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[LETTERHEAD OF CHEYENNE SOFTWARE, INC.]
October 11, 1996
Dear Stockholder:
I am pleased to report that on October 7, 1996, Cheyenne
Software, Inc. ("Cheyenne") entered into a merger agreement with Computer
Associates International, Inc. ("CA") and one of its subsidiaries that provides
for the acquisition of Cheyenne by CA at a price of $30.50 per share in cash.
Under the terms of the proposed transaction, a CA subsidiary has made a tender
offer for all outstanding shares of Cheyenne common stock at $30.50 per share in
cash.
Your Board of Directors has unanimously approved the merger
agreement and the CA offer, and has determined that the terms of the offer and
the merger are fair to and in the best interests of Cheyenne stockholders.
Accordingly, the Board of Directors unanimously recommends that all Cheyenne
stockholders accept the CA offer and tender their shares to CA.
In arriving at its recommendations, the Board of Directors gave
careful consideration to a number of factors. These factors included the opinion
of Lazard Freres & Co. LLC, financial advisor to Cheyenne, that the cash
consideration of $30.50 per share to be received by the stockholders pursuant to
the CA offer and the merger is fair to Cheyenne stockholders from a financial
point of view.
Following the successful completion of the tender offer, upon
approval by stockholder vote, if required, the CA subsidiary will be merged with
and into Cheyenne, and all shares not purchased in the tender offer will be
converted into the right to receive $30.50 per share in cash in the merger.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is the
Offer to Purchase and related materials, including a Letter of Transmittal for
use in tendering shares. We urge you to read the enclosed materials carefully.
In light of the proposed transaction with CA, Cheyenne's annual
meeting of stockholders scheduled for December 1996 will be postponed pending
completion of the tender offer and the merger. The management and directors of
Cheyenne thank you for the support you have given the company.
On behalf of the Board of Directors,
Sincerely,
/s/ ReiJane Huai
ReiJane Huai
Chairman of the Board, President and
Chief Executive Officer
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TABLE OF CONTENTS
1. Solicitation/Recommendation Statement on Schedule 14D-9
2. Annex A: Information Statement Pursuant to Section 14(f) of the Securities
Exchange Act of 1934
3. Annex B: Opinion of Lazard Freres & Co. LLC, dated October 7, 1996
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
CHEYENNE SOFTWARE, INC.
(Name of Subject Company)
CHEYENNE SOFTWARE, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
16688810
(CUSIP Number of Class of Securities)
MICHAEL B. ADLER
VICE PRESIDENT AND
GENERAL COUNSEL
CHEYENNE SOFTWARE, INC.
3 EXPRESSWAY PLAZA
ROSLYN HEIGHTS, NEW YORK 11577
(516) 465-4000
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
COPY TO:
BARRY A. BRYER
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6150
(212) 403-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Cheyenne Software, Inc., a
Delaware corporation (the "Company"), and the address of the principal executive
offices of the Company is 3 Expressway Plaza, Roslyn Heights, New York 11577.
The title of the class of equity securities to which this statement relates is
the Company's common stock, par value $.01 per share (the "Common Stock").
Unless the context otherwise requires, as used herein, the term "Shares" shall
mean shares of the Common Stock and the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of April
15, 1996 (the "Rights Agreement"), between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer")
described in the Tender Offer Statement on Schedule 14D-1 dated October 11, 1996
(as amended or supplemented, the "Schedule 14D-1"), filed by
Tse-tsehese-staestse, Inc., a Delaware corporation (the "Purchaser"), which is a
wholly owned subsidiary of Computer Associates International, Inc., a Delaware
corporation ("CA"), with the Securities and Exchange Commission (the
"Commission") relating to an offer by the Purchaser to purchase all the issued
and outstanding Shares at a price of $30.50 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 Purchaser's Offer to Purchase dated October
11, 1996, as amended or supplemented, and the related Letter of Transmittal
(which together constitute the "Offer Documents"). The Offer Documents indicate
that the principal executive offices of the Purchaser and CA are located at One
Computer Associates Plaza, Islandia, New York 11788-7000.
The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of October 7, 1996 (the "Merger Agreement"), among the Company,
CA and the Purchaser. A copy of the Merger Agreement is filed as Exhibit 1 to
this Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule
14D-9") and is incorporated herein by reference in its entirety. Pursuant to the
Merger Agreement, following the consummation of the Offer, upon the earlier of
November 30, 1996 or the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation").
