, (C) no termination event or condition or uncured
default of a material nature on the part of Company or any such Subsidiary or,
to Company's knowledge, the landlord, exists under any Real Property Lease, and
(D) Company or one of its Subsidiaries is the sole undisputed lessee of each
Leased Real Property, is in actual possession thereof and is entitled to quiet
enjoyment thereof in accordance with the terms of the applicable Real Property
Lease.
(i) Software.
--------
(i) Section 4.1(i)(i) of the Disclosure Schedule sets forth
under the caption "Owned Software" a true, correct and complete list of all
computer programs (source code or object code) owned by Company or any
Subsidiary of Company, including without limitation any computer programs in the
development or testing phase (collectively, the "Owned Software"), and Section
4.1(i)(i) of the Disclosure Schedule sets forth under the caption "Licensed
Software" a true, correct and complete list of all computer programs (source
code or object code) licensed to Company or any Subsidiary of Company by any
third party (other than any off-the-shelf computer program that is so licensed
under a shrink wrap license) (collectively, the "Licensed Software" and,
together with the Owned Software, the "Software").
(ii) Except as specified in Section 4.1(i)(ii) of the Disclosure
Schedule, Company, directly or through its Subsidiaries, has good, marketable
and exclusive title to, and the valid and enforceable power and unqualified
right to sell, license, lease, transfer, use or otherwise exploit, all versions
and releases of the Owned Software and all copyrights thereof, free and clear of
all Liens. Company, directly or through its Subsidiaries, is in actual
possession of the source code and object code for each computer program included
in the Owned Software, and Company, directly or through its Subsidiaries, is in
possession of all other documentation (including without limitation all related
engineering specifications, program flow charts, installation and user manuals)
and know-how required for the effective use of the Software as currently used in
Company's business or as offered or represented to Company's customers or
potential customers. Company, directly or through its Subsidiaries, is in actual
possession of the object code and user manuals for each computer program
included in the Licensed Software, and of the source code when applicable. The
Software constitutes all of the computer programs necessary to conduct Company's
business as now conducted, and includes all of the computer programs used in the
development, marketing, licensing, sale or support of the
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products and the services presently offered by Company. Except as specified in
Section 4.1(i)(ii) of the Disclosure Schedule, no person other than Company and
its Subsidiaries has any right or interest of any kind or nature in or with
respect to the Owned Software or any portion thereof or any rights to sell,
license, lease, transfer, use or otherwise exploit the Owned Software or any
portion thereof.
(iii) Section 4.1(i)(iii) of the Disclosure Schedule sets forth
a true, correct and complete list, by computer program, of (A) all persons other
than Company and its Subsidiaries that have been provided with the source code
or have a right to be provided with the source code (including any such right
that may arise after the occurrence of any specified event or circumstance,
either with or without the giving of notice or passage of time or both) for any
of the Owned Software, and (B) all source code escrow agreements relating to any
of the Owned Software (setting forth as to any such escrow agreement the source
code subject thereto and the names of the escrow agent and all other persons who
are actual or potential beneficiaries of such escrow agreement), and lists all
agreements and arrangements pursuant to which the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby would entitle any third party or parties to receive
possession of the source code for any of the Owned Software or any related
technical documentation. Except as specified in Section 4.1(i)(iii) of the
Disclosure Schedule, no person (other than Company and its Subsidiaries and any
person that is a party to a contract referred to in clause (v) of the first
sentence of Section 4.1(l) that restricts such person from disclosing any
information concerning such source code) is in possession of, or has or has had
access to, any source code for any computer program included in the Owned
Software.
(iv) There are no defects in any computer program included in
the Software that would adversely affect the functioning thereof in accordance
with any published specifications therefor or which would cause the Software to
fail to be Year 2000 compliant. Without limiting the generality of the
foregoing, all of the Software has the following properties and capabilities:
(A) the capability to correctly recognize and accurately process dates expressed
as a four-digit number (or the binary equivalent or other machine readable
iteration thereof) (collectively, the "Four-Digit Dates"); (B) the capability to
accurately execute calculations using Four-Digit Dates; (C) the functionality
(both on-line and batch), including entry, inquiry, maintenance and update, to
support processing involving Four-Digit Dates; (D) the capability to generate
interfaces and reports that support processing involving Four-Digit Dates; (E)
the capability to generate and successfully transition, without human
intervention, into the year 2000 using the correct system date and to thereafter
21
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continue processing with Four-Digit Dates; and (F) the capability to provide
correct results in forward and backward data calculations spanning century
boundaries, including the conversion of pre-2000 dates currently stored as two-
digit dates; provided, however, that no representation or warranty is made as to
the effect that defects in computer programs, hardware or systems provided by
third parties (or the inability of any such programs, hardware or systems, other
than those contemplated by the documentation for the Software to be used in
conjunction with the Software, to properly exchange date data with the Software)
may, when used in conjunction with the Software, have on the foregoing
capabilities. Each computer program included in the Software is in machine
readable form and contains all current revisions. Section 4.1(i)(iv) of the
Disclosure Schedule sets forth a true, correct and complete list of any current
developments or maintenance efforts with respect to the Owned Software,
including without limitation the development of new computer programs,
enhancements or revisions to existing computer programs included in the Owned
Software and software fixes in progress for any person to whom or to which
Company or a Subsidiary of Company has sold, licensed, leased, transferred or
otherwise furnished Software or related products or services.
(v) Except as specified in Section 4.1(i)(v) of the Disclosure
Schedule, none of the sale, license, lease, transfer, use, reproduction,
distribution, modification or other exploitation by Company, any Subsidiary of
Company or any of their respective successors or assigns of any version or
release of any computer program included in the Software obligates or will
obligate Company, any Subsidiary of Company or any of their respective
successors or assigns to pay any royalty, fee or other compensation to any other
person.
(vi) Neither Company nor any of its Subsidiaries markets, or
has marketed, and none of them has supported or is obligated to support, any
Licensed Software.
(vii) Except as specified in Section 4.1(i)(vii) of the
Disclosure Schedule, no agreement, license or other arrangement pertaining to
any of the Software (including without limitation any development, distribution,
marketing, user or maintenance agreement, license or arrangement) to which
Company or any Subsidiary of Company is a party will terminate or become
terminable by any party thereto as a result of the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
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(j) Intellectual Property.
---------------------
(i) Section 4.1(j)(i) of the Disclosure Schedule sets forth
a true, correct and complete list (including, to the extent applicable,
registration, application or file numbers) of all patents, trademarks, trade
names, service marks, domain names and registered copyrights and material non-
registered copyrights used by Company or any Subsidiary of Company which are
material to the conduct of Company's business, and all registrations of or
applications for registration of any of the foregoing, including any additions
thereto or extensions, continuations, renewals or divisions thereof (setting
forth the registration, issue or serial number and a description of the same)
(collectively, together with all trade dress, trade secrets, processes,
formulae, designs, know-how and other intellectual property rights that are so
used, the "Intellectual Property"). Parent has heretofore been furnished with
true, correct and complete copies of each registration or application for
registration covering any of the Intellectual Property which is registered with,
or in respect of which any application for registration has been filed with, any
Governmental Entity.
(ii) The Intellectual Property includes all of the
intellectual property rights owned or licensed by Company and its Subsidiaries
that are reasonably necessary to conduct Company's business as it is now
conducted or is expected to be conducted, and includes all of the intellectual
property rights owned by or licensed to Company and its Subsidiaries that are
used in the development, marketing, licensing or support of the Software.
Except as specified in Section 4.1(j)(ii) of the Disclosure Schedule, (A)
Company, directly or through its Subsidiaries, has good, marketable and
exclusive title to, and the valid and enforceable power and unqualified right to
use, the Intellectual Property free and clear of all Liens and (B) no person or
entity other than Company and its Subsidiaries has any right or interest of any
kind or nature in or with respect to the Intellectual Property or any portion
thereof or any rights to use, market or exploit the Intellectual Property or any
portion thereof.
(k) No Infringement. Except as specified in Section 4.1(k) of
---------------
the Disclosure Schedule, neither the existence nor the sale, license, lease,
transfer, use, reproduction, distribution, modification or other exploitation by
Company, any Subsidiary of Company or any of their respective successors or
assigns of any Software or Intellectual Property, as such Software or
Intellectual Property, as the case may be, is or was, or is currently
contemplated to be, sold, licensed, leased, transferred, used or otherwise
exploited by such persons, does, did or will (i) infringe on any patent,
trademark, copyright or other right of any other person, (ii) constitute
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a misuse or misappropriation of any trade secret, know-how, process, proprietary
information or other right of any other person, or (iii) entitle any other
person to any interest therein, or right to compensation from Company, any
Subsidiary of Company or any of their respective successors or assigns, by
reason thereof (it being understood and agreed that, insofar as the foregoing
representation and warranty relates to Software and Intellectual Property that
is licensed to Company or any Subsidiary of Company by any third party, such
representation and warranty is made only to Company's knowledge). Except as
specified in Section 4.1(k) of the Disclosure Schedule, neither Company nor any
of its Subsidiaries has received any complaint, assertion, threat or allegation
or otherwise has notice of any lawsuit, claim, demand, proceeding or
investigation involving matters of the type contemplated by the immediately
preceding sentence or is aware of any facts or circumstances that could
reasonably be expected to give rise to any such lawsuit, claim, demand,
proceeding or investigation. Except as specified in Section 4.1(k) of the
Disclosure Schedule, there are no restrictions on the ability of Company, any
Subsidiary of Company or any of their respective successors or assigns to sell,
license, lease, transfer, use, reproduce, distribute, modify or otherwise
exploit any Software or Intellectual Property.
(l) Material Contracts. There have been made available to Parent
------------------
and its representatives true, correct and complete copies of all of the
following contracts to which Company or any of its Subsidiaries is a party or by
which any of them is bound (collectively, the "Material Contracts"): (i)
contracts with any current officer or director of Company; (ii) contracts
involving an initial fee of $100,000 or more pursuant to which Company or any of
its Subsidiaries licenses other persons to use the Software and pursuant to
which other persons license Company or any of its Subsidiaries to use the
Licensed Software; (iii) contracts (A) for the sale of any of the assets of
Company or any of its Subsidiaries, other than contracts entered into in the
ordinary course of business or (B) for the grant to any person of any
preferential rights to purchase any of its assets; (iv) contracts which restrict
Company or any of its Subsidiaries from competing in any line of business or
with any person in any geographical area or which restrict any other person from
competing with Company or any of its Subsidiaries in any line of business or in
any geographical area; (v) contracts which are material to Company and which
restrict Company or any of its Subsidiaries from disclosing any information
concerning or obtained from any other person or which restrict any other person
from disclosing any information concerning or obtained from Company or any of
its Subsidiaries; (vi) contracts with any stockholders of Company; (vii)
acquisition, merger, asset purchase or sale agreements involving aggregate
consideration of $500,000 or more; (viii) agreements, arrange-
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ments, transactions or understandings with any Affiliate that would be required
to be disclosed under Item 404 of Regulation S-K under the Securities Act; and
(ix) contracts which contain a "change in control" or similar provision. Except
as specified in Section 4.1(l) of the Disclosure Schedule, all of the Material
Contracts are in full force and effect and are the legal, valid and binding
obligation of Company and/or its Subsidiaries, enforceable against them in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Except as specified in Section 4.1(l) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is in breach
or default in any material respect under any Material Contract nor, to the
knowledge of Company, is any other party to any Material Contract in breach or
default thereunder in any material respect.
(m) Litigation, etc. Except as specified in Section 4.1(m) of
---------------
the Disclosure Schedule or the Filed SEC Documents, (i) there is no suit, claim,
action, proceeding (at law or in equity) or investigation pending or, to the
knowledge of Company, threatened against Company or any of its Subsidiaries
before any court or other Governmental Entity, and (ii) neither Company nor any
of its Subsidiaries is subject to any outstanding order, writ, judgement,
injunction, decree or arbitration order or award that, in any such case
described in clauses (i) and (ii), has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Company. As
of the date hereof, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of Company, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by this
Agreement.
(n) Compliance with Applicable Laws. All federal, state, local
-------------------------------
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for each
of Company and its Subsidiaries to own, lease or operate its properties and
assets and to carry on its business as now conducted have been obtained or made,
and there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or default could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Company. To the Company's knowledge, Company and its
Subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, and neither Company
nor any of its Subsidiaries has received notification of any
25
<PAGE>
asserted present or past failure to so comply.
(o) Environmental Laws. Except as specified in Section 4.1(o) of
------------------
the Disclosure Schedule and as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company: (A)
neither Company nor any of its Subsidiaries has violated or is in violation of
any Environmental Law (as defined in Section 9.3); (B) to the knowledge of
Company, neither Company nor any of its Subsidiaries is liable for any off-site
contamination; (C) to the knowledge of Company, neither Company nor any of its
Subsidiaries has any liability or remediation obligation under any Environmental
Law; (D) no assets of Company or any of its Subsidiaries are subject to pending
or threatened Liens under any Environmental Law; (E) to the knowledge of
Company, Company and its Subsidiaries have all Permits required under any
Environmental Law ("Environmental Permits"); and (F) Company and its
Subsidiaries are in compliance with their respective Environmental Permits.
(p) Taxes. Except as specified in Section 4.1(p) of the
-----
Disclosure Schedule, as of the date hereof and as of the Effective Time:
(i) Except where the failure to do so could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Company, each of Company and each Subsidiary of Company (and any affiliated
or unitary group of which any such person was a member) has (A) timely filed all
federal, state, local and foreign returns, declarations, reports, estimates,
information returns and statements, including combined unitary or consolidated
returns for any group of entities ("Returns") required to be filed by or for it
in respect of any Taxes (as hereinafter defined) and has caused such Returns as
so filed to be true, correct and complete, (B) established reserves that are
reflected in Company's most recent financial statements included in the Filed
SEC Documents and that as so reflected are adequate for the payment of all Taxes
not yet due and payable with respect to the results of operations of Company and
its Subsidiaries through the date hereof, and (C) timely withheld and paid over
to the proper taxing authorities all Taxes and other amounts required to be so
withheld and paid over. Each of Company and each Subsidiary of Company (and any
affiliated or unitary group of which any such person was a member) has timely
paid all Taxes currently due and payable except for those contested in good
faith and for which adequate reserves have been provided for in Company's
financial statements.
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(ii) (A) The Returns of Company, each of its Subsidiaries and
any affiliated, consolidated, combined or unitary group that includes Company or
any of its Subsidiaries either have been examined and settled with the
appropriate Tax authority or closed by virtue of the expiration of the
applicable statute of limitations and (B) except for alleged deficiencies which
have been finally and irrevocably resolved, neither Company nor any of its
Subsidiaries have received formal or informal notification that any deficiency
for any Taxes, the amount of which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company, has been
or will be proposed, asserted or assessed against Company or any of its
Subsidiaries by any federal, state, local or foreign taxing authority or court
with respect to any period.
(iii) Neither Company nor any of its Subsidiaries has (A)
executed or entered into with the IRS or any other taxing authority any
agreement or other document that continues in force and effect beyond the
Effective Time and that extends or has the effect of extending the period for
assessments or collection of any federal, state, local or foreign Taxes, (B)
executed or entered into with the IRS or any other taxing authority any closing
agreement or other similar agreement (nor has Company or any of its Subsidiaries
received any ruling, technical advice memorandum or similar determination)
affecting the determination of Taxes required to be shown on any Return not yet
filed, or (C) requested any extension of time to be granted to file after the
Effective Time any Return required by applicable law to be filed by it.
(iv) Neither Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Company or any of its
Subsidiaries.
(v) Neither Company nor any of its Subsidiaries is a party to,
is bound by or has any obligation under any tax sharing agreement or similar
agreement or arrangement.
(vi) Neither Company nor any of its Subsidiaries has agreed to
make, nor is required to make, any material adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise and, to the
knowledge of Company, the IRS has not proposed any such adjustment or change in
accounting method.
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(vii) Neither Company nor any of its Subsidiaries is, or
has been, a United States Real Property Holding Corporation within the meaning
of Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(viii) Except for the group of which Company is presently a
member, Company has never been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code, other than as a common parent
corporation, and each of Company's Subsidiaries has never been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, except where Company was the common parent of such affiliated group.
(ix) Neither Company nor any Subsidiary is a party to any
agreement, contract, arrangement or plan that has resulted, or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(x) There are no Tax liens upon any asset of Company or
any of its Subsidiaries except liens for Taxes not yet due.
(xi) No power of attorney currently in force has been
granted by Company or any of its Subsidiaries concerning any Tax matter.
(xii) Neither Company nor any of its Subsidiaries has made
a disclosure on a Return pursuant to Section 6662 of the Code.
For purposes of this Agreement, "Taxes" shall mean all federal,
state, local, foreign income, property, sales, excise, employment, payroll,
franchise, withholding and other taxes, tariffs, charges, fees, levies, imposts,
duties, licenses or other assessments of every kind and description, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority.