In the Merger, each Share outstanding immediately prior to the effective time of
the Merger (other than Shares held in the treasury of the Company, Shares owned
by CA, the Purchaser or any other subsidiary of CA, or Shares held by
stockholders who properly exercise their dissenters' rights under the Delaware
General Corporation Law ("Delaware Law")) will, by virtue of the Merger and
without any action by the holder thereof, be converted into the right to receive
$30.50 per Share (or any higher price paid per Share in the Offer), net to the
seller in cash, without interest thereon (the "Merger Consideration"), upon the
surrender of the certificate formerly representing such Share. The Merger
Agreement is summarized in Item 3 of this Schedule 14D-9.
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ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person
filing this Schedule 14D-9, are set forth in Item 1 above. Unless the context
otherwise requires, references to the Company in this Schedule 14D-9 are to the
"Company" and its direct and indirect subsidiaries, viewed as a single entity.
(b) Certain contracts, agreements, arrangements or understandings
between the Company or its affiliates and certain of its executive officers,
directors or affiliates are described in Annex A attached to this Schedule 14D-9
and incorporated herein by reference.
Except as described or incorporated by reference herein, to the
knowledge of the Company, as of the date hereof, there exists no material
contract, agreement, arrangement or understanding and no actual or potential
conflict of interest between the Company or its affiliates and (i) the Company's
executive officers, directors or affiliates or (ii) CA or its executive
officers, directors or affiliates.
PRIOR RELATIONSHIP WITH CA
The Company has entered into agreements from time to time in the
ordinary course of business with CA and certain of its subsidiaries, none of
which the Company believes to be material to this transaction. See Item 4, "The
Solicitation or Recommendation -- (b) Background of the Offer; Reasons for the
Recommendation -- Background" for a description of such agreements.
MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement, a copy of which is filed as
Exhibit 1 to this Schedule 14D-9 and is incorporated herein by reference. The
Merger Agreement should be read in its entirety for a more complete description
of the matters summarized below.
The Offer. The Merger Agreement provides for the making of the
Offer. The obligation of the Purchaser to accept for payment or pay for Shares
is subject to the satisfaction of the condition that there shall be validly
tendered in accordance with the terms of the Offer prior to the expiration date
of the Offer and not withdrawn a number of Shares which, together with the
Shares then owned by CA and the Purchaser, represents at least a majority of the
total number of outstanding Shares, assuming the exercise of all outstanding
options, rights and convertible securities (if any) and the issuance of all
Shares that the Company is obligated to issue (such total number of outstanding
Shares being hereinafter referred to as the "Fully Diluted Shares") (the
"Minimum Condition") and certain other conditions that are described below.
Pursuant to the Merger Agreement, CA and the Purchaser expressly reserve the
right to waive the conditions to the Offer and to make any change in the terms
or conditions of the Offer; provided that, without the written consent of the
Company, no change may be made which changes the form of consideration to be
paid, decreases the price per Share or the number of Shares being sought in the
Offer, imposes conditions to the Offer in addition to those set forth in the
Merger Agreement, changes or waives the Minimum Condition, extends the Offer
(except as set forth in the Merger
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Agreement), or makes any other change to any condition to the Offer set forth in
the Merger Agreement which is adverse to the holders of Shares.
In addition, subject to CA's or the Company's ability to
terminate the Merger Agreement under certain circumstances, if the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), shall not have expired or been terminated as of the
date the Offer would otherwise have expired, the Purchaser has agreed, pursuant
to the Merger Agreement, to extend the Offer from time to time until the earlier
of (x) the date that is 30 days after the first scheduled Expiration Date and
(y) the date that such waiting period has expired or been terminated.