(q) Benefit Plans. Section 4.1(q) of the Disclosure Schedule
-------------
sets forth a true, correct and complete list of all the material "employee
benefit plans" (as that phrase is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) in each case, that
is sponsored, maintained or contributed to or required to be contributed to by
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with
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Company would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA, or to which Company or an ERISA Affiliate is party, whether
written or oral, for the benefit of any current or former employee, officer or
director of Company or any of its Subsidiaries ("Company ERISA Plans") and any
other material benefit or compensation plan, program or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by Company or an ERISA Affiliate, whether written or oral, for
the benefit of any current or former employee, officer or director of Company or
any of its Subsidiaries (Company ERISA Plans and such other plans being
referred to as "Company Plans"). Company has furnished or made available to
Parent and its representatives a true, correct and complete copy of every
document pursuant to which each Company Plan is established or operated
(including any summary plan descriptions), a written description of any Company
Plan for which there is no written document, and the three most recent annual
reports, financial statements and actuarial valuations with respect to each
Company Plan. Except as specified in Section 4.1(q) of the Disclosure Schedule:
(i) none of the Company ERISA Plans is a "multiemployer
plan" within the meaning of ERISA;
(ii) none of the Company Plans promises or provides retiree
health benefits or retiree life insurance benefits to any person;
(iii) none of the Company Plans provides for payment of a
benefit, the increase of a benefit amount, the payment of a contingent benefit
or the acceleration of the payment or vesting of a benefit determined or
occasioned, in whole or in part, by reason of the execution of this Agreement or
the consummation of the transactions contemplated by this Agreement;
(iv) neither Company nor any of its Subsidiaries has an
obligation to adopt, or is considering the adoption of, any new benefit or
compensation plan, program or arrangement or, except as required by law, the
amendment of an existing Company Plan;
(v) each Company ERISA Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination notification,
advisory and/or opinion letter, as applicable, from the IRS that it is so
qualified or still has remaining a period of time under applicable Treasury
Regulations or Internal Revenue Service pronouncements in which to apply for
such a letter and to make any
29
<PAGE>
amendments necessary to obtain a favorable determination and nothing has
occurred since the date of such letter that could reasonably be expected to
affect the qualified status of such Company ERISA Plan;
(vi) each Company Plan has been operated in accordance
with its terms and the requirements of all applicable law, and no prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code has
occurred with respect to any Company ERISA Plan;
(vii) neither Company nor any of its Subsidiaries or
members of their "controlled group" has incurred any direct or indirect
liability under ERISA or the Code in connection with the termination of,
withdrawal from or failure to fund, any Company ERISA Plan or other retirement
plan or arrangement, and no fact or event exists that could reasonably be
expected to give rise to any such liability;
(viii) the aggregate accumulated benefit obligations of each
Company ERISA Plan subject to Title IV of ERISA (as of the date of the most
recent actuarial valuation prepared for such Company ERISA Plan and based on the
discount rate and other actuarial assumptions used in such valuation) do not
exceed the fair market value of the assets of such Company ERISA Plan (as of the
date of such valuation);
(ix) Company is not aware of any claims relating to the
Company Plans, other than routine claims for benefits;
(x) None of the Company Plans provides for benefits or
other participation therein, and Company has received no claims or demands for
participation in or benefits under any Company Plan, by any individual
classified or treated by Company as an independent contractor; and
(xi) no Right (as such term is defined in the Company's
1992 Stock Option Plan) that has been granted by the Company or any of its
Subsidiaries is outstanding;
provided, however, that the failure of the representations
set forth in clauses (v), (vi), (vii), (ix) and (x) to be true and correct shall
not be deemed to be a breach of any such representation unless such failures
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Company.
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(r) Absence of Changes in Benefit Plans. Except as disclosed in
-----------------------------------
the Filed SEC Documents or in Section 4.1(r) of the Disclosure Schedule, since
the date of the most recent audited financial statements included in the Filed
SEC Documents, neither Company nor any of its material Subsidiaries has adopted
or agreed to adopt any collective bargaining agreement or any Company Plan.
(s) Labor Matters.
-------------
(i) Except as specified in Section 4.1(s)(i) of the
Disclosure Schedule, neither Company nor any of its Subsidiaries is a party to
any employment, labor or collective bargaining agreement, and there are no
employment, labor or collective bargaining agreements which pertain to employees
of Company or any of its Subsidiaries. Company has heretofore made available to
Parent true, complete and correct copies of the agreements set forth in Section
4.1(s)(i) of the Disclosure Schedule, together with all amendments,
modifications, supplements or side letters affecting the duties, rights and
obligations of any party thereunder.
(ii) No employees of Company or any of its Subsidiaries are
represented by any labor organization and, to the knowledge of Company, no labor
organization or group of employees of Company or any of its Subsidiaries has
made a pending demand for recognition or certification. There are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority and, to the knowledge of Company, there are no
organizing activities involving Company or any of its Subsidiaries pending with
any labor organization or group of employees of Company or any of its
Subsidiaries.
(iii) Except as specified in Section 4.1(s)(iii) of the
Disclosure Schedule, there are no (A) unfair labor practice charges, grievances
or complaints pending or threatened in writing by or on behalf of any employee
or group of employees of Company or any of its material Subsidiaries, or (B)
complaints, charges or claims against Company or any of its material
Subsidiaries pending, or, to the knowledge of Company, threatened in writing to
be brought or filed, with any Governmental Entity or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by Company or any of its
Subsidiaries.
(t) Brokers. No broker, investment banker, financial advisor or
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31
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other person, other than Hambrecht & Quist, the fees and expenses of which will
be paid by Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Company.
(u) Written Opinion of Financial Advisor. Company has received
------------------------------------
the written opinion of Hambrecht & Quist, dated March 23, 1999 (a true, correct
and complete copy of which has been delivered to Parent by Company), to the
effect that, based upon and subject to the matters set forth therein and as of
the date thereof, the Offer Consideration and the Merger Consideration to be
received by the holders of Shares in the Offer and the Merger, respectively, is
fair, from a financial point of view, to such holders and such opinion has not
been withdrawn or modified.
(v) Voting Requirements. In the event that Section 253 of the
-------------------
DGCL is inapplicable and unavailable to effectuate the Merger, the affirmative
vote of the holders of a majority of the outstanding Shares entitled to vote at
the Stockholders Meeting (as defined in Section 6.1(a)) with respect to the
adoption of this Agreement is the only vote of the holders of any class or
series of Company's capital stock or other securities required in connection
with the consummation by Company of the Merger and the other transactions
contemplated hereby to be consummated by Company. The restrictions contained in
Section 203 of the DGCL are not applicable to this Agreement, the Stockholder
Agreements and the transactions contemplated hereby and thereby, including the
Offer, the Merger and the acquisition of Shares pursuant to the Stockholder
Agreements. No other state takeover statute or similar statute applies or
purports to apply to the Offer, the Merger or the other transactions
contemplated hereby.
(w) Company Rights Agreement. Company and its Board of Directors
------------------------
have taken all action to amend the Company Rights Agreement (the "Rights
Amendment") which may be necessary under the Company Rights Agreement so that
the Offer and the execution and delivery of this Agreement (and any amendments
thereto by the parties hereto) and the Stockholder Agreements, and the
consummation of the Merger and the transactions contemplated hereby and by the
Stockholder Agreements, will not cause (i) Parent or Purchaser to constitute an
"Acquiring Person" (as defined in the Company Rights Agreement), (ii) a
"Distribution Date," "Section 13 Event," "Triggering Event," or "Shares
Acquisition Date" (each as defined in the Company Rights Agreement) to occur or
(iii) the Rights (as defined in the Company Rights Agreement) to become
exercisable pursuant to Section 11(a)(ii) thereof or otherwise. The Rights
Amendment is sufficient to render
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the Rights inoperative with respect to the acquisition of Shares by Parent,
Purchaser or their affiliates pursuant this Agreement, the Offer and/or the
Stockholder Agreements. As a result of the Rights Amendment, the Rights shall
not be exercisable upon or at any time after the acceptance for payment of
Shares pursuant to the Offer and/or the purchase of, or right to acquire, Shares
pursuant to the Stockholder Agreements. A true and correct copy of the Rights
Amendment has been delivered to Parent.
(x) Selesta Litigation. The Settlement Agreement, dated
------------------
February, 1999, by and among Selesta Integrazioni, Selesta Gestione Centri and
Gruppo Selesta (including, without limitation, Selesta Auditing, Selesta
Gestione Centri Operations, Selesta Gestione Centri Applications, Selesta
Technologie and Selesta Gestion Centros) (collectively "Selesta"), on the one
hand; and the Company and Interlink France S.A.R.L., Franco Rasello and RASCA
s.a.s. di Ing. Franco Rasello & C., and Marco Spinetti and Integrazione Sistemi
s.a.s. di Ing. Marco Spinetti & C., on the other hand (the "Selesta Settlement
Agreement"), is a valid and binding obligation of the parties thereto,
enforceable in accordance with its terms. Neither the Company nor Selesta has
breached any provision of, or is in default in any respect under, and no
condition exists which, with the passage of time, the giving of notice of, or
both would result in a default by the Company or Selesta under, the terms of the
Selesta Settlement Agreement. The Company has provided to Parent a true, correct
and complete copy of the Selesta Settlement Agreement.
(y) Except as specified in Section 4.1(y) of the Disclosure
Schedule, Company is not a party to any confidentiality, nondisclosure or
similar agreement which contains any "standstill" provisions or similar
restrictions on Acquisition Proposals (as defined in Section 6.5) by any third
party.
Section 4.2 Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser represent and warrant to Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent
------------------------------------------
and Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business. Parent has
delivered or made available to the Company complete and correct copies of the
Certificate of Incorporation and By-laws (or similar charter documents) of
Parent and Purchaser, in each case as amended to the date hereof.
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(b) Authority; Noncontravention. Parent and Purchaser have the
---------------------------
requisite corporate power and authority to enter into this Agreement. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated
hereby have been duly authorized by the Executive Committee of the Board of
Directors of Parent and the Board of Directors of Purchaser and have been
duly approved by Parent as sole stockholder of Purchaser, and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of
Parent and Purchaser and, assuming this Agreement constitutes a valid and
binding obligation of Company, constitutes a valid and binding obligation
of each of Parent and Purchaser, enforceable against each such party in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby and compliance
with the provisions of this Agreement will not (i) conflict with any of the
provisions of the certificate of incorporation or bylaws of Parent or
Purchaser, in each case as amended to the date of this Agreement, (ii)
subject to the governmental filings and other matters referred to in
Section 4.2(c), conflict with, result in a breach of or default (with or
without notice or lapse of time, or both) under, or give rise to a material
obligation, a right of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or require the consent of
any person under, any indenture, or other agreement, permit, concession,
franchise, license or similar instrument or undertaking to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of their
respective assets is bound or affected, or (iii) subject to the
governmental filings and other matters referred to in Section 4.2(c),
contravene any law, rule or regulation, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, which, in
the case of clauses (ii) and (iii) above, could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Parent.
(c) Consents and Approvals. No consent, approval or
----------------------
authorization of, or declaration or filing with, or notice to, any
Governmental Entity which has not been received or made is required by or
with respect to Parent or Purchaser in connection with the execution and
delivery of this Agreement by Parent or Purchaser or the consummation by
Parent or Purchaser, as the case may be, of any of the transactions
contemplated hereby, except for (i) the filing of premerger notification
and report forms under the HSR Act, (ii) the filing with the SEC of (A) the
Schedule
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14D-1 and (B) such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby,
(iii) the filing of the certificate of merger with the Delaware State
Secretary and appropriate documents with the relevant authorities of
other states in which Company is qualified to do business, and (iv) any
other consents, approvals, authorizations, filings or notices the failure
to make or obtain which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(d) Certain Information. Subject to Company's fulfillment of
-------------------
its obligations hereunder with respect thereto, the Offer Documents will
contain (or will be amended in a timely manner so as to contain) all
information which is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and any other
applicable law and will conform in all material respects with the
requirements of the Exchange Act and any other applicable law, and the
Offer Documents will not, at the respective times they are filed with the
SEC or published, sent or given to Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that no representation or warranty is hereby
made by Parent or Purchaser with respect to any information supplied by
Company in writing for inclusion in, or with respect to Company information
derived from Company's public SEC filings which is included or incorporated
by reference in the Offer Documents. None of the information supplied or to
be supplied by Parent or Purchaser for inclusion or incorporation by
reference in, or which may be deemed to be incorporated by reference in,
the Schedule 14D-9 or the Proxy Statement will, at the respective times the
Schedule 14D-9 and the Proxy Statement are filed with the SEC or published,
sent or given to Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent or Purchaser,
or with respect to any information supplied by Parent or Purchaser for
inclusion in the Schedule 14D-9 or the Proxy Statement, shall occur which
is required to be described in an amendment of, or a supplement to, such
document, Parent or Purchaser shall so describe the event to Company.
(e) Financing. Parent and Purchaser collectively have cash on
---------
hand or financing commitments from financially responsible third parties,
or a combination thereof, in an aggregate amount sufficient to enable
Parent and Pur-
35
<PAGE>
chaser to pay in full (i) the Offer Consideration, (ii) the Merger
Consideration, and (iii) all fees and expenses payable by Parent and
Purchaser in connection with this Agreement and the transactions
contemplated hereby.
(f) Interim Operations of the Purchaser. The Purchaser has
-----------------------------------
engaged in no significant business activities prior to the date hereof.
ARTICLE V
CONDUCT OF BUSINESS OF COMPANY
Section 5.1 Conduct of Business of Company. Except as expressly
------------------------------
provided for herein or in the Disclosure Schedule, during the period from
the date of this Agreement to the Effective Time, Company shall, and shall
cause each of its Subsidiaries to, act and carry on its business only in
the ordinary course of business consistent with past practice and, to the
extent consistent therewith, use commercially reasonable efforts to
preserve intact its current business organizations, keep available the
services of its current key officers and employees and preserve the
goodwill of those engaged in material business relationships with Company,
and to that end, without limiting the generality of the foregoing, Company
shall not, and shall not permit any of its Subsidiaries to, without the
prior consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, securities or other
property) in respect of, any of its outstanding capital stock (other than,
with respect to a Subsidiary of Company, to its corporate parent), (B)
split, combine or reclassify any of its outstanding capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its outstanding capital stock, or (C)
purchase, redeem or otherwise acquire any shares of outstanding capital
stock or any rights, warrants or options to acquire any such shares,
except, in the case of this clause (C), for the acquisition of Shares from
holders of Options in full or partial payment of the exercise price payable
by such holder upon exercise of Options;
(ii) issue, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible or
exchangeable securities, other than upon the exercise of Options and
Warrants outstanding on the date of this Agreement;
36
<PAGE>
(iii) amend its certificate of incorporation, bylaws or
other comparable charter or organizational documents or amend or redeem the
Company Rights Agreement;
(iv) directly or indirectly acquire, make any
investment in, or make any capital contributions to, any person other than
in the ordinary course of business consistent with past practice;
(v) make any new capital expenditure or expenditures
in excess of $50,000 individually, or $250,000 in the aggregate, other than
as specified in the Company's budget for capital expenditures made
available to Parent or the specific capital expenditures disclosed and set
forth on Schedule 5.1 of the Disclosure Schedule;
(vi) except for software licenses in the ordinary
course of business, enter into, amend or terminate any Material Contract,
or waive, release or assign any material rights or claims;
(vii) directly or indirectly sell, pledge or otherwise
dispose of or encumber any of its properties or assets that are material to
its business, except for sales, pledges or other dispositions or
encumbrances in the ordinary course of business consistent with past
practice;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, other than indebtedness
owing to or guarantees of indebtedness owing to Company or any direct or
indirect wholly owned Subsidiary of Company or (B) make any loans or
advances to any other person, other than to Company or to any direct or
indirect wholly owned Subsidiary of Company and other than routine advances
to employees consistent with past practice, except, in the case of clause
(A), for borrowings under existing credit facilities described in the Filed
SEC Documents in the ordinary course of business consistent with past
practice;
(ix) grant or agree to grant to any officer, employee
or consultant any increase in wages or bonus, severance, profit sharing,
retirement, deferred compensation, insurance or other compensation or
benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend any existing Company Plans, except
as may be required under existing agreements or by
37
<PAGE>
law;
(x) accelerate the payment, right to payment or
vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits;
(xi) enter into or amend any employment, consulting,
severance or similar agreement with any individual;
(xii) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization or any agreement relating
to an Acquisition Proposal (as defined in Section 6.5(d)), except as
provided for in Section 6.5;
(xiii) make or rescind any tax election or settle or
compromise any income tax liability of Company or of any of its
Subsidiaries involving on an individual basis more than $100,000;
(xiv) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (x) of any
such claims, liabilities or obligations in the ordinary course of business
and consistent with past practice or (y) of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) of Company and its
consolidated Subsidiaries;
(xv) except as required by GAAP, make any change in any
method of accounting or accounting practice or policy, except as required
by any changes in generally accepted accounting principles;
(xvi) settle any action, suit, claim, investigation or
proceeding (legal, administrative or arbitrative) in an amount in excess
of $50,000, except in connection with the Selesta litigation described in
Section 4.1(x);
(xvii) permit any material insurance policy naming it as
a beneficiary or a loss payable payee to be cancelled or terminated without
notice to Parent, except in the ordinary course of business and consistent
with past practice;
(xviii) enter into any agreement, understanding or commit-
38
<PAGE>
ment that restrains, limits or impedes Company's ability to compete with or
conduct any business or line of business, including, but not limited to,
geographic limitations on Company's activities;
(xix) plan, announce, implement or effect any reduction
in force, lay-off, early retirement program, severance program or other
program or effort concerning the termination of employment of employees of
Company or its Subsidiaries, provided, however, that routine employee
terminations for cause shall not be considered subject to this clause
(xix);
(xx) accelerate the collection of any account
receivable or delay the payment of any account payable, or otherwise reduce
the assets or increase the liabilities of Company or any of its
Subsidiaries otherwise than in the ordinary course of business consistent
with past practice, in any such case with the purpose or effect of using
the resulting increase in the cash flow of Company or any of its
Subsidiaries to reduce the total indebtedness of Company and its
Subsidiaries for money borrowed;
(xxi) willfully take any action that would result in (i)
any of its representations and warranties set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) except to the extent such action is otherwise
expressly contemplated by this Agreement, any of the conditions to the
Offer set forth in Exhibit A not being satisfied; or
(xxii) authorize any of, or commit or agree to take any
of, the foregoing actions in respect of which it is restricted by the
provisions of this Section 5.1 except to the extent such action is
otherwise expressly contemplated by this Agreement.
ARTICLE VI
ADDITIONAL COVENANTS
Section 6.1 Company Stockholders Meeting; Preparation of the Proxy
------------------------------------------------------
Statement; Short-Form Merger.
----------------------------
(a) As soon as practicable following the acceptance for
payment
39
<PAGE>
of and payment for Shares by Purchaser in the Offer, if required by law to
consummate the Merger, Company shall take all action necessary, in
accordance with the DGCL, the Exchange Act and other applicable law and its
certificate of incorporation and bylaws to convene and hold a special
meeting of the stockholders of Company (the "Stockholders Meeting") for the
purpose of considering and voting upon this Agreement and to solicit
proxies pursuant to the Proxy Statement in connection therewith. The Board
of Directors of Company shall recommend that the holders of Shares vote in
favor of the adoption of this Agreement at the Stockholders Meeting and
shall cause such recommendation to be included in the Proxy Statement. At
the Stockholders Meeting, Parent and Purchaser shall cause all of the
Shares owned by them to be voted in favor of the adoption of this
Agreement.
(b) Company, if requested by Parent, shall promptly prepare and
file with the SEC a proxy statement or information statement (together with
any supplement or amendment thereto, the "Proxy Statement") relating to the
Stockholder Meeting in accordance with the Exchange Act and the rules and
regulations thereunder. Parent, Purchaser and Company will cooperate with
each other in the preparation of the Proxy Statement. Without limiting the
generality or effect of the foregoing, Company shall use its commercially
reasonable efforts to respond to all SEC comments with respect to the Proxy
Statement and, subject to compliance with SEC rules and regulations, to
cause the Proxy Statement to be mailed to Company's stockholders at the
earliest practicable date. Each of Parent and Purchaser shall promptly
supply to Company in writing, for inclusion in the Proxy Statement, all
information concerning Parent and Purchaser required under the Exchange Act
and the rules and regulations thereunder to be included in the Proxy
Statement.
(c) Notwithstanding the foregoing clauses (a) and (b), in the
event that Purchaser or any other wholly owned Subsidiary of Parent shall
acquire at least 90% of the outstanding Shares in the Offer, the parties
hereto shall, at the request of Purchaser, take all necessary actions to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of Company,
in accordance with Section 253 of the DGCL.
(d) Parent shall: (i) cause Purchaser promptly to submit this
Agreement for adoption by its sole stockholder; (ii) cause the outstanding
shares of capital stock of Purchaser to be voted in favor of the adoption
of this Agreement; and (iii) cause to be taken all additional actions
necessary for Purchaser to adopt this Agreement.
40
<PAGE>
Section 6.2 Access to Information; Confidentiality. Company
--------------------------------------
shall, and shall cause each of its Subsidiaries to, afford to Parent and
its officers, employees, counsel, financial advisors and other
representatives access during the period prior to the Effective Time to all
of Company's and its Subsidiaries' properties, books, contracts,
commitments, Returns, personnel and records and, during such period,
Company shall, and shall cause each of its Subsidiaries to, furnish as
promptly as practicable to Parent such information concerning Company's and
its Subsidiaries' businesses, properties, financial condition, operations
and personnel as Parent may from time to time request. Any such
investigation by Parent shall not affect the representations or warranties
of Company contained in this Agreement. Except as required by law, Parent
and Company will hold, and will use commercially reasonable efforts to
cause its directors, officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any non-public
information obtained from the other in confidence to the extent required
by, and in accordance with the provisions of, the letter agreement (the
"Letter Agreement"), dated December 21, 1998, between Parent and Company
with respect to confidentiality and other matters.
Section 6.3 Commercially Reasonable Efforts. On the terms and
-------------------------------
subject to the conditions set forth in this Agreement, including, without
limitation, Section 6.5 hereof, each of the parties shall use its
commercially reasonable efforts to take, or cause to be taken, all actions,
and do, or cause to be done, and assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer,
the Merger and the other transactions contemplated hereby, including the
satisfaction of the respective conditions set forth in Article VII.
Section 6.4 Public Announcements. Parent and Purchaser, on the one
--------------------
hand, and Company, on the other hand, shall attempt in good faith to
consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release, SEC filing
(including without limitation the Offer Documents, the Schedule 14D-9 and
the Proxy Statement) or other public statements with respect to the
transactions contemplated hereby, including the Offer and Merger, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law, by court
process or by obligations pursuant to any listing agreement with any
national securities exchange.
Section 6.5 No Solicitation; Acquisition Proposals. (a) Company
--------------------------------------
shall
41
<PAGE>
not, nor shall it permit any of its Subsidiaries to, nor shall it authorize
(and shall use its best efforts not to permit) any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, Company or any of its Subsidiaries to, (i) solicit or
initiate, or intentionally encourage, directly or indirectly, any inquiries
relating to, or the submission of, any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal, or, in connection with any Acquisition Proposal, furnish to
any Person any information or data with respect to or access to the
properties of Company or any of its Subsidiaries, or take any other action,
to knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal or (iii) enter
into any agreement with respect to any Acquisition Proposal or approve or
resolve to approve any Acquisition Proposal; provided, that nothing
contained in this Section 6.5 or any other provision hereof shall prohibit
Company or Company's Board of Directors from (i) taking and disclosing to
Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act, or (ii) making such disclosure to Company's stockholders
as, in the good faith judgment of Company's Board of Directors, after
consultation with outside counsel, is required under, or is necessary to
comply with, applicable law, provided that Company may not, except as
permitted by Section 6.5(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer or the Merger or approve or
recommend, or propose to approve or recommend any Acquisition Proposal, or
enter into any agreement with respect to any Acquisition Proposal. Upon
execution of this Agreement, Company will immediately cease any existing
activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the
foregoing, prior to the time of acceptance of Shares for payment pursuant
to the Offer, Company may furnish information concerning its and/or its
Subsidiaries' business, properties or assets to any person or group and may
negotiate and participate in discussions and negotiations with such person
or group concerning an Acquisition Proposal, provided that such person or
group shall have entered into a confidentiality agreement, the
confidentiality provisions of which shall be no more favorable to such
third party than those provided for in the Letter Agreement, if:
(x) such Person or group has submitted a Superior
Proposal; and
(y) in the opinion of Company's Board of Directors
such action is required to discharge the Board's fiduciary duties to
Company's
42
<PAGE>
stockholders under applicable law, determined only after consultation
with independent legal counsel to Company.
Company will promptly (but in no case later than 24 hours) notify Parent in
writing of the existence of any proposal, discussion, negotiation or
inquiry received by Company regarding any Acquisition Proposal, and Company
will promptly communicate to Parent the terms of any proposal, discussion,
negotiation or inquiry which it may receive regarding any Acquisition
Proposal (and will promptly provide to Parent copies of any written
materials received by Company in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal
or inquiry or engaging in such discussion or negotiation. Company will
promptly provide to Parent any non-public information concerning Company
provided to any other person in connection with any Acquisition Proposal
which was not previously provided to Parent. Company will keep Parent
informed of the status and details of any such Acquisition Proposal and of
any amendments or proposed amendments to any Acquisition Proposal and of
the status of any discussions or negotiations relating to any Acquisition
Proposal and will promptly (but in no case later than 24 hours) notify
Parent of any determination by Company's Board of Directors that a Superior
Proposal has been made.
(b) Except as set forth in this Section 6.5, neither the Board
of Directors of Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Board of Directors of
Company of the Offer, this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or
(iii) enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing or anything else herein, subject to
compliance with the provisions of this Section 6.5, prior to the time of
acceptance for payment of Shares pursuant to the Offer, Company's Board of
Directors may withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal,
in each case at any time after the third business day following Parent's
receipt of written notice (including by facsimile) from Company advising
Parent that the Board of Directors of Company has received a Superior
Proposal which it intends to accept, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal, but only if Company shall have caused its financial and
legal advisors to negotiate with Parent to make such adjustments to the
terms and conditions of this Agreement as would enable Company to
proceed with the transactions
43
<PAGE>
contemplated hereby on such adjusted terms.
(c) Nothing in this Section 6.5, and no action taken by the Board
of Directors of Company pursuant to this Section 6.5, will (i) permit Company to
enter into any agreement providing for any transaction contemplated by an
Acquisition Proposal for as long as this Agreement remains in effect or (ii)
affect in any manner any other obligation of Company under this Agreement.
(d) For purposes of this Agreement, "Acquisition Proposal" means
any bona fide offer, proposal or other indication of interest regarding any of
the following (other than the transactions provided for in this Agreement
involving Company): (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction involving
the Company or any of its Subsidiaries; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of a significant portion of the
assets of Company and its Subsidiaries, taken as a whole, in a single
transaction or series of related transactions (other than sales of inventory or
used equipment in the ordinary course of business); (iii) any purchase of, or
tender offer or exchange offer for, 20% percent or more of the outstanding
shares of capital stock of Company by any person or the filing of a registration
statement under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. For purposes of this Agreement,
"Superior Proposal" means an unsolicited Acquisition Proposal on terms which the
Board of Directors of Company determines in good faith to be more favorable to
Company's stockholders than the Offer and the Merger (based on advice of
Company's independent financial advisor that the value of the consideration
provided for in such proposal is superior to the value of the consideration
provided for in the Offer and the Merger); for which financing, to the extent
required, is then committed or which, in the good faith reasonable judgment of
the Board of Directors of Company (based on advice from Company's independent
financial advisor) is reasonably capable of being financed by such third party
provided that the Board of Directors of the Company has also, among other
things, duly considered the timing of such Acquisition Proposal and the
likelihood that such Acquisition Proposal will be consummated.
Section 6.6 Consents, Approvals and Filings. Upon the terms and subject
-------------------------------
to the conditions hereof, each of the parties hereto shall (a) make promptly its
respective filings, and thereafter make any other required submissions, under
the HSR Act and the Exchange Act, with respect to the Offer, the Merger and the
other
44
<PAGE>
transactions contemplated hereby and (b) use commercially reasonable efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Offer, the Merger and the other
transactions contemplated hereby, including without limitation using
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Entities
and parties to contracts with Company and its Subsidiaries as are necessary for
the consummation of the Offer, the Merger and the other transactions
contemplated hereby and to fulfill the conditions to the Offer and the Merger;
provided, however, that in no event shall Parent or any of its Subsidiaries be
required to agree or commit to divest, hold separate, offer for sale, abandon,
limit its operation of or take similar action with respect to any assets
(tangible or intangible) or any business interest of it or any of its
Subsidiaries (including without limitation the Surviving Corporation after
consummation of the Offer or the Merger) in connection with or as a condition to
receiving the consent or approval of any Governmental Entity (including without
limitation under the HSR Act). In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their commercially reasonable efforts to take all such action.
Section 6.7 Employee Benefit Matters.
------------------------
(a) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, honor and
provide for payment of all accrued obligations and benefits under all Company
Plans and employment or severance agreements disclosed on the Disclosure
Schedule between Company and persons who are or had been employees of Company or
any of its Subsidiaries at or prior to the Effective Time ("Covered Employees"),
all in accordance with their respective terms.
(b) From and after the Effective Time, Parent shall, and shall
cause its Subsidiaries (including the Surviving Corporation) to, provide Covered
Employees who remain in the employ of Company or any of its Subsidiaries with
employee benefits that are reasonably comparable to the employee benefits
provided to similarly situated employees of Parent or any such Subsidiary who
are not Covered Employees. To the extent that Covered Employees are included in
any benefit plan of Parent or its Subsidiaries, Parent agrees that the Covered
Employees shall receive credit under such plan (other than any such plan
providing for sabbati-
45
<PAGE>
cals) for service prior to the Effective Time with Company and its Subsidiaries
to the same extent such service was counted under similar Company Plans for
purposes of eligibility, vesting, eligibility for retirement (but not for
benefit accrual) and, with respect to vacation, disability and severance,
benefit accrual. To the extent that Covered Employees are included in any
medical, dental or health plan other than the plan or plans they participated in
at the Effective Time, Parent agrees that any such plans shall not include pre-
existing condition exclusions, except to the extent such exclusions were
applicable under the similar Company Plan at the Effective Time, and shall
provide credit for any deductibles and co-payments applied or made with respect
to each Covered Employee in the calendar year of the change.
(c) Notwithstanding anything in this Agreement to the contrary,
from and after the Effective Time, the Surviving Corporation will have sole
discretion over the hiring, promotion, retention, firing and other terms and
conditions of the employment of employees of the Surviving Corporation. Except
as otherwise provided in this Section 6.7, nothing herein shall prevent Parent
or the Surviving Corporation from amending or terminating any Company Plan in
accordance with its terms.
(d) "Offering Periods" under the Company 1996 Employee Stock
Purchase Plan (the "ESPP") shall terminate on the earlier to occur of (i) April
30, 1999, or (ii) the expiration date of the Offer, and the Company shall cause
written notice to be given to participants in accordance with the terms of the
ESPP. No further Offering Period under the ESPP shall be created.
Section 6.8 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) For a period of four years after the Effective Time, the
provisions with respect to indemnification set forth in the certificate of
incorporation and bylaws of Purchaser as in effect on the date of this Agreement
(true, correct and complete copies of which have been provided to Company) shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of Company in respect of actions
or omissions occurring at or prior to the Effective Time (including without
limitation the transactions contemplated by this Agreement), unless such
modification is required by law.
(b) From and after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, indemnify, defend and hold harmless each
person who
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is now, or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer or director of Company (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) incurred in connection with any
threatened or actual action, suit or proceeding based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of Company ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, this Agreement or the transactions contemplated hereby, in each
case, to the full extent that a corporation is permitted under the DGCL to
indemnify its own directors or officers, as the case may be. In the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Party, the indemnifying party shall assume and direct all aspects of
the defense thereof, including settlement, and the Indemnified Party shall
cooperate in the vigorous defense of any such matter. The Indemnified Party
shall have a right to participate in (but not control) the defense of any such
matter with its own counsel and at its own expense. The indemnifying party shall
not settle any such matter unless (i) the Indemnified Party gives prior written
consent, which shall not be unreasonably withheld, or (ii) the terms of the
settlement provide that the Indemnified Party shall have no responsibility for
the discharge of any settlement amount and impose no other obligations or duties
on the Indemnified Party and the settlement discharges all rights against
Indemnified Party with respect to such matter. In no event shall the
indemnifying party be liable for any settlement effected without its prior
written consent. Any Indemnified Party wishing to claim indemnification under
this Section 6.8(b), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Parent and the Surviving Corporation
(but the failure so to notify shall not relieve the indemnifying party from any
liability which it may have under this Section 6.8(b) except to the extent such
failure prejudices such indemnifying party), and shall deliver to Parent and
the Surviving Corporation the undertaking contemplated by Section 145(e) of the
DGCL. The Indemnified Parties as a group will be represented by a single law
firm with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties. The rights to
indemnification under this Section 6.8(b) shall continue in full force and
effect for a period of four years from the Effective Time; provided, however,
that all rights to indemnification in respect of any Indemnified Liabilities
asserted or made within such period shall continue until the disposition of such
Indemnified Liabilities.
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(c) For a period of two years after the Effective Time Parent
shall cause to be maintained in effect policies of directors' and officers'
liability insurance, for the benefit of those persons who are covered by
Company's directors' and officers' liability insurance policies at the Effective
Time, providing coverage with respect to matters occurring prior to the
Effective Time that is at least equal to the coverage provided under Company's
current directors' and officers' liability insurance policies, to the extent
that such liability insurance can be maintained at an annual cost to Parent not
greater than 150 percent of the premium for the current Company directors' and
officers' liability insurance; provided that if such insurance cannot be so
maintained at such cost, Parent shall maintain as much of such insurance as can
be so maintained at a cost equal to 150 percent of the current annual premiums
of Company for such insurance.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction or written waiver on or prior to the Closing Date of the
following conditions:
(a) Completion of the Offer. Purchaser shall have accepted for
-----------------------
payment and paid for all Shares validly tendered in the Offer and not withdrawn;
provided, however, that neither Parent nor Purchaser may invoke this condition
if Purchaser shall have failed to purchase Shares so tendered and not withdrawn
in violation of the terms of this Agreement or the Offer.
(b) Stockholder Approval. This Agreement shall have been adopted
--------------------
by the affirmative vote of the holders of the requisite number of shares of
capital stock of Company if such vote is required pursuant to Company's
certificate of incorporation, the DGCL or other applicable law.
(c) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, the party so invoking this condition shall have
complied with its obligations under
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Section 6.3 and Section 6.6 and the parties hereto shall have used commercially
reasonable efforts to lift or remove such order, injunction, restraint or
prohibition.