Conditions of the Offer. Notwithstanding any other provision of
the Offer, CA and the Purchaser shall not be required to accept for payment or
pay for any Shares, and may terminate the Offer, if (i) by the expiration of the
Offer, the Minimum Condition shall not have been satisfied, (ii) by the
expiration of the Offer, the applicable waiting period under the HSR Act shall
not have expired or been terminated, or (iii) at any time on or after October 7,
1996 and prior to the acceptance for payment of Shares, any of the following
conditions exist:
(a) there shall be instituted or pending any action or proceeding
by any Governmental Entity (as defined below) or by any other person, domestic
or foreign, before any Governmental Entity or arbitrator, (i) challenging or
seeking to make illegal, to delay materially or otherwise directly or indirectly
to restrain or prohibit the making of the Offer, the acceptance for payment of
or payment for some of or all the Shares by CA or the Purchaser or the
consummation by CA or the Purchaser of the Merger, seeking to obtain material
damages or otherwise directly or indirectly relating to the transactions
contemplated by the Merger Agreement, the Offer or the Merger, (ii) seeking to
restrain or prohibit CA's or the Purchaser's ownership or operation (or that of
their respective subsidiaries or affiliates) of all or any material portion of
the business or assets of the Company and its subsidiaries, taken as a whole, or
of CA and its subsidiaries, taken as a whole, or to compel CA or any of its
subsidiaries or affiliates to dispose of or hold separate all or any material
portion of the business or assets of the Company and its subsidiaries, taken as
a whole, or of CA and its subsidiaries, taken as a whole, (iii) seeking to
impose material limitations on the ability of CA or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or owned by
CA or any of its subsidiaries or affiliates on all matters properly presented to
the Company's stockholders, (iv) seeking to require divestiture by CA or any of
its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the
judgment of CA, is likely to materially adversely affect the business, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, or CA and its subsidiaries, taken as a whole; provided that, in the
case of any instituted or pending action or proceeding described in this
paragraph (a) above by a person other than a Governmental Entity, there is a
substantial probability of a determination material and adverse to CA or any of
its subsidiaries or the Company or any of its subsidiaries in such action or
proceeding; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Merger Agreement, the Offer or
the Merger, by any Governmental Entity or arbitrator other than the application
of the waiting period provisions of the HSR Act to
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the Merger Agreement, the Offer or the Merger, that, in the judgment of CA, is
likely, directly or indirectly, to result in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, financial condition or results of operations of the
Company or any of its subsidiaries that, in the reasonable judgment of CA, is or
is likely to have a Material Adverse Effect (as defined below); or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange, Inc. or on the American Stock Exchange, Inc. (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
Governmental Entity on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the United
States which would reasonably be expected to have a Material Adverse Effect or
prevent (or materially delay) the consummation of the Offer or (v) in the case
of any of the foregoing existing at the time of commencement of the Offer, a
material acceleration or worsening thereof; or
(e) any Consent (as defined below) (other than the filing of a
certificate of merger or approval by the stockholders of the Company of the
Merger (if required by Delaware Law)) required to be filed, occurred or been
obtained by the Company or any of its subsidiaries or CA or any of its
subsidiaries (including the Purchaser) in connection with the execution and
delivery of the Merger Agreement, the Offer and the consummation of the
transactions contemplated by the Merger Agreement shall not have been filed,
occurred or been obtained (other than any such Consents the failure to file,
occur or obtain in the aggregate, could not reasonably be expected to (1) have a
Material Adverse Effect or (2) prevent or materially delay the consummation of
the Offer or the Merger); or
(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger Agreement,
or any of the representations and warranties of the Company set forth in the
Merger Agreement that is qualified as to materiality shall not be true when made
or at any time prior to consummation of the Offer as if made at and as of such
time, or any of the representations and warranties set forth in the Merger
Agreement that is not so qualified shall not be true in any material respect
when made or at any time prior to the consummation of the Offer as if made at
and as of such time; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms; or
(h) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its approval or
recommendation of the Offer, the Merger or the Merger Agreement; or
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to any Acquisition Proposal (as defined below);
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which, in the sole judgment of CA in any such case, and regardless of the
circumstances (including any action or omission by CA or the Purchaser) giving
rise to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payment. The term "Material Adverse Effect" means a material
adverse effect on the financial condition, business or results of operations of
the Company and its subsidiaries taken as a whole, except that occurrences due
solely to a disruption of the Company's or its subsidiary's businesses solely as
a result of the announcement of the execution of the Merger Agreement and the
transactions proposed to be consummated by the Merger Agreement shall be
excluded from consideration for purposes of the effect of an action or inaction
on the Company and its subsidiaries taken as a whole.
The foregoing conditions are for the sole benefit of CA and the
Purchaser and may be asserted by CA in its sole discretion regardless of the
circumstances (including any action or omission by CA or the Purchaser) giving
rise to any such condition or (other than the Minimum Condition) may be waived
by CA and the Purchaser in their sole discretion in whole at any time or in part
from time to time. The failure by CA or the Purchaser at any time to exercise
its rights under any of the foregoing conditions shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right which
may be asserted at any time or from time to time. Any determination by CA
concerning the events described in the foregoing conditions will be final and
binding upon all parties to the Merger Agreement.