(d) HSR Act. All necessary waiting periods under the HSR Act
-------
applicable to the Merger shall have expired or been earlier terminated.
Section 7.2 Conditions to Parent's or Purchaser's Obligation to Effect the
--------------------------------------------------------------
Merger. The obligation of Parent and/or Purchaser to effect the Merger shall be
- ------
subject to the satisfaction or written waiver on or prior to the Closing Date of
the following condition: No outstanding Option shall entitle the holder thereof,
at the Effective Time or thereafter, to purchase any capital stock of Company.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Merger by the stockholders of Company:
(a) By the mutual written consent of Parent and Company; provided,
--------
however, that if Parent shall have a majority of the directors pursuant to
- -------
Section 1.4, such consent of Company may only be given if approved by the
Continuing Directors.
(b) By either of Parent or Company if (i) a statute, rule or
executive order shall have been enacted, entered or promulgated prohibiting the
transactions contemplated hereby on the terms contemplated by this Agreement or
(ii) any Governmental Entity shall have issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action the parties
hereto shall use their commercially reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree, ruling or other action shall have
become final and non-appealable.
(c) By either of Parent or Company if the consummation of the
Offer shall not have occurred on or before July 31, 1999; provided, however,
-------- -------
that the party seeking to terminate this Agreement pursuant to this Section
8.1(c) shall not
49
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have breached in any material respect its obligations under this Agreement;
(d) By Company:
(i) if Company has entered into an agreement with respect
to a Superior Proposal or Company or the Board of Directors of Company has
approved or recommended a Superior Proposal in accordance with Section 6.5(b),
provided Company has complied with all provisions of Section 6.5, including the
notice provisions therein, and that it simultaneously terminates this Agreement
and makes simultaneous payment to the Parent of the Termination Fee and the
Expenses (as such terms are defined in Section 9.2); or
(ii) if Parent or Purchaser shall have terminated the Offer
or the Offer expires without Parent or Purchaser, as the case may be, purchasing
any Shares pursuant thereto; provided that Company may not terminate this
Agreement pursuant to this Section 8.1(d)(ii) if Company is in material breach
of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that Company
may not terminate this Agreement pursuant to this Section 8.1(d)(iii) if Company
is in material breach of this Agreement; or
(iv) if there shall be a material breach by either Parent or
Purchaser of any of their representations, warranties, covenants or agreements
contained in this Agreement, except where such breach does not have a material
adverse effect on the ability of Parent or Purchaser to consummate the Offer or
the Merger.
(e) By Parent or Purchaser:
(i) (A) if, prior to the purchase of the Shares pursuant to
the Offer, the Board of Directors of Company shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser, its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
recommended or approved, or announced a neutral position with respect to, an
Acquisition Proposal or upon request of Parent, shall fail to reaffirm its
approval and recommendation of the Offer, the Merger Agreement, or the Merger;
or
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(B) if there shall have been a material breach by the Company of
any provision of Section 6.5; or
(ii) if the Offer has expired or terminated without Parent or
Purchaser purchasing any Shares thereunder and, pursuant to Exhibit A and
Article I hereof, the Purchaser is neither required to accept and pay for the
Shares tendered in the Offer nor extend the expiration date of the Offer,
provided that Parent or Purchaser may not terminate this Agreement pursuant to
- --------
this Section 8.1(e)(ii) if Parent or Purchaser is in material breach of this
Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Exhibit A hereto which occurrence is incapable of being
cured or remediated prior to the initial expiration date of the Offer, Parent,
Purchaser or any of their affiliates shall have failed to commence the Offer on
or prior to five business days following the date of the initial public
announcement of the Offer, provided that Parent or Purchaser may not terminate
this Agreement pursuant to Section 8.1(e)(iii) if Parent or Purchaser is in
material breach of this Agreement; or
(iv) if any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the Shares; or
(v) if there shall be a breach by Company of any of its
representations or warranties, contained in this Agreement (without reference to
any "Material Adverse Effect" or "materiality" qualifications contained therein)
which breach causes a Material Adverse Effect on Company and is incapable of
being cured prior to the twentieth business day following the initial expiration
date of the Offer or there shall be a material breach by Company of any of its
covenants or agreements contained in this Agreement.
Section 8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Company or Parent or Purchaser as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Purchaser or Company, other than
the provisions of Section 4.1(t), Section 6.2, this Section 8.2 and Article IX
and except to the extent
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that such termination results from the willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 Fees and Expenses. (a) Except as provided in Section 9.2(b)
-----------------
below, all fees and expenses incurred in connection with the Offer, the Merger,
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) If (x) Parent or Purchaser terminates this Agreement
pursuant to Section 8.1(e)(i), or (y) Company terminates this Agreement pursuant
to Section 8.1(d)(i), then in each case, Company shall pay, or cause to be paid
to Parent, at the time of termination, an amount equal to $2,870,000 (the
"Termination Fee") and an amount equal to Parent's and Purchaser's actual and
reasonably documented out-of-pocket expenses incurred by Parent or Purchaser in
connection with the Offer, the Merger, this Agreement and the consummation of
the transactions contemplated hereby up to a maximum expense reimbursement
amount of $718,000 (the "Expenses"). In addition, if this Agreement is
terminated by Parent or Purchaser pursuant to Section 8.1(e)(ii) solely as a
result of the failure of the Minimum Condition or by Company pursuant to Section
8.1(d)(ii) and, in each case at the time of such termination, Parent is not in
material breach of this Agreement and there has been previously publicly
announced, and not withdrawn, an Acquisition Proposal, and, if Company shall
thereafter, within 9 months after such termination, enter into an agreement with
respect to such Acquisition Proposal, then Company shall pay the Termination Fee
concurrently with entering into any such agreement. If this Agreement is
terminated by Parent or Purchaser pursuant to Section 8.1(e)(v), then Company
shall pay Parent the Expenses. Any payments required to be made pursuant to this
Section 9.2 shall be made by wire transfer of same day funds to an
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account designated by Parent.
Section 9.3 Definitions. For purposes of this Agreement:
-----------
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "business day" means any day other than Saturday, Sunday or
any other day on which banks in the City of New York are required or permitted
to close;
(c) "Disclosure Schedule" means the disclosure schedule delivered
by Company to Parent and Purchaser simultaneously with the execution of this
Agreement;
(d) "Environmental Laws" means any federal, state or local law
relating to: (i) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances; or (iii) otherwise relating to
pollution of the environment or the protection of human health;
(e) "Hazardous Substances" means: (i) those substances defined in
or regulated under the following federal statutes and their state counterparts,
as each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas and any mixtures thereof; (iv) radon; (v) any
other contaminant; and (vi) any substance with respect to which any Governmental
Entity requires environmental investigation, monitoring, reporting or
remediation;
(f) "knowledge" means the actual knowledge of any executive
officer of Company or Parent, as the case may be, after making due inquiry under
the circumstances;
53
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(g) "Liens" means, collectively, all pledges, claims, liens,
charges, mortgages, conditional sale or title retention agreements,
hypothecations, collateral assignments, security interests, easements and other
encumbrances of any kind or nature whatsoever;
(h) a "Material Adverse Effect" with respect to any person means
any event, change, occurrence, effect, fact or circumstance having, or which
could reasonably be expected to have, a material adverse effect on (i) the
ability of such person to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or (ii) the financial condition,
results of operations, value or business of such person and its Subsidiaries
taken as a whole; except for those changes, events and effects that (i) are
caused by conditions affecting the United States or world economy as a whole or
affecting the industry in which such entity competes as a whole, which
conditions do not affect such entity in a materially disproportionate manner, or
(ii) are related to or result from announcement or pendency of the Merger or the
Offer;
(i) the "NYSE" means the New York Stock Exchange;
(j) a "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity;
(k) "Principal Stockholders" means Cisco Systems, Inc., Advent
International Corp. and certain affiliates thereof, Andrew I. Fillat, Ralph B.
Godfrey, Ronald W. Braniff, Augustus J. Berkeley, William C. Jones, Christopher
A. Markle, Victor C. Langford, James A. Barth and Michael J. Satterwhite;
(l) a "Subsidiary" of any person means any other person of which
(i) the first mentioned person or any Subsidiary thereof is a general partner,
(ii) voting power to elect a majority of the board of directors or others
performing similar functions with respect to such other person is held by the
first mentioned person and/or by any one or more of its Subsidiaries, or (iii)
at least 50% of the equity interests of such other person is, directly or
indirectly, owned or controlled by such first mentioned person and/or by any one
or more of its Subsidiaries.
Section 9.4 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of Company contemplated
hereby, by written agreement of the parties hereto (which in the case of Company
54
<PAGE>
shall include approvals as contemplated in Section 1.4(c)), at any time prior to
the Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration or otherwise adversely affect the
rights of such stockholders.
Section 9.5 Extension; Waiver. Subject to Section 1.4 hereof, at any time
-----------------
prior to the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement, or (c) subject to Section 9.4, waive compliance with any of the
agreements or conditions of the other parties contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in a written instrument executed and delivered by a duly
authorized officer on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 9.6 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to Parent or to Purchaser, to
Sterling Software, Inc.
300 Crescent Court, Suite 1200
Dallas, Texas 75201
Attention: Don J. McDermett, Jr., Esq.
Telecopy: (214) 981-1265
55
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with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Blaine V. Fogg, Esq.
Telecopy: (212) 735-2000
(ii) if to Company, to
Interlink Computer Sciences, Inc.
47370 Fremont Boulevard
Fremont, California 94538
Attention: Augustus J. Berkeley
Telecopy: (510) 249-6150
with a copy (which shall not constitute notice) to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Thomas C. DeFilipps, Esq.
Telecopy: (650) 845-5000
Section 9.7 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
Section 9.8 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (except for the letter agreement referenced in
the last sentence of Section 6.2). Other than the provisions of Section 6.8,
this Agreement is not intended to confer upon any person (including without
limitation any employees or former employees of Company), other than the parties
hereto, any rights or
56
<PAGE>
remedies.
Section 9.9 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.10 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, and any such assignment without
such prior written consent shall be null and void, except that Parent and/or
Purchaser may assign this Agreement to any direct or indirect wholly owned
Subsidiary of Parent without the prior consent of Company; provided that Parent
and/or Purchaser, as the case may be, shall remain liable for all of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 9.11 Enforcement. Irreparable damage would occur in the event that
-----------
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the personal jurisdiction
of the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware) in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (iii) shall not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than the Court of Chancery in and for New Castle
County in the State of Delaware (or, if such court lacks subject matter
jurisdiction, any appropriate state or federal court in New Castle County in the
State of Delaware).
57
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Section 9.12 Severability. Whenever possible, each provision or portion of
------------
any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 9.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
58
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
-------------------------------
Name: Don J. McDermett, Jr.
Title: Senior Vice President
STERLING SOFTWARE (SOUTHWEST), INC.
By: /s/ Don J. McDermett, Jr.
-------------------------------
Name: Don J. McDermett, Jr.
Title: Vice President
INTERLINK COMPUTER SCIENCES, INC.
By: /s/ Augustus J. Berkeley
-------------------------------
Name: Augustus J. Berkeley
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement and Plan of Merger (the "Agreement") of which this
Exhibit A is a part. Notwithstanding any other provision of the Offer and
subject to the terms of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may amend the Offer consistent with the terms of the Agreement or
terminate the Offer and not accept for payment any tendered Shares, if (i) there
shall not have been validly tendered and not withdrawn prior to the expiration
of the Offer such number of Shares which, when added to the Shares, if any,
beneficially owned by Parent or Purchaser, would constitute at least a majority
of the Shares outstanding on a fully diluted basis on the date of purchase ("on
a fully-diluted basis" meaning, as of any date, the number of Shares
outstanding, together with the Shares which Company may be required to issue
pursuant to warrants, options or obligations outstanding at that date under
employee stock or similar benefit plans or otherwise whether or not vested or
then exercisable) (the "Minimum Condition"), (ii) any applicable waiting period
under the HSR Act has not expired or been terminated, or (iii) at any time on or
after the date of the Agreement and prior to the Expiration Date, any of the
following events shall occur and be continuing and shall not have resulted from
the breach by Parent or Purchaser of any of their obligations under the
Agreement:
(a) there shall be pending any suit, action or proceeding brought by
any third party that has a high likelihood of success on the merits or by any
Governmental Entity before any court of competent jurisdiction (i) seeking to
prohibit or impose any material limitations on Parent's or Purchaser's ownership
or operation (or that of any of their respective Subsidiaries or affiliates) of
all or a material portion of their or Company's businesses or assets, (ii)
seeking to compel Parent or Purchaser or their respective Subsidiaries and
affiliates to dispose of or hold separate any material portion of the business
or assets of Company or Parent and their respective Subsidiaries, in each case
taken as a whole, as a result of the Agreement, (iii) challenging the
acquisition by Parent or Purchaser of any Shares pursuant to the Offer, (iv)
seeking to restrain or prohibit the making or consumma-
A-1
<PAGE>
tion of the Offer or the Merger or the performance of any of the transactions
contemplated by the Agreement, (v) seeking to obtain from Company any damages
(including damages against Company's directors or officers for which they may
seek indemnification from Company) that would be reasonably likely to have a
Material Adverse Effect on Company, (vi) seeking to impose material limitations
on the ability of Purchaser, or rendering Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, or (vii) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
Purchaser or Parent on all matters properly presented to Company's stockholders;
or
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (vii) of paragraph (a) above; or
(c) (i) the representations and warranties of Company contained
in Sections 4.1(b), 4.1(u), 4.1(v), 4.1(w), 4.1(x) and the first five sentences
of Section 4.1(d) of the Agreement shall not be true and correct in all material
respects as of the date of consummation of the Offer as though made on or as of
such date (other than any such representations and warranties that by their
terms address only matters as of another specified dated, which shall be true
and correct only as of such other specified date) and (ii) all other
representations and warranties of Company contained in the Agreement, which
representations and warranties shall be deemed for purposes of this condition
not to include any qualification or limitation with respect to materiality
(whether by reference to "Material Adverse Effect" or otherwise), shall not be
true and correct as of the date of consummation of the Offer as though made on
or as of such date (other than representations and warranties that by their
terms address matters only as of another specified date, which shall be true and
correct only as of such other specified date), except in the case of this clause
(ii) where the matters in respect of which such representations and warranties
are not true and correct, in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect on Company, with the
same effect as though such representations and warranties were made as of the
date of consummation of the Offer; or
A-2
<PAGE>
(d) there shall have occurred a Material Adverse Effect on
Company; or
(e) Company's Board of Directors (i) shall have withdrawn, or
modified or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, (ii) shall have recommended or announced a neutral
position with respect to an Acquisition Proposal, (iii) shall have adopted any
resolution tion to effect any of the foregoing, or (iv) upon request of Parent,
shall fail to reaffirm its approval or recommendation of the Offer, the Merger
Agreement, or the Merger; or
(f) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member, shall have acquired or announced its intention to
acquire (including by commencement of a tender or exchange offer) beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the Shares; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms;
which in the sole good faith judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by Parent
or Purchaser) giving rise to such condition makes it inadvisable to proceed with
the Offer and/or with such acceptance for payment of or payments for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may (except for the Minimum Condition) be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent or Purchaser. The failure by Parent or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
A-3
<PAGE>
EXHIBIT (C)(2)
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of March 23, 1999 (this "Agreement"),
is made and entered into among Sterling Software, Inc., a Delaware corporation
("Parent"), Sterling Software (Southwest), Inc., a Delaware corporation and
indirect wholly owned subsidiary of Parent ("Purchaser"), and Adtel Limited
Partnership, Adventact Limited Partnership, Advent International Investors II
Limited Partnership, Adwest Limited Partnership, Global Private Equity II
Limited Partnership and Golden Gate Development and Investment Limited
Partnership (collectively referred to hereinafter as "Stockholder").
RECITALS:
A. Parent, Purchaser and Interlink Computer Sciences, Inc., a Delaware
corporation ("Company"), propose to enter into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), pursuant to which the
Purchaser will merge with and into Company (the "Merger") on the terms and
subject to the conditions set forth in the Merger Agreement. Except as otherwise
defined herein, terms used herein with initial capital letters have the
respective meanings ascribed thereto in the Merger Agreement.
B. As of the date hereof, Stockholder beneficially owns and is
entitled to dispose of (or to direct the disposition of) and to vote (or to
direct the voting of) 447,232 shares of common stock ("Common Stock"), par value
$.001 per share ("Shares"), of Company (such Shares, together with any other
shares of capital stock of Company the beneficial ownership of which is
acquired, or can be acquired upon exercise of options or warrants at a price
equal to or less than the Option Consideration (as defined in Section 2.1), by
Stockholder during the period from and including the date hereof through and
including the earlier of (i) the Effective Time and (ii) the date that is 120
days after the date on which the Merger Agreement is terminated pursuant to
Section 8.1 thereof, are collectively referred to herein as "Subject Shares").
C. Pursuant to the Merger Agreement, Purchaser shall commence a cash
tender offer (the "Offer") to purchase at a price of $7.00 per Share all
outstanding Shares, including all of the Subject Shares. Stockholder has advised
Parent and Purchaser that it intends to tender the Subject Shares in the Offer.
<PAGE>
D. As a condition and inducement to Parent's and Purchaser's willingness to
enter into the Merger Agreement, Parent and Purchaser have requested that
Stockholder agree, and Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained in this Agreement and the Merger
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
ARTICLE I
VOTING AGREEMENT
Section 1.1 Agreement to Vote Shares. During the Option Period (as
------------------------
defined in Section 2.2), at any meeting of the stockholders of Company called to
consider and vote upon the adoption of the Merger Agreement (and at any and all
postponements and adjournments thereof), and in connection with any action to be
taken in respect of the adoption of the Merger Agreement by written consent of
stockholders of Company, Stockholder shall vote or cause to be voted (including
by written consent, if applicable) all of the Subject Shares, now owned or
hereafter acquired, in favor of the adoption of the Merger Agreement and in
favor of any other matter necessary for the consummation of the transactions
contemplated by the Merger Agreement and considered and voted upon at any such
meeting or made the subject of any such written consent, as applicable. During
the Option Period, at any meeting of the stockholders of Company called to
consider and vote upon any Other Proposal (as hereinafter defined) (and at any
and all postponements and adjournments thereof), and in connection with any
action to be taken in respect of any Other Proposal by written consent of
stockholders of Company, Stockholder shall vote or cause to be voted (including
by written consent, if applicable) all of the Subject Shares against such Other
Proposal. For purposes of this Agreement, the term "Other Proposal" means any
(a) Acquisition Proposal (as defined in the Merger Agreement) or (b) other
action which is intended or could reasonably be expected to materially impede,
interfere with, delay or materially and adversely affect the consummation of the
Merger or any of the other transactions contemplated by the Merger Agreement or
this Agreement; provided, however, that neither the Merger nor any other
transaction contemplated by the Merger Agreement to be consummated by Company,
Parent or Purchaser in connection with the Merger shall constitute an Other
Proposal. Stockholder shall not enter into any
2
<PAGE>
agreement or understanding with any person or entity the effect of which would
be violative of the provisions and agreements contained in this Section 1.1.
Section 1.2 Irrevocable Proxy.
-----------------
(a) Grant of Proxy. STOCKHOLDER HEREBY APPOINTS PARENT AND ANY
--------------
DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND ATTORNEY-
IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE GENERAL
CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO VOTE OR
ACT BY WRITTEN CONSENT DURING THE OPTION PERIOD WITH RESPECT TO THE SUBJECT
SHARES IN ACCORDANCE WITH SECTION 1.1 HEREOF. THIS PROXY IS GIVEN TO SECURE THE
PERFORMANCE OF THE DUTIES OF STOCKHOLDER UNDER THIS AGREEMENT. STOCKHOLDER
AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE.
STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS
MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY.
(b) Other Proxies Revoked. Stockholder represents that any proxies
---------------------
heretofore given in respect of the Subject Shares are not irrevocable, and that
all such proxies are hereby revoked.
ARTICLE II
OPTION
Section 2.1 Grant of Option. Stockholder hereby grants to Parent
----------------
an irrevocable option (the "Option") to purchase the Subject Shares on the terms
and subject to the conditions set forth herein, at a price per Subject Share
equal to $7.00 in cash or any higher price that Parent or any controlled
affiliate of Parent offers to pay for the shares of Common Stock of the Company
made generally to the stockholders of the Company (such price being referred to
as the "Option Consideration").
Section 2.2 Exercise of Option. (a) Parent may exercise the
------------------
Option, in whole or in part, at any time or from time to time during the period
(the "Option Period") from and including the date hereof through and including
the earlier of (i) the date that is 120 days after the purchase of shares of
common stock of the Company
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<PAGE>
pursuant to the Offer, or (ii) the date that is 120 days after the date on which
the Merger Agreement is terminated pursuant to Section 8.1 thereof, provided,
--------
however, that the Option shall terminate (x) with respect to any Subject Shares
- -------
that are tendered pursuant to the Offer and purchased by Purchaser thereunder,
(y) if the Merger Agreement is terminated pursuant to Section 8.1(d)(iv) thereof
and at the time of such termination Company is not in breach of the Merger
Agreement, and (z) if the Merger Agreement is terminated solely because the
condition contained in Section 7.1(d) of the Merger Agreement is incapable of
being fulfilled. Notwithstanding anything in this Agreement to the contrary,
Parent shall be entitled to purchase all Subject Shares in respect of which it
shall have exercised the Option in accordance with the terms hereof prior to the
expiration of the Option Period, and the expiration of the Option Period shall
not affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such expiration.
(b) Parent shall not demand appraisal rights under Section 262 of the
DGCL in respect of any Subject Shares.
(c) If Parent wishes to exercise the Option, it shall deliver to
Stockholder a written notice (an "Exercise Notice") to that effect which
specifies (i) the number of Subject Shares to be purchased from Stockholder and
(ii) a date (an "Option Closing Date") not earlier than three business days
after the date such Exercise Notice is delivered for the consummation of the
purchase and sale of such Subject Shares (an "Option Closing"). If and to the
extent necessary to deliver the number of Shares to be purchased pursuant
hereto, Stockholder shall exercise vested stock options promptly upon receipt of
an Exercise Notice. If the Option Closing cannot be effected on the Option
Closing Date specified in the Exercise Notice by reason of a preliminary or
final injunction or any other applicable judgment, decree, order, law or
regulation, or because any applicable waiting period under the HSR Act shall not
have expired or been terminated, (i) Stockholder shall promptly take all such
actions as may be reasonably requested by Parent, and shall otherwise fully
cooperate with Parent, to cause the elimination of all such impediments to the
Option Closing and (ii) the Option Closing Date specified in the Exercise Notice
shall be extended to the fifth business day following the elimination of all
such impediments. The place of the Option Closing shall be at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center, San
Francisco, California 94111, and the time of the Option Closing shall be 10:00
a.m. (New York Time) on the Option Closing Date.
Section 2.3 Payment and Delivery of Certificates. At any Option
------------------------------------
Closing, Parent shall pay to Stockholder the Option Consideration payable in
respect of
4
<PAGE>
the Subject Shares to be purchased from Stockholder at the Option Closing, and
Stockholder shall deliver to Parent such Subject Shares, free and clear of all
Liens, with the certificate or certificates evidencing such Subject Shares being
duly endorsed for transfer by Stockholder and accompanied by all powers of
attorney and/or other instruments necessary to convey valid and unencumbered
title thereto to Parent, and shall, to the extent permissible, assign to Parent
(pursuant to a written instrument in form and substance satisfactory to Parent)
all rights that Stockholder may have to require Company to register such Subject
Shares under the Securities Act. Transfer taxes, if any, imposed as a result of
the exercise of the Option shall be borne by Stockholder.
Section 2.4 Adjustment upon Changes in Capitalization, Etc. In the
----------------------------------------------
event of any change in the capital stock of Company by reason of a stock
dividend, split-up, merger, recapitalization, combination, exchange of shares,
extraordinary distribution or similar transaction, the type and number or amount
of shares, securities or other property subject to the Option, and the Option
Consideration payable therefor, shall be adjusted appropriately so that Parent
shall receive upon exercise of Option the type and number or amount of shares,
securities or property that Parent would have retained and/or been entitled to
receive in respect of the Subject Shares if the Option had been exercised
immediately prior to such event relating to Company or the record date therefor,
as applicable. The provisions of this Section 2.4 shall apply in a like manner
to successive stock dividends, split-ups, mergers, recapitalizations,
combinations, exchanges of shares or extraordinary distributions or similar
transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Certain Representations and Warranties of Stockholder.
-----------------------------------------------------
Stockholder represents and warrants to Parent and Purchaser as follows:
(a) Ownership. Stockholder is the sole record and beneficial owner of
---------
447,232 Shares and has full and unrestricted power to dispose of and to vote
such Shares. Stockholder does not beneficially own any securities of Company on
the date hereof other than such Shares. Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in
Articles I and II hereof, sole power of disposition, sole power of conversion,
sole power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case
5
<PAGE>
with respect to all of the Subject Shares with no limitations, qualifications or
restriction on such rights, subject to applicable securities laws and the terms
of this Agreement.
(b) Power and Authority; Execution and Delivery. Stockholder has all
-------------------------------------------
requisite legal capacity, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Stockholder and the consummation by Stockholder of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Stockholder. This Agreement has been duly executed and
delivered by Stockholder and, assuming that this Agreement constitutes the valid
and binding obligation of the other parties hereto, constitutes a valid and
binding obligation of Stockholder, enforceable against Stockholder in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
(c) No Conflicts. The execution and delivery of this Agreement do not,
------------
and, subject to compliance with the HSR Act and securities laws, to the extent
applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not (i) conflict with or result in
any breach of any organizational documents applicable to Stockholder or (ii)
conflict with, result in a breach or violation of or default (with or without
notice or lapse of time or both) under, or give rise to a material obligation, a
right of termination, cancellation, or acceleration of any obligation or a loss
of a material benefit under, or require notice to or the consent of any person
under any agreement, instrument, undertaking, law, rule, regulation, judgment,
order, injunction, decree, determination or award binding on Stockholder, other
than any such conflicts, breaches, violations, defaults, obligations, rights or
losses that individually or in the aggregate would not (i) materially impair the
ability of Stockholder to perform Stockholder's obligations under this Agreement
or (ii) prevent or delay the consummation of any of the transactions
contemplated hereby.
(d) No Encumbrances. Except as applicable in connection with the
---------------
transactions contemplated by Articles I and II hereof, the Subject Shares and
the certificates representing the Subject Shares are now, and at all times
during the term hereof will be, held by Stockholder, or by a nominee or
custodian for the benefit of Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder or any such encumbrances not caused
or created by Stockholder.
6
<PAGE>
(e) No Finder's Fees. No broker, investment banker, financial advisor or
----------------
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Stockholder.
Section 3.2 Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser hereby represent and warrant to Stockholder that:
(a) Power and Authority; Execution and Delivery. Parent and Purchaser
-------------------------------------------
each has all requisite legal capacity, corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and Purchaser. This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming that this Agreement constitutes the valid
and binding obligation of Stockholder, constitutes a valid and binding
obligation of Parent and Purchaser, enforceable against Parent and Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
(b) No Conflicts. The execution and delivery of this Agreement do not,
------------
and, subject to compliance with the HSR Act, to the extent applicable, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not (i) conflict with or result in any breach of any
organizational documents applicable to Parent or Purchaser or (ii) conflict
with, result in a breach or violation of or default (with or without notice or
lapse of time or both) under, or give rise to a material obligation, right of
termination, cancellation, or acceleration of any obligation or a loss of a
material benefit under, or require notice to or the consent of any person under
any agreement, instrument, undertaking, law, rule, regulation, judgment, order,
injunction, decree, determination or award binding on Parent or Purchaser, other
than any such conflicts, breaches, violations, defaults, obligations, rights or
losses that individually or in the aggregate would not (i) impair the ability of
Parent and Purchaser to perform their obligations under this Agreement or (ii)
prevent or delay the consummation of any of the transactions contemplated
hereby.
(c) Purchase Not for Distribution. The Option and the Subject Shares to
-----------------------------
be acquired upon exercise of the Option are being and shall be acquired by
7
<PAGE>
Parent without a view to public distribution thereof otherwise than in
compliance with the Securities Act and applicable state securities laws and
shall not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act and in
compliance with applicable state securities laws.
ARTICLE IV
CERTAIN COVENANTS
Section 4.1 Certain Covenants of Stockholder.
--------------------------------
(a) (i) Restriction on Transfer of Subject Shares, Proxies and
------------------------------------------------------
Noninterference. During the period (the "Restricted Period") from and including
- ---------------
the date hereof through and including the earlier of (x) the Effective Time and
(y) the end of the Option Period, Stockholder shall not, directly or indirectly:
(A) except pursuant to the terms of this Agreement (including Sections
4.1(a)(ii), (iii) and (iv)) and except for the tender of Subject Shares in the
Offer, offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Subject Shares; (B) except pursuant to the terms of this Agreement, grant
any proxies (other than proxies relating to the election of management's slate
of directors at an annual meeting of Company's stockholders, and other routine
matters which would not require the filing of a preliminary proxy statement
under Rule 14a-6(a) of the Exchange Act), or powers of attorney, deposit any of
the Subject Shares into a voting trust or enter into a voting agreement with
respect to any of the Subject Shares; or (C) take any action that would make any
representation or warranty contained herein untrue or incorrect or have the
effect of impairing the ability of Stockholder to perform Stockholder's
obligations under this Agreement or preventing or delaying the consummation of
any of the transactions contemplated hereby or by the Merger Agreement.
(ii) The restrictions with respect to the transfer of the Subject
Shares contained in Section 4.1(a)(i)(A) of this Agreement (the "Transfer
Restrictions") shall not limit the ability of Stockholder to transfer some, or
all, of the Subject Shares to an affiliate of Stockholder, as long as, before
any such transfer, such affiliate enters into a written agreement (an
"Acknowledgment Agreement") with Parent and Purchaser whereby such affiliate
agrees to be bound by all of the terms and provisions of this Agreement with
respect to the Subject Shares received by such affiliate.
8
<PAGE>
(iii) At any time after the Merger Agreement is terminated in
accordance with its terms, except for the termination of the Merger Agreement
pursuant to Section 8.1(d)(i) or Section 8.1(e)(i) thereof, the Transfer
Restrictions shall not limit the ability of Stockholder to sell some, or all, of
the Subject Shares in open market transactions. The sale of Subject Shares in
open market transactions permitted by this Section 4.1(a)(iii) shall not,
however, limit or relieve Stockholder of its obligations hereunder to deliver
Shares to Parent in the event that Parent validly exercises the Option.
(iv) At any time after the Merger Agreement is terminated in
accordance with its terms, except for the termination of the Merger Agreement
pursuant to Section 8.1(d)(i) or Section 8.1(e)(i) thereof, the Transfer
Restrictions shall not limit the ability of Stockholder to sell or transfer some
or all of the Subject Shares in a privately negotiated transaction to one or
more third parties, as long as, before any such sale or transfer, each such
third party enters into an Acknowledgment Agreement with Parent.
(b) Cooperation. Stockholder, in the capacity as a stockholder, shall
-----------
cooperate fully with Parent, Purchaser and Company in connection with their
respective efforts to fulfill the conditions to the Merger set forth in Article
VII of the Merger Agreement.
(c) Releases. Stockholder hereby fully, unconditionally and irrevocably
--------
releases, effective as of the Effective Time, any and all claims and causes of
action that Stockholder has or may have against Company or any of its
Subsidiaries or any present or former director, officer, employee or agent of
Company or any of its Subsidiaries (collectively, the "Released Parties")
arising or resulting from or relating to any act, omission, event or occurrence
prior to the Effective Time.
(d) No Solicitation. Stockholder shall not, in the capacity as a
---------------
stockholder, respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) concerning any
business combination merger, tender offer, exchange offer, sale of assets, sale
of shares of capital stock or debt securities or similar transactions involving
Company or any Subsidiary, division or operating or principal business unit of
Company. If Stockholder, in the capacity as a Stockholder, receives any such
inquiry or proposal, then Stockholder shall promptly inform Parent of the
existence thereof. Stockholder, in the capacity as a Stockholder, will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
9
<PAGE>
(e) Reliance by Parent. Stockholder understands and acknowledges that
------------------
Parent and Purchaser are entering into, the Merger Agreement in reliance upon
Stockholder's execution and delivery of this Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1 Fees and Expenses. Each party hereto shall pay its own
-----------------
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Section 5.2 Amendment; Termination. This Agreement may not be
----------------------
amended except by an instrument in writing signed on behalf of each of the
parties hereto. This Agreement and the proxies granted pursuant to Section 1.2
shall terminate immediately following (i) termination of the Merger Agreement
pursuant to Section 8.1(a) thereof, provided at the time of such termination the
parties intend to abandon the transactions contemplated by the Merger Agreement
or (ii) termination of the Merger Agreement pursuant to Section 8.1(d)(iv)
thereof, provided at the time of such termination Company is not in breach of
the Merger Agreement or (iii) any termination of the Merger Agreement solely
because the condition contained in Section 7.1(d) of the Merger Agreement is
incapable of being fulfilled.
Section 5.3 Extension; Waiver. Any agreement on the part of a party
-----------------
to waive any provision of this Agreement, or to extend the time for any
performance hereunder, shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 5.4 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, and is not intended to confer upon any person
other than the parties any rights or remedies; provided, however, that the
provisions of Section 4.1(c) are intended to inure to the benefit of, and to be
enforceable by, the Released Parties.
10
<PAGE>
Section 5.5 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Section 5.6 Notices. All notices, requests, claims, demands and
-------
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, or sent by overnight courier or telecopy
(providing proof of delivery) to the address set forth below (or, in each case,
at such other address as shall be specified by like notice).
If to Parent or Purchaser:
Sterling Software, Inc.
300 Crescent Court, Suite 1200
Dallas, Texas 75201
Attention: Don J. McDermett, Jr., Esq.
Telecopy: (214) 981-1265
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Blaine V. Fogg, Esq.
Telecopy: (212) 735-2000
If to Stockholder:
c/o Advent International
101 Federal Street
Boston, MA 02110
Attention: Andrew I. Fillat
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Thomas C. DeFilipps, Esq.
Telecopy: (650) 493-6811
11
<PAGE>
Section 5.7 Assignment. Neither this Agreement nor any of the rights,
----------
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by Stockholder without the prior written consent of Parent,
and any such assignment or delegation that is not consented to shall be null and
void. This Agreement, together with any rights, interests, or obligations of
Parent and Purchaser hereunder, may be assigned or delegated, in whole or in
part, by Parent and Purchaser without the consent of or any action by
Stockholder upon notice by Parent or Purchaser to Stockholder as herein
provided. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns (including without limitation any person to
whom any Subject Shares are sold, transferred, assigned or passed, whether by
operation of law or otherwise).