Consideration to be Paid in the Merger. The Merger Agreement
provides that, following the purchase of Shares pursuant to the Offer and upon
the terms (but subject to the conditions) set forth in the Merger Agreement, the
Purchaser will be merged with and into the Company, with the Company continuing
as the Surviving Corporation. In the Merger, each outstanding Share not held by
CA, the Purchaser or any subsidiary of either of them or by the Company as
treasury stock (and other than Shares as to which appraisal rights have been
exercised pursuant to Section 262 of the Delaware Law) will be converted into
the right to receive $30.50 in cash or any higher price paid for each Share in
the Offer, without interest. Each share of common stock of the Purchaser issued
and outstanding immediately prior to the time of the Merger will be converted
into and become one share of common stock of the Surviving Corporation, which
will thereupon become a wholly owned subsidiary of CA. The Merger Agreement
provides that (i) the closing of the Merger shall take place, after consummation
of the Offer, on the later of (a) November 30, 1996, provided that as of such
date the conditions to the Merger set forth in the Merger Agreement shall be
fulfilled or waived and (b) the first business day on which all of the
conditions to the Merger set forth in the Merger Agreement shall be fulfilled
or waived, and (ii) as soon as practicable following the closing of the Merger,
the Company and the Purchaser will file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by Delaware Law in connection with the Merger. The Merger
shall become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of Delaware, or, with the consent of
the Independent Director referred to below, at such later time as is specified
in the certificate of merger (the "Effective Time").
Board Representation. The Merger Agreement provides that,
effective upon acceptance for payment by the Purchaser of such number of Shares
which satisfies the
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Minimum Condition, CA shall be entitled to designate the number of directors,
rounded up to the nearest whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Company's Board
of Directors and (ii) the percentage that the number of Shares owned by CA or
the Purchaser (including Shares accepted for payment) bears to the total number
of Shares outstanding. The Company has agreed that it will take all action
necessary to cause CA's designees to be elected or appointed to the Company's
Board of Directors, including increasing the number of directors or seeking and
accepting resignations of incumbent directors or both; provided that, prior to
the Effective Time, the Company's Board of Directors shall always have one
member who is neither a designee nor an affiliate of CA or the Purchaser nor an
employee of the Company (an "Independent Director"). No action proposed to be
taken by the Company to amend or terminate the Merger Agreement or waive any
action by CA or the Purchaser shall be effective without the approval of the
Independent Director.
The Merger Agreement provides that, from and after the Effective
Time, the directors and officers of the Purchaser at the Effective Time will be
the initial directors and officers of the Surviving Corporation, each to hold
office until his or her respective successors are duly elected and qualified.
Pursuant to the Merger Agreement, the Certificate of Incorporation (except for a
change in the name of the corporation) and the By-Laws of the Purchaser, as in
effect immediately prior to the Effective Time, will be the Certificate of
Incorporation and By-Laws of the Surviving Corporation.
Stockholder Meeting. The Merger Agreement provides that, if
required by applicable law, the Company will call a meeting of its stockholders
to be held as soon as reasonably practicable for the purpose of voting on the
approval and adoption of the Merger Agreement and the Merger. Under the Merger
Agreement, at any such meeting, CA has agreed to make a quorum and to vote all
Shares acquired in the Offer or otherwise beneficially owned by it in favor of
adoption of the Merger Agreement.
If the Minimum Condition is satisfied pursuant to the Offer, the
Purchaser will hold at least a majority of the outstanding Shares on a Fully
Diluted Basis and will be able to assure that the requisite number of
affirmative votes in favor of approval and adoption of the Merger Agreement will
be received, even if no other Stockholder votes in favor thereof. If the
Purchaser obtains at least 90% of the outstanding Shares, it may effect the
Merger without any notice to and without the authorization of the stockholders
of the Company pursuant to the "short-form" merger provisions of Delaware Law.
Representations and Warranties. The Merger Agreement contains
various representations and warranties of the parties thereto. These include
representations and warranties of the Company with respect to corporate
existence and power, corporate authorization, governmental authorization,
non-contravention, capitalization, subsidiaries, Commission filings, financial
statements, absence of certain changes, undisclosed liabilities, litigation,
taxes, employee benefits, brokers, compliance with laws, contracts and debt
instruments, intellectual property and technology and other matters.