Section 5.8 Confidentiality. Stockholder recognizes that successful
---------------
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, Stockholder hereby agrees not to
disclose or discuss such matters with anyone not a party to this Agreement
(other than its counsel and advisors, if any) without the prior written consent
of Parent, except for filings required pursuant to the Exchange Act and the
rules and regulations thereunder or disclosures its counsel advises are
necessary in order to fulfill its obligations imposed by law, in which event
Stockholder shall give notice of such disclosure to Parent as promptly as
practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.
Section 5.9 Further Assurances. Stockholder shall execute and deliver
------------------
such other documents and instruments and take such further actions as may be
necessary or appropriate or as may be reasonably requested by Parent or
Purchaser in order to ensure that Parent and Purchaser receive the full benefit
of this Agreement.
Section 5.10 Enforcement. Irreparable damage would occur in the event
-----------
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the
12
<PAGE>
personal jurisdiction of the Court of Chancery in and for New Castle County in
the State of Delaware (or, if such court lacks subject matter jurisdiction, any
appropriate state or federal court in New Castle County in the State of
Delaware) in the event any dispute arises out of this Agreement or any of the
transactions contemplated hereby, (ii) shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (iii) shall not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than the Court of Chancery
in and for New Castle County in the State of Delaware (or, if such court lacks
subject matter jurisdiction, any appropriate state or federal court in New
Castle County in the State of Delaware).
Section 5.11 Severability. Whenever possible, each provision or portion
------------
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
Section 5.12 Descriptive Headings. The descriptive headings used herein
--------------------
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 5.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other parties.
[signature page follows]
13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
ADTEL LIMITED PARTNERSHIP
ADVENTACT LIMITED PARTNERSHIP
ADWEST LIMITED PARTNERSHIP
GLOBAL PRIVATE EQUITY II LIMITED
PARTNERSHIP
GOLDEN GATE DEVELOPMENT AND
INVESTMENT LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: Andrew I. Fillat, Senior Vice President*
ADVENT INTERNATIONAL INVESTORS II LIMITED
PARTNERSHIP
By: Advent International Corporation, General
Partner
By: Andrew I. Fillat, Senior Vice President*
*For all of the above:
/s/ Andrew I. Fillat
----------------------------------
Andrew I. Fillat
<PAGE>
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
-----------------------------
Name: Don J. McDermett, Jr.
Title: Senior Vice President
STERLING SOFTWARE (SOUTHWEST), INC.
By: /s/ Don J. McDermett, Jr.
-----------------------------
Name: Don J. McDermett, Jr.
Title: Vice President
<PAGE>
EXHIBIT (C)(3)
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of March 23, 1999 (this
"Agreement"), is made and entered into among Sterling Software, Inc., a Delaware
corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware
corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and
Cisco Systems, Inc. ("Stockholder").
RECITALS:
A. Parent, Purchaser and Interlink Computer Sciences, Inc., a
Delaware corporation ("Company"), propose to enter into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which
the Purchaser will merge with and into Company (the "Merger") on the terms and
subject to the conditions set forth in the Merger Agreement. Except as otherwise
defined herein, terms used herein with initial capital letters have the
respective meanings ascribed thereto in the Merger Agreement.
B. As of the date hereof, Stockholder beneficially owns and is
entitled to dispose of (or to direct the disposition of) and to vote (or to
direct the voting of) 622,000 shares of common stock ("Common Stock"), par value
$.001 per share ("Shares"), of Company (such Shares, together with any other
shares of capital stock of Company the beneficial ownership of which is
acquired, or can be acquired upon exercise of options or warrants at a price
equal to or less than the Option Consideration (as defined in Section 2.1), by
Stockholder during the period from and including the date hereof through and
including the earlier of (i) the Effective Time and (ii) the date that is 120
days after the date on which the Merger Agreement is terminated pursuant to
Section 8.1 thereof, are collectively referred to herein as "Subject Shares").
C. Pursuant to the Merger Agreement, Purchaser shall commence a cash
tender offer (the "Offer") to purchase at a price of $7.00 per Share all
outstanding Shares, including all of the Subject Shares. Stockholder has advised
Parent and Purchaser that it intends to tender the Subject Shares in the Offer.
D. As a condition and inducement to Parent's and Purchaser's
willingness to enter into the Merger Agreement, Parent and Purchaser have
requested that Stockholder agree, and Stockholder has agreed, to enter into this
Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement and the Merger Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
VOTING AGREEMENT
Section 1.1 Agreement to Vote Shares. During the Option Period (as
------------------------
defined in Section 2.2), at any meeting of the stockholders of Company called to
consider and vote upon the adoption of the Merger Agreement (and at any and all
postponements and adjournments thereof), and in connection with any action to be
taken in respect of the adoption of the Merger Agreement by written consent of
stockholders of Company, Stockholder shall vote or cause to be voted (including
by written consent, if applicable) all of the Subject Shares, now owned or
hereafter acquired, in favor of the adoption of the Merger Agreement and in
favor of any other matter necessary for the consummation of the transactions
contemplated by the Merger Agreement and considered and voted upon at any such
meeting or made the subject of any such written consent, as applicable. During
the Option Period, at any meeting of the stockholders of Company called to
consider and vote upon any Other Proposal (as hereinafter defined) (and at any
and all postponements and adjournments thereof), and in connection with any
action to be taken in respect of any Other Proposal by written consent of
stockholders of Company, Stockholder shall vote or cause to be voted (including
by written consent, if applicable) all of the Subject Shares against such Other
Proposal. For purposes of this Agreement, the term "Other Proposal" means any
(a) Acquisition Proposal (as defined in the Merger Agreement) or (b) other
action which is intended or could reasonably be expected to materially impede,
interfere with, delay or materially and adversely affect the consummation of the
Merger or any of the other transactions contemplated by the Merger Agreement or
this Agreement; provided, however, that neither the Merger nor any other
transaction contemplated by the Merger Agreement to be consummated by Company,
Parent or Purchaser in connection with the Merger shall constitute an Other
Proposal. Stockholder shall not enter into any agreement or understanding with
any person or entity the effect of which would be violative of the provisions
and agreements contained in this Section 1.1.
2
<PAGE>
Section 1.2 Irrevocable Proxy.
-----------------
(a) Grant of Proxy. STOCKHOLDER HEREBY APPOINTS PARENT AND ANY
--------------
DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND ATTORNEY-
IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE GENERAL
CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO VOTE OR
ACT BY WRITTEN CONSENT DURING THE OPTION PERIOD WITH RESPECT TO THE SUBJECT
SHARES IN ACCORDANCE WITH SECTION 1.1 HEREOF. THIS PROXY IS GIVEN TO SECURE THE
PERFORMANCE OF THE DUTIES OF STOCKHOLDER UNDER THIS AGREEMENT. STOCKHOLDER
AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE.
STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS
MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY.
(b) Other Proxies Revoked. Stockholder represents that any proxies
---------------------
heretofore given in respect of the Subject Shares are not irrevocable, and that
all such proxies are hereby revoked.
ARTICLE II
OPTION
Section 2.1 Grant of Option. Stockholder hereby grants to Parent an
---------------
irrevocable option (the "Option") to purchase the Subject Shares on the terms
and subject to the conditions set forth herein, at a price per Subject Share
equal to $7.00 in cash or any higher price that Parent or any controlled
affiliate of Parent offers to pay for the shares of Common Stock of the Company
made generally to the stockholders of the Company (such price being referred to
as the "Option Consideration").
Section 2.2 Exercise of Option. (a) Parent may exercise the Option,
------------------
in whole or in part, at any time or from time to time during the period (the
"Option Period") from and including the date hereof through and including the
earlier of (i) the date that is 120 days after the purchase of shares of common
stock of the Company pursuant to the Offer, (ii) the date that is 120 days after
the date on which the Merger Agreement is terminated pursuant to Sections
8.1(d)(i) or (e)(i) thereof, (iii) the date that
3
<PAGE>
is 30 days after the date on which the Merger Agreement is terminated pursuant
to Section 8.1(e)(v), and (iv) the date on which the Merger Agreement is
terminated if such termination is other than pursuant to Sections 8.1(d)(i),
(e)(i) or (e)(v) thereof; provided, however, that the Option shall terminate
-------- -------
with respect to any Subject Shares that are tendered pursuant to the Offer and
purchased by Purchaser thereunder. Notwithstanding anything in this Agreement to
the contrary, Parent shall be entitled to purchase all Subject Shares in respect
of which it shall have exercised the Option in accordance with the terms hereof
prior to the expiration of the Option Period, and the expiration of the Option
Period shall not affect any rights hereunder which by their terms do not
terminate or expire prior to or as of such expiration.
(b) Parent shall not demand appraisal rights under Section 262 of the
DGCL in respect of any Subject Shares.
(c) If Parent wishes to exercise the Option, it shall deliver to
Stockholder a written notice (an "Exercise Notice") to that effect which
specifies (i) the number of Subject Shares to be purchased from Stockholder and
(ii) a date (an "Option Closing Date") not earlier than three business days
after the date such Exercise Notice is delivered for the consummation of the
purchase and sale of such Subject Shares (an "Option Closing"). If and to the
extent necessary to deliver the number of Shares to be purchased pursuant
hereto, Stockholder shall exercise vested stock options promptly upon receipt of
an Exercise Notice. If the Option Closing cannot be effected on the Option
Closing Date specified in the Exercise Notice by reason of a preliminary or
final injunction or any other applicable judgment, decree, order, law or
regulation, or because any applicable waiting period under the HSR Act shall not
have expired or been terminated, (i) Stockholder shall promptly take all such
actions as may be reasonably requested by Parent, and shall otherwise fully
cooperate with Parent, to cause the elimination of all such impediments to the
Option Closing and, (ii) the Option Closing Date specified in the Exercise
Notice shall be extended to the fifth business day following the elimination of
all such impediments. The place of the Option Closing shall be at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center, San
Francisco, California 94111, and the time of the Option Closing shall be 10:00
a.m. (New York Time) on the Option Closing Date.
Section 2.3 Payment and Delivery of Certificates. At any Option
------------------------------------
Closing, Parent shall pay to Stockholder the Option Consideration payable in
respect of the Subject Shares to be purchased from Stockholder at the Option
Closing, and Stockholder shall deliver to Parent such Subject Shares, free and
clear of all Liens, with
4
<PAGE>
the certificate or certificates evidencing such Subject Shares being duly
endorsed for transfer by Stockholder and accompanied by all powers of attorney
and/or other instruments necessary to convey valid and unencumbered title
thereto to Parent, and shall, to the extent permissible, assign to Parent
(pursuant to a written instrument in form and substance satisfactory to Parent)
all rights that Stockholder may have to require Company to register such Subject
Shares under the Securities Act. Transfer taxes, if any, imposed as a result of
the exercise of the Option shall be borne by Stockholder.
Section 2.4 Adjustment upon Changes in Capitalization, Etc. In the
----------------------------------------------
event of any change in the capital stock of Company by reason of a stock
dividend, split-up, merger, recapitalization, combination, exchange of shares,
extraordinary distribution or similar transaction, the type and number or amount
of shares, securities or other property subject to the Option, and the Option
Consideration payable therefor, shall be adjusted appropriately so that Parent
shall receive upon exercise of Option the type and number or amount of shares,
securities or property that Parent would have retained and/or been entitled to
receive in respect of the Subject Shares if the Option had been exercised
immediately prior to such event relating to Company or the record date therefor,
as applicable. The provisions of this Section 2.4 shall apply in a like manner
to successive stock dividends, split-ups, mergers, recapitalizations,
combinations, exchanges of shares or extraordinary distributions or similar
transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Certain Representations and Warranties of Stockholder.
-----------------------------------------------------
Stockholder represents and warrants to Parent and Purchaser as follows:
(a) Ownership. Stockholder is the sole record and beneficial owner of
---------
622,000 Shares and has full and unrestricted power to dispose of and to vote
such Shares. Stockholder does not beneficially own any securities of Company on
the date hereof other than such Shares. Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in
Articles I and II hereof, sole power of disposition, sole power of conversion,
sole power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case
5
<PAGE>
with respect to all of the Subject Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the terms
of this Agreement.
(b) Power and Authority; Execution and Delivery. Stockholder has all
-------------------------------------------
requisite legal capacity, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Stockholder and the consummation by Stockholder of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Stockholder. This Agreement has been duly executed and
delivered by Stockholder and, assuming that this Agreement constitutes the valid
and binding obligation of the other parties hereto, constitutes a valid and
binding obligation of Stockholder, enforceable against Stockholder in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
(c) No Conflicts. The execution and delivery of this Agreement do
------------
not, and, subject to compliance with the HSR Act and securities laws, to the
extent applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not (i) conflict with or result in
any breach of any organizational documents applicable to Stockholder or (ii)
conflict with, result in a breach or violation of or default (with or without
notice or lapse of time or both) under, or give rise to a material obligation, a
right of termination, cancellation, or acceleration of any obligation or a loss
of a material benefit under, or require notice to or the consent of any person
under any agreement, instrument, undertaking, law, rule, regulation, judgment,
order, injunction, decree, determination or award binding on Stockholder, other
than any such conflicts, breaches, violations, defaults, obligations, rights or
losses that individually or in the aggregate would not (i) materially impair the
ability of Stockholder to perform Stockholder's obligations under this Agreement
or (ii) prevent or delay the consummation of any of the transactions
contemplated hereby.
(d) No Encumbrances. Except as applicable in connection with the
---------------
transactions contemplated by Articles I and II hereof, the Subject Shares and
the certificates representing the Subject Shares are now, and at all times
during the term hereof will be, held by Stockholder, or by a nominee or
custodian for the benefit of Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder or any such encumbrances not caused
or created by Stockholder.
6
<PAGE>
(e) No Finder's Fees. No broker, investment banker, financial advisor
----------------
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Stockholder.
Section 3.2 Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser hereby represent and warrant to Stockholder that:
(a) Power and Authority; Execution and Delivery. Parent and Purchaser
-------------------------------------------
each has all requisite legal capacity, corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and Purchaser. This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming that this Agreement constitutes the valid
and binding obligation of Stockholder, constitutes a valid and binding
obligation of Parent and Purchaser, enforceable against Parent and Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
(b) No Conflicts. The execution and delivery of this Agreement do
------------
not, and, subject to compliance with the HSR Act, to the extent applicable, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not (i) conflict with or result in any breach of any
organizational documents applicable to Parent or Purchaser or (ii) conflict
with, result in a breach or violation of or default (with or without notice or
lapse of time or both) under, or give rise to a material obligation, right of
termination, cancellation, or acceleration of any obligation or a loss of a
material benefit under, or require notice to or the consent of any person under
any agreement, instrument, undertaking, law, rule, regulation, judgment, order,
injunction, decree, determination or award binding on Parent or Purchaser, other
than any such conflicts, breaches, violations, defaults, obligations, rights or
losses that individually or in the aggregate would not (i) impair the ability of
Parent and Purchaser to perform their obligations under this Agreement or (ii)
prevent or delay the consummation of any of the transactions contemplated
hereby.
7
<PAGE>
(c) Purchase Not for Distribution. The Option and the Subject Shares
-----------------------------
to be acquired upon exercise of the Option are being and shall be acquired by
Parent without a view to public distribution thereof otherwise than in
compliance with the Securities Act and applicable state securities laws and
shall not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act and in
compliance with applicable state securities laws.
ARTICLE IV
CERTAIN COVENANTS
Section 4.1 Certain Covenants of Stockholder.
--------------------------------
(a) Restriction on Transfer of Subject Shares, Proxies and
-------------------------------------------------------
Noninterference. During the period (the "Restricted Period") from and including
- ---------------
the date hereof through and including the earlier of (i) the Effective Time and
(ii) the end of the Option Period, Stockholder shall not, directly or
indirectly: (A) except pursuant to the terms of this Agreement and except for
the tender of Subject Shares in the Offer, offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of the Subject Shares; (B) except
pursuant to the terms of this Agreement, grant any proxies (other than proxies
relating to the election of management's slate of directors at an annual
meeting of Company's stockholders, and other routine matters which would not
require the filing of a preliminary proxy statement under Rule 14a-6(a) of the
Exchange Act), or powers of attorney, deposit any of the Subject Shares into a
voting trust or enter into a voting agreement with respect to any of the Subject
Shares; or (C) take any action that would make any representation or warranty
contained herein untrue or incorrect or have the effect of impairing the ability
of Stockholder to perform Stockholder's obligations under this Agreement or
preventing or delaying the consummation of any of the transactions contemplated
hereby or by the Merger Agreement.
8
<PAGE>
(b) Cooperation. Stockholder, in the capacity as a stockholder, shall
-----------
cooperate fully with Parent, Purchaser and Company in connection with their
respective efforts to fulfill the conditions to the Merger set forth in Article
VII of the Merger Agreement.
(c) Releases. Stockholder hereby fully, unconditionally and
--------
irrevocably releases, effective as of the Effective Time, any and all claims and
causes of action that Stockholder has or may have against Company or any of its
Subsidiaries or any present or former director, officer, employee or agent of
Company or any of its Subsidiaries (collectively, the "Released Parties")
arising or resulting from or relating to any alleged breach of fiduciary duty by
any officer or director of the Company occurring prior to the Effective Time;
provided, however, that such release shall not apply to any currently effective
contract or agreement between Stockholder and Company (the "Existing Contracts")
or any claim or cause of action arising therefrom.
(d) No Solicitation. Stockholder shall not, in the capacity as a
---------------
stockholder, respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) concerning any
business combination merger, tender offer, exchange offer, sale of assets, sale
of shares of capital stock or debt securities or similar transactions involving
Company or any Subsidiary, division or operating or principal business unit of
Company. If Stockholder, in the capacity as a Stockholder, receives any such
inquiry or proposal, then Stockholder shall promptly inform Parent of the
existence thereof. Stockholder, in the capacity as a Stockholder, will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
(e) Reliance by Parent. Stockholder understands and acknowledges that
------------------
Parent and Purchaser are entering into, the Merger Agreement in reliance upon
Stockholder's execution and delivery of this Agreement.
9
<PAGE>
ARTICLE V
MISCELLANEOUS
Section 5.1 Fees and Expenses. Each party hereto shall pay its own
-----------------
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Section 5.2 Amendment; Termination. This Agreement may not be
----------------------
amended except by an instrument in writing signed on behalf of each of the
parties hereto. This Agreement and the proxies granted pursuant to Section 1.2
shall terminate at the end of the Option Period.
Section 5.3 Extension; Waiver. Any agreement on the part of a party
-----------------
to waive any provision of this Agreement, or to extend the time for any
performance hereunder, shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 5.4 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, and is not intended to confer upon any person
other than the parties any rights or remedies; provided, however, that the
provisions of Section 4.1(c) are intended to inure to the benefit of, and to be
enforceable by, the Released Parties. This Agreement shall not affect or in any
way amend any of the Existing Contracts.
Section 5.5 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Section 5.6 Notices. All notices, requests, claims, demands and
-------
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, or sent by overnight courier or telecopy
(providing proof of delivery) to the address set forth below (or, in each case,
at such other address as shall be specified by like notice).
10
<PAGE>
If to Parent or Purchaser:
Sterling Software, Inc.
300 Crescent Court
Suite 1200
Dallas, Texas 75201
Attention: Don J. McDermett, Jr., Esq.
Telecopy: (214) 981-1265
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Blaine V. Fogg, Esq.
Telecopy: (212) 735-2000
If to Stockholder:
Cisco Systems, Inc.
170 West Tasman Drive
San Jose, CA 95134-1706
Attention: Vice President, Legal and Government
Affairs
Telecopy: (408) 526-5925
with a copy (which shall not constitute notice) to:
Brobeck, Phleger & Harrison LLP
2200 Geng Road
Two Embarcadero Place
Palo Alto, CA 94303
Attention: Therese A. Mrozek, Esq.
Telecopy: (650) 496-2885
Section 5.7 Assignment. Neither this Agreement nor any of the
----------
rights, interests, or obligations under this Agreement may be assigned or
delegated, in whole or in part, by Stockholder without the prior written consent
of Parent, and any such assignment or delegation that is not consented to shall
be null and void. This Agreement, together with any rights, interests, or
obligations of Parent and Purchaser hereunder, may be assigned or delegated,
in whole or in part, by Parent and Purchaser
11
<PAGE>
without the consent of or any action by Stockholder upon notice by
Parent or Purchaser to Stockholder as herein provided. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns
(including without limitation any person to whom any Subject Shares are sold,
transferred, assigned or passed, whether by operation of law or otherwise).
Section 5.8 Confidentiality. Stockholder recognizes that successful
---------------
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, Stockholder hereby agrees not to
disclose or discuss such matters with anyone not a party to this Agreement
(other than its counsel and advisors, if any) without the prior written consent
of Parent, except for filings required pursuant to the Exchange Act and the
rules and regulations thereunder or disclosures its counsel advises are
necessary in order to fulfill its obligations imposed by law, in which event
Stockholder shall give notice of such disclosure to Parent as promptly as
practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.
Section 5.9 Further Assurances. Stockholder shall execute and
------------------
deliver such other documents and instruments and take such further actions as
may be necessary or appropriate or as may be reasonably requested by Parent or
Purchaser in order to ensure that Parent and Purchaser receive the full benefit
of this Agreement.
Section 5.10 Enforcement. Irreparable damage would occur in the event
-----------
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware), this being in
addition to any other remedy to which they are entitled at law or in equity.
Each of the parties hereto (i) shall submit itself to the personal jurisdiction
of the Court of Chancery in and for New Castle County in the State of Delaware
(or, if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware) in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for
12
<PAGE>
leave from any such court, and (iii) shall not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
the Court of Chancery in and for New Castle County in the State of Delaware (or,
if such court lacks subject matter jurisdiction, any appropriate state or
federal court in New Castle County in the State of Delaware).
Section 5.11 Severability. Whenever possible, each provision or
------------
portion of any provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
Section 5.12 Descriptive Headings. The descriptive headings used
--------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 5.13 Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same instrument
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other parties.
[signature page follows]
13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
-------------------------------
Name: Don J. McDermett, Jr.
Title: Senior Vice President
STERLING SOFTWARE (SOUTHWEST), INC.
By: /s/ Don J. McDermett, Jr.
--------------------------------
Name: Don J. McDermett, Jr.
Title: Vice President
CISCO SYSTEMS, INC.
By: /s/ Dennis Powell
--------------------------------
Name: Dennis Powell
Title: Vice President and
Corporate Controller
14
<PAGE>
EXHIBIT (C)(4)
FORM OF
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of March 23, 1999 (this
"Agreement"), is made and entered into among Sterling Software, Inc., a Delaware
corporation ("Parent"), Sterling Software (Southwest), Inc., a Delaware
corporation and indirect wholly owned subsidiary of Parent ("Purchaser"), and [
] ("Stockholder").
RECITALS:
A. Parent, Purchaser and Interlink Computer Sciences, Inc., a
Delaware corporation ("Company"), propose to enter into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which
the Purchaser will merge with and into Company (the "Merger") on the terms and
subject to the conditions set forth in the Merger Agreement. Except as otherwise
defined herein, terms used herein with initial capital letters have the
respective meanings ascribed thereto in the Merger Agreement.
B. As of the date hereof, Stockholder beneficially owns and is
entitled to dispose of (or to direct the disposition of) and to vote (or to
direct the voting of) [ ] shares of common stock ("Common Stock"), par value
$.001 per share ("Shares"), of Company (such Shares, together with any other
shares of capital stock of Company the beneficial ownership of which is
acquired, or can be acquired upon exercise of vested options at a price equal to
or less than the Option Consideration (as defined in Section 2.1), by
Stockholder during the period from and including the date hereof through and
including the earlier of (i) the Effective Time and (ii) the date that is 120
days after the date on which the Merger Agreement is terminated pursuant to
Section 8.1 thereof, are collectively referred to herein as "Subject Shares").
C. Pursuant to the Merger Agreement, Purchaser shall commence
a cash tender offer (the "Offer") to purchase at a price of $7.00 per Share all
outstanding Shares, including all of the Subject Shares. Stockholder has advised
Parent and Purchaser that it intends to tender the Subject Shares in the Offer.
<PAGE>
D. As a condition and inducement to Parent's and Purchaser's
willingness to enter into the Merger Agreement, Parent and Purchaser have
requested that Stockholder agree, and Stockholder has agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement and the Merger Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
VOTING AGREEMENT
Section 1.1 Agreement to Vote Shares. During the period (the
------------------------
"Voting Period") from and including the date hereof through and including the
earlier of (i) the date that is 120 days after the purchase of shares of common
stock of the Company pursuant to the Offer, (ii) the date that is 120 days after
the date on which the Merger Agreement is terminated pursuant to Section 8.1
thereof, or (iii) the termination of this Agreement pursuant to Section 5.2
hereof, at any meeting of the stockholders of Company called to consider and
vote upon the adoption of the Merger Agreement (and at any and all postponements
and adjournments thereof), and in connection with any action to be taken in
respect of the adoption of the Merger Agreement by written consent of
stockholders of Company, Stockholder shall vote or cause to be voted (including
by written consent, if applicable) all of the Subject Shares, now owned or
hereafter acquired, in favor of the adoption of the Merger Agreement and in
favor of any other matter necessary for the consummation of the transactions
contemplated by the Merger Agreement and considered and voted upon at any such
meeting or made the subject of any such written consent, as applicable. During
the Voting Period, at any meeting of the stockholders of Company called to
consider and vote upon any Other Proposal (as hereinafter defined) (and at any
and all postponements and adjournments thereof), and in connection with any
action to be taken in respect of any Other Proposal by written consent of
stockholders of Company, Stockholder shall vote or cause to be voted (including
by written consent, if applicable) all of the Subject Shares against such Other
Proposal. For purposes of this Agreement, the term "Other Proposal" means any
(a) Acquisition Proposal (as defined in the Merger Agreement) or (b) other
action which is intended or could reasonably be expected to materially impede,
interfere with, delay or materially and adversely affect the consummation of the
Merger or any of the other transactions
2
<PAGE>
contemplated by the Merger Agreement or this Agreement; provided, however, that
neither the Merger nor any other transaction contemplated by the Merger
Agreement to be consummated by Company, Parent or Purchaser in connection with
the Merger shall constitute an Other Proposal. Stockholder shall not enter into
any agreement or understanding with any person or entity the effect of which
would be violative of the provisions and agreements contained in this Section
1.1.
Section 1.2 Irrevocable Proxy.
-----------------
(a) Grant of Proxy. STOCKHOLDER HEREBY APPOINTS PARENT AND ANY
--------------
DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S PROXY AND
ATTORNEY-IN-FACT PURSUANT TO THE PROVISIONS OF SECTION 212 OF THE DELAWARE
GENERAL CORPORATION LAW, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, TO
VOTE OR ACT BY WRITTEN CONSENT DURING THE VOTING PERIOD WITH RESPECT TO THE
SUBJECT SHARES IN ACCORDANCE WITH SECTION 1.1 HEREOF. THIS PROXY IS GIVEN TO
SECURE THE PERFORMANCE OF THE DUTIES OF STOCKHOLDER UNDER THIS AGREEMENT.
STOCKHOLDER AFFIRMS THAT THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE. STOCKHOLDER SHALL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER
INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY.
(b) Other Proxies Revoked. Stockholder represents that any
---------------------
proxies heretofore given in respect of the Subject Shares are not irrevocable,
and that all such proxies are hereby revoked.
ARTICLE II
OPTION
Section 2.1 Grant of Option. Stockholder hereby grants to
---------------
Parent an irrevocable option (the "Option") to purchase the Subject Shares on
the terms and subject to the conditions set forth herein, at a price per Subject
Share equal to $7.00 in cash or any higher price that Parent or any controlled
affiliate of Parent offers to pay for the shares of Common Stock of the Company
made generally to the stockholders of the Company (such price being referred to
as the "Option Consideration").
3
<PAGE>
Section 2.2 Exercise of Option. (a) Parent may exercise the
------------------
Option, in whole or in part, at any time or from time to time during the period
(the "Option Period") from and including the date hereof through and including
the earlier of (i) the date that is 120 days after the purchase of shares of
common stock of the Company pursuant to the Offer, or (ii) the date that the
Merger Agreement is terminated pursuant to Section 8.1 thereof, provided,
--------
however, that the Option shall terminate with respect to any Subject Shares that
- -------
are tendered pursuant to the Offer and purchased by Purchaser thereunder.
Notwithstanding anything in this Agreement to the contrary, Parent shall be
entitled to purchase all Subject Shares in respect of which it shall have
exercised the Option in accordance with the terms hereof prior to the expiration
of the Option Period, and the expiration of the Option Period shall not affect
any rights hereunder which by their terms do not terminate or expire prior to or
as of such expiration.
(b) Parent shall not demand appraisal rights under Section 262
of the DGCL in respect of any Subject Shares.
(c) If Parent wishes to exercise the Option, it shall deliver
to Stockholder a written notice (an "Exercise Notice") to that effect which
specifies (i) the number of Subject Shares to be purchased from Stockholder and
(ii) a date (an "Option Closing Date") not earlier than three business days
after the date such Exercise Notice is delivered for the consummation of the
purchase and sale of such Subject Shares (an "Option Closing"). If and to the
extent necessary to deliver the number of Shares to be purchased pursuant
hereto, Stockholder shall exercise vested stock options promptly upon receipt of
an Exercise Notice. If the Option Closing cannot be effected on the Option
Closing Date specified in the Exercise Notice by reason of a preliminary or
final injunction or any other applicable judgment, decree, order, law or
regulation, or because any applicable waiting period under the HSR Act shall not
have expired or been terminated, (i) Stockholder shall promptly take all such
actions as may be reasonably requested by Parent, and shall otherwise fully
cooperate with Parent, to cause the elimination of all such impediments to the
Option Closing and (ii) the Option Closing Date specified in the Exercise Notice
shall be extended to the fifth business day following the elimination of all
such impediments. The place of the Option Closing shall be at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center, San
Francisco, California 94111, and the time of the Option Closing shall be 10:00
a.m. (New York Time) on the Option Closing Date.
4
<PAGE>
Section 2.3 Payment and Delivery of Certificates. At any
------------------------------------
Option Closing, Parent shall pay to Stockholder the Option Consideration payable
in respect of the Subject Shares to be purchased from Stockholder at the Option
Closing, and Stockholder shall deliver to Parent such Subject Shares, free and
clear of all Liens, with the certificate or certificates evidencing such Subject
Shares being duly endorsed for transfer by Stockholder and accompanied by all
powers of attorney and/or other instruments necessary to convey valid and
unencumbered title thereto to Parent, and shall, to the extent permissible,
assign to Parent (pursuant to a written instrument in form and substance
satisfactory to Parent) all rights that Stockholder may have to require Company
to register such Subject Shares under the Securities Act. Transfer taxes, if
any, imposed as a result of the exercise of the Option shall be borne by
Stockholder.
Section 2.4 Adjustment upon Changes in Capitalization, Etc. In
----------------------------------------------
the event of any change in the capital stock of Company by reason of a stock
dividend, split-up, merger, recapitalization, combination, exchange of shares,
extraordinary distribution or similar transaction, the type and number or amount
of shares, securities or other property subject to the Option, and the Option
Consideration payable therefor, shall be adjusted appropriately so that Parent
shall receive upon exercise of Option the type and number or amount of shares,
securities or property that Parent would have retained and/or been entitled to
receive in respect of the Subject Shares if the Option had been exercised
immediately prior to such event relating to Company or the record date therefor,
as applicable. The provisions of this Section 2.4 shall apply in a like manner
to successive stock dividends, split-ups, mergers, recapitalizations,
combinations, exchanges of shares or extraordinary distributions or similar
transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Certain Representations and Warranties of Stock
-----------------------------------------------
holder. Stockholder represents and warrants to Parent and Purchaser as follows:
- ------
(a) Ownership. Stockholder is the sole record and beneficial
---------
owner of [ ] Shares and has full and unrestricted power to dispose of and
to vote such Shares. Stockholder is the beneficial owner of options to
purchase [ ] Shares of which [ ] options to purchase Shares are
fully vested. Stockholder
5
<PAGE>
does not beneficially own any securities of Company on the date hereof other
than such Shares. Stockholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Articles I and II hereof,
sole power of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Subject Shares with no
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power and Authority; Execution and Delivery. Stockholder
-------------------------------------------
has all requisite legal capacity, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Stockholder and the consummation by
Stockholder of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of Stockholder. This Agreement has been duly
executed and delivered by Stockholder and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of Stockholder, enforceable against
Stockholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and to general principles of
equity.
(c) No Conflicts. The execution and delivery of this Agreement
------------
do not, and, subject to compliance with the HSR Act and securities laws, to the
extent applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not (i) conflict with or result in
any breach of any organizational documents applicable to Stockholder or (ii)
conflict with, result in a breach or violation of or default (with or without
notice or lapse of time or both) under, or give rise to a material obligation, a
right of termination, cancellation, or acceleration of any obligation or a loss
of a material benefit under, or require notice to or the consent of any person
under any agreement, instrument, undertaking, law, rule, regulation, judgment,
order, injunction, decree, determination or award binding on Stockholder, other
than any such conflicts, breaches, violations, defaults, obligations, rights or
losses that individually or in the aggregate would not (i) materially impair the
ability of Stockholder to perform Stockholder's obligations under this Agreement
or (ii) prevent or delay the consummation of any of the transactions
contemplated hereby.
(d) No Encumbrances. Except as applicable in connection with
---------------
the transactions contemplated by Articles I and II hereof, the Subject Shares
and the
6
<PAGE>
certificates representing the Subject Shares are now, and at all times during
the term hereof will be, held by Stockholder, or by a nominee or custodian for
the benefit of Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder or any such encumbrances not caused or created by
Stockholder.
(e) No Finder's Fees. No broker, investment banker, financial
----------------
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Stockholder.
Section 3.2 Representations and Warranties of Parent and
--------------------------------------------
Purchaser. Parent and Purchaser hereby represent and warrant to Stockholder
- ---------
that:
(a) Power and Authority; Execution and Delivery. Parent and
-------------------------------------------
Purchaser each has all requisite legal capacity, corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Parent and Purchaser and
the consummation by Parent and Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Parent and Purchaser. This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming that this Agreement constitutes the valid and
binding obligation of Stockholder, constitutes a valid and binding obligation
of Parent and Purchaser, enforceable against Parent and Purchaser in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity.
(b) No Conflicts. The execution and delivery of this Agreement
------------
do not, and, subject to compliance with the HSR Act, to the extent applicable,
the consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not (i) conflict with or result in any breach of any
organizational documents applicable to Parent or Purchaser or (ii) conflict
with, result in a breach or violation of or default (with or without notice or
lapse of time or both) under, or give rise to a material obligation, right of
termination, cancellation, or acceleration of any obligation or a loss of a
material benefit under, or require notice to or the consent of any person under
any agreement, instrument, undertaking, law, rule, regulation, judgment, order,
injunction, decree, determination or award binding
7
<PAGE>
on Parent or Purchaser, other than any such conflicts, breaches, violations,
defaults, obligations, rights or losses that individually or in the aggregate
would not (i) impair the ability of Parent and Purchaser to perform their
obligations under this Agreement or (ii) prevent or delay the consummation of
any of the transactions contemplated hereby.
(c) Purchase Not for Distribution. The Option and the Subject
-----------------------------
Shares to be acquired upon exercise of the Option are being and shall be
acquired by Parent without a view to public distribution thereof otherwise than
in compliance with the Securities Act and applicable state securities laws and
shall not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act and in
compliance with applicable state securities laws.
ARTICLE IV
CERTAIN COVENANTS
Section 4.1 Certain Covenants of Stockholder.
--------------------------------
(a) Restriction on Transfer of Subject Shares, Proxies and
------------------------------------------------------
Noninterference. During the period (the "Restricted Period") from and including
- ---------------
the date hereof through and including the earlier of (i) the Effective Time and
(ii) the end of the Option Period (or, in the case of clause (B), the end of the
Voting Period), Stockholder shall not, directly or indirectly: (A) except
pursuant to the terms of this Agreement and except for the tender of Subject
Shares in the Offer, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition of,
any or all of the Subject Shares; (B) except pursuant to the terms of this
Agreement, grant any proxies (other than proxies relating to the election of
management's slate of directors at an annual meeting of Company's stockholders,
and other routine matters which would not require the filing of a preliminary
proxy statement under Rule 14a-6(a) of the Exchange Act), or powers of attorney,
deposit any of the Subject Shares into a voting trust or enter into a voting
agreement with respect to any of the Subject Shares; or (C) take any action that
would make any representation or warranty contained herein untrue or incorrect
or have the effect of impairing the ability of Stockholder to perform
Stockholder's obligations under this
8
<PAGE>
Agreement or preventing or delaying the consummation of any of the transactions
contemplated hereby or by the Merger Agreement.
(b) Cooperation. Stockholder, in the capacity as a
-----------
stockholder, shall cooperate fully with Parent, Purchaser and Company in
connection with their respective efforts to fulfill the conditions to the Merger
set forth in Article VII of the Merger Agreement.
(c) Releases. Stockholder hereby fully, unconditionally and
--------
irrevocably releases, effective as of the Effective Time, any and all claims and
causes of action that Stockholder has or may have against Company or any of its
Subsidiaries or any present or former director, officer, employee or agent of
Company or any of its Subsidiaries (collectively, the "Released Parties")
arising or resulting from or relating to any act, omission, event or occurrence
prior to the Effective Time; provided, however, that such release shall not
apply to any claim or cause of action insofar as it relates to any entitlement
to indemnification, or to compensation or benefits earned or accrued by or for
the benefit of Stockholder prior to the Effective Time in respect of services
performed by Stockholder to Company as a director, officer, consultant or
employee of Company.
(d) No Solicitation. Stockholder shall not, in the capacity as
---------------
a stockholder, respond to any inquiries or the making of any proposal by any
person or entity (other than Parent or any affiliate of Parent) concerning any
business combination merger, tender offer, exchange offer, sale of assets, sale
of shares of capital stock or debt securities or similar transactions involving
Company or any Subsidiary, division or operating or principal business unit of
Company. If Stockholder, in the capacity as a Stockholder, receives any such
inquiry or proposal, then Stockholder shall promptly inform Parent of the
existence thereof. Stockholder, in the capacity as a Stockholder, will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
(e) Reliance by Parent. Stockholder understands and
------------------
acknowledges that Parent and Purchaser are entering into, the Merger Agreement
in reliance upon Stockholder's execution and delivery of this Agreement.
9
<PAGE>
ARTICLE V
MISCELLANEOUS
Section 5.1 Fees and Expenses. Each party hereto shall pay its
-----------------
own expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Section 5.2 Amendment; Termination. This Agreement may not be
----------------------
amended except by an instrument in writing signed on behalf of each of the
parties hereto. This Agreement and the proxies granted pursuant to Section 1.2
shall terminate immediately following (i) termination of the Merger Agreement
pursuant to Section 8.1(a) thereof, provided at the time of such termination the
parties intend to abandon the transactions contemplated by the Merger Agreement
or (ii) termination of the Merger Agreement pursuant to Section 8.1(d)(iv)
thereof, provided at the time of such termination Company is not in breach of
the Merger Agreement or (iii) any termination of the Merger Agreement solely
because the condition contained in Section 7.1(d) of the Merger Agreement is
incapable of being fulfilled.
Section 5.3 Extension; Waiver. Any agreement on the part of a
-----------------
party to waive any provision of this Agreement, or to extend the time for any
performance hereunder, shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 5.4 Entire Agreement; No Third-Party Beneficiaries.
----------------------------------------------
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement, and is not intended to confer
upon any person other than the parties any rights or remedies; provided,
however, that the provisions of Section 4.1(c) are intended to inure to the
benefit of, and to be enforceable by, the Released Parties.
Section 5.5 Governing Law. This Agreement shall be governed
-------------
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflict of laws thereof.
10
<PAGE>
Section 5.6 Notices. All notices, requests, claims, demands
-------
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, or sent by overnight courier or telecopy
(providing proof of delivery) to the address set forth below (or, in each case,
at such other address as shall be specified by like notice).
If to Parent or Purchaser:
Sterling Software, Inc.
300 Crescent Court, Suite 1200
Dallas, Texas 75201
Attention: Don J. McDermett, Jr., Esq.
Telecopy: (214) 981-1265
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Blaine V. Fogg, Esq.
Telecopy: (212) 735-2000
If to Stockholder:
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Thomas C. DeFilipps, Esq.
Telecopy: (650) 493-6811
Section 5.7 Assignment. Neither this Agreement nor any of the
----------
rights, interests, or obligations under this Agreement may be assigned or
delegated, in whole or in part, by Stockholder without the prior written consent
of Parent, and
11
<PAGE>
any such assignment or delegation that is not consented to shall be null and
void. This Agreement, together with any rights, interests, or obligations of
Parent and Purchaser hereunder, may be assigned or delegated, in whole or in
part, by Parent and Purchaser without the consent of or any action by
Stockholder upon notice by Parent or Purchaser to Stockholder as herein
provided. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns (including without limitation any person to
whom any Subject Shares are sold, transferred, assigned or passed, whether by
operation of law or otherwise).
Section 5.8 Confidentiality. Stockholder recognizes that
---------------
successful consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, Stockholder
hereby agrees not to disclose or discuss such matters with anyone not a party to
this Agreement (other than its counsel and advisors, if any) without the prior
written consent of Parent, except for filings required pursuant to the Exchange
Act and the rules and regulations thereunder or disclosures its counsel advises
are necessary in order to fulfill its obligations imposed by law, in which event
Stockholder shall give notice of such disclosure to Parent as promptly as
practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.
Section 5.9 Further Assurances. Stockholder shall execute and
------------------
deliver such other documents and instruments and take such further actions as
may be necessary or appropriate or as may be reasonably requested by Parent or
Purchaser in order to ensure that Parent and Purchaser receive the full benefit
of this Agreement.
Section 5.10 Enforcement. Irreparable damage would occur in
-----------
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in the Court of Chancery in and for New Castle County in the
State of Delaware (or, if such court lacks subject matter jurisdiction, any
appropriate state or federal court in New Castle County in the State of
Delaware), this being in addition to any other remedy to which they are entitled
at law or in equity. Each of the parties hereto (i) shall submit itself to the
personal jurisdiction of the Court of Chancery in and for New Castle County in
the State of Delaware (or, if such court lacks subject matter jurisdiction, any
appro-
12
<PAGE>
priate state or federal court in New Castle County in the State of Delaware) in
the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iii)
shall not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than the Court of Chancery in and for New
Castle County in the State of Delaware (or, if such court lacks subject matter
jurisdiction, any appropriate state or federal court in New Castle County in the
State of Delaware).
Section 5.11 Severability. Whenever possible, each provision
------------
or portion of any provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
Section 5.12 Descriptive Headings. The descriptive headings
--------------------
used herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
Section 5.13 Counterparts. This Agreement may be executed in
------------
one or more counterparts, all of which shall be considered one and the same
instrument and shall become effective when one or more counterparts have been
signed by each party and delivered to the other parties.
[signature page follows]
13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the day and year first written above.
STERLING SOFTWARE, INC.
By:
--------------------------
Name: Don J. McDermett, Jr.
Title: Senior Vice President
STERLING SOFTWARE (SOUTHWEST), INC.
By: ___________________________
Name: Don J. McDermett, Jr.
Title: Vice President
______________________________
[ ]
14
<PAGE>
ANNEX
Share Ownership for Stockholders who
executed Stockholder Agreements
<TABLE>
<CAPTION>
SHARES ISSUABLE OPTIONS VESTED AS
OUTSTANDING PURSUANT TO OF MARCH 23,
STOCKHOLDER SHARES OUTSTANDING OPTIONS 1999
- ------------------------------------ --------------- ------------------------- ---------------------
<S> <C> <C> <C>
Directors and Officers:
Ralph B. Godfrey 0 18,750 4,688
Andrew I. Fillat 0 26,250 10,001
Ronald W. Braniff 21,000 74,250 58,001
Augustus J. Berkeley 17,522 412,300 129,455
William C. Jones 13,746 60,000 13,938
Christopher A. Markle 13,934 47,500 21,043
Victor C. Langford 15,000 75,000 18,752
James A. Barth 19,352 90,000 25,714
Michael J. Satterwhite 1,282 50,000 22,917
Other Stockholders:
CISCO Systems, Inc. 622,000 0 0
(Advent International Entities)
Adtel, L.P. 38,629 0 0
Adventact, L.P. 21,461 0 0
Advent International Investors II
L.P. 861 0 0
Adwest L.P. 17,169 0 0
Global Private Equity II L.P. 322,029 0 0
Golden Gate Development and
Investment L.P. 47,083 0 0
--------------- ----------------------- ---------------------
1,171,068 854,050 304,509
</TABLE>
15
<PAGE>
EXHIBIT (C)(5)
STERLING SOFTWARE, INC.
300 Crescent Court
Suite 1200
Dallas, Texas 75201
March 16, 1999
Interlink Computer Sciences, Inc.
47370 Fremont Boulevard
Fremont, California 94538
Attn: A.J. Berkeley, President
Re: Potential Acquisition Transaction
---------------------------------
Gentlemen:
This letter is to confirm certain agreements we have reached regarding
the potential acquisition (the "Potential Acquisition") by Sterling Software,
Inc. ("Sterling Software") of Interlink Computer Sciences, Inc. ("Interlink").
As a material inducement to Sterling Software's continuation of negotiations
with Interlink with respect to the terms and conditions of the Potential
Acquisition, and in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Exclusivity Period. Upon the execution of this letter
------------------
agreement and continuing until the earlier of (a) 6:00 p.m. California time on
March 25, 1999 and (b) the execution of a definitive agreement governing the
terms and conditions of the Potential Acquisition (such period, the "Exclusivity
Period"), Interlink shall, shall cause its subsidiaries to, and shall use
reasonable efforts to cause all of its or their affiliates, officers, directors,
employees, agents and representatives (including without limitation any
investment banker, financial advisor, attorney and accountant retained by
Interlink or any of its subsidiaries or affiliates) to, discontinue any
solicitation efforts, discussions or negotiations with respect to any
Acquisition Proposal (as hereinafter defined) with any person or entity other
than Sterling Software. During the Exclusivity Period, Interlink shall not, and
shall not authorize or permit any of its subsidiaries or any of its or their
affiliates, officers, directors, employees, agents or representatives (including
without limitations any investment banker, financial advisor, attorney or
accountant retained by Interlink or any of its subsidiaries or affiliates) to,
directly or indirectly, initiate, solicit or intentionally encourage (including
by way of furnishing information or assistance), or take any other action to
facilitate, any inquiries, any expression of interest or the making of any
proposal that constitutes, or would reasonably be expected to lead to, an
Acquisition Proposal, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to seek to obtain
an Acquisition Proposal or agree to or endorse any Acquisition Proposal.
<PAGE>
Interlink Computer Sciences, Inc.
March 16, 1999
Page 2
Interlink shall notify Sterling Software immediately if any such inquiries,
expressions of interest or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with Interlink or any of its subsidiaries, affiliates,
agents or representatives; provided, however, that Interlink's obligation under
this and the immediately succeeding two sentences shall only be applicable to
such of the foregoing as (i) involve any items of non-cash consideration other
than securities for which there is an existing public market ("Marketable
Securities"), or (ii) involve aggregate consideration consisting of cash and/or
Marketable Securities in exchange for all of Interlink's outstanding shares of
common stock, such consideration having a value per share of $7.00 or greater
(each, a "Superior Proposal"). Such notice shall include the identity of the
party making, and the terms of (including delivery of copies thereof), any
inquiry or proposal relating to a Superior Proposal. Interlink will keep
Sterling Software fully informed of the status of, and any modification to, any
Superior Proposal. For purposes of this letter agreement, "Acquisition Proposal"
means an inquiry, offer, proposal or other indication of interest (other than by
Sterling Software in connection with the Potential Acquisition) regarding any of
the following matters involving Interlink: (i) any merger, consolidation, share
exchange, tender or exchange offer, recapitalization, business combination or
other similar transaction immediately following the consummation of which, the
stockholders of Interlink immediately prior thereto would hold less than 80% of
the voting stock of the surviving or resulting entity; (ii) any acquisitions of
voting stock or other securities issued by Interlink or any of its subsidiaries
representing more than 80% of the outstanding voting stock of Interlink or any
of its subsidiaries; (iii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or substantially all of the assets of Interlink and
its subsidiaries, taken as a whole, in a single transaction or series of related
transactions; or (iv) any agreement in principle or other agreement to engage in
any of the foregoing.
2. Certain Obligations Only on Definitive Agreement. No agreement
------------------------------------------------
providing for the Potential Acquisition shall be deemed to exist unless and
until definitive documentation providing therefor has been executed and
delivered by Sterling Software and Interlink (and/or any other appropriate party
or parties thereto). Unless and until such definitive documentation concerning a
Potential Acquisition has been executed, neither Sterling Software nor any of
our representatives will have any liability to Interlink with respect to a
Potential Acquisition, whether by virtue of this letter agreement or otherwise.
3. Non-Solicitation of Employees. Sterling Software agrees that for
-----------------------------
a period of one year from the date of this letter agreement, it will not,
directly or
<PAGE>
Interlink Computer Sciences, Inc.
March 16, 1999
Page 3
indirectly, solicit for employment or attempt to hire or recruit any employee of
Interlink (or any subsidiary thereof) with whom Sterling Software has had
contact or who became known to Sterling Software in connection with Sterling
Software's consideration of the Potential Acquisition. Notwithstanding anything
to the contrary herein, Sterling Software shall not be deemed to have breached
or violated this paragraph 3 solely (a) as a result of generic employment
advertising by Sterling Software (including, without limitation, "open position"
and similar listings in Sterling Software's various World Wide Web pages), (b)
as a result of the efforts of an executive recruitment or similar firm generally
engaged to recruit employees for Sterling Software (without targeting of
Interlink or its specific employees) or (c) if any employee of Interlink (or any
subsidiary thereof) approaches and obtains employment with Sterling Software
after the date hereof solely as a result of any advertising or recruitment
effort contemplated in clause (a) or (b) above.
4. General Provisions. No failure or delay in exercising any right
------------------
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right. This letter agreement shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns,
although neither party may assign any of its rights or obligations hereunder
without the prior written consent of the other party, which consent may be
withheld in the sole and absolute discretion of such other party. Money damages
would not be a sufficient remedy for any breach or violation of the terms of
this letter agreement and, accordingly, Sterling Software or Interlink, as the
case may be, shall be entitled to specific performance and injunctive relief as
remedies for any breach or violation, in addition to all other remedies
available at law or equity. This letter agreement may not be amended except by
virtue of a written instrument executed by both of the parties hereto. This
letter agreement shall be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the principles of conflict of
laws thereof.
<PAGE>
Interlink Computer Sciences, Inc.
March 16, 1999
Page 4
Please sign and return one copy of this letter agreement to evidence
your acceptance of and agreement to the foregoing, whereupon this letter
agreement will become the binding obligation of each of the undersigned subject
to the terms hereof.
Very truly yours,
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
------------------------------
Don J. McDermett, Jr.
Senior Vice President and
General Counsel
Accepted and agreed to as of
the date first written above:
INTERLINK COMPUTER SCIENCES, INC.
By: /s/ James A. Barth
--------------------------------------
James A. Barth
Vice President and Chief Financial
Officer