CA and the Purchaser have also made certain representations and
warranties with respect to corporate existence and power, corporate
authorization, governmental authorization, non-contravention, brokers, financing
and other matters.
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Conduct of Business Pending the Merger. The Company has agreed
that, during the period from the date of the Merger Agreement to the Effective
Time, the Company will, and will cause its subsidiaries to, carry on their
respective businesses in the ordinary course in substantially the same manner as
theretofore conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. The Company has
further agreed that, during the period from the date of the Merger Agreement to
the Effective Time, the Company will not, and will not permit any of its
subsidiaries to, without the prior written approval of CA, (i)(a) declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, other than dividends and distributions by any direct
or indirect wholly owned subsidiary of the Company to its parent, (b) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (c) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities (other than in connection with the exercise of outstanding
company stock options); (ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
Shares upon the exercise of company stock options outstanding on the date of the
Merger Agreement in accordance with their terms on such date); (iii) amend its
certificate of incorporation, by-laws or other comparable charter or
organizational documents; (iv) (a) mortgage or otherwise encumber or, subject to
any lien any of the Company's intellectual property or any other material
properties or assets, (b) except in the ordinary course of business consistent
with past practice and pursuant to existing contracts or commitments, sell,
lease, transfer or otherwise dispose of any of the Company's intellectual
property or any other material properties or assets or (c) except in the
ordinary course of business consistent with past practice or pursuant to
existing contracts or commitments, license any of the Company's intellectual
property; (v) make or agree to make any new capital expenditures individually in
excess of $250,000; (vi) make any material tax election (unless required by law)
or settle or compromise any material income tax liability; (vii) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
and in accordance with their terms, of (i) liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the documents filed
with the Commission or (ii) liabilities incurred in the ordinary course of
business consistent with past practice, or, subject to the fiduciary duties of
the Board of Directors of the Company as advised in writing by counsel to the
Company, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party; (viii) commence a lawsuit other than (a) for the
routine collection of bills, (b) to enforce the Merger Agreement or (c) in such
cases where the Company in good faith determines that the failure to commence
suit would result in a material impairment of a valuable aspect of the Company's
business, provided that the Company consults with CA prior to filing such suit;
(ix) (a) enter into or amend any employment agreement, (b) enter into any
customer sale or license agreement with non-standard terms or at discounts from
list prices from that typically granted to similarly situated customers in
accordance with past
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practice; provided that such action with respect to a customer sale or license
agreement that is immaterial in amount and term will not be deemed to violate
this provision if the Company has (1) used its best efforts to ensure compliance
with this provision and (2) taken prompt corrective action in the event of a
violation sufficient to ensure that no similar violation will occur in the
future, (c) pay commissions to sales employees except pursuant to quarterly
draws consistent with past practice or on the basis of executed customer
contracts with respect to products actually delivered to customers, (d) without
the consent of CA which shall not be unreasonably withheld or delayed, enter
into any contracts or series of related contracts in excess of $500,000 for any
contract or $1,000,000 for any series of related contracts, (e) enter into or
amend any agreement or arrangement for professional services or advice except in
the ordinary course of business consistent with past practice, (f) enter into or
amend any customer agreements providing for product replacements except in the
ordinary course of business consistent with past practice or (g) make any
determination as to amounts payable under any plan, arrangement or agreement,
providing for discretionary incentive compensation or bonus to any officer,
director, employee or independent contractor of the Company or any of its
subsidiaries; (x) hire additional employees except in accordance with existing
budgets; provided that the aggregate number of employees of the Company and its
subsidiaries shall not be increased by more than eight percent per quarter over
the number of employees on the date of the Merger Agreement; (xi) authorize any
of, or commit or agree to take any of, the foregoing actions; or (xii) (a) take
or agree or commit to take any action that would make any representation or
warranty of the Company under the Merger Agreement inaccurate in any respect at,
or as of any time prior to, the Effective Time or (b) omit or agree or commit to
omit to take any action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time.
The Company has agreed to give CA and its representatives access
(during normal business hours and upon reasonable notice) to the offices,
properties, books and records, of the Company and its subsidiaries, and to
furnish CA and its representatives with such other information concerning its
business, properties and personnel as such persons may reasonably request.
Pursuant to the Merger Agreement, each of CA and the Company has
agreed to (i) promptly make or cause to be made the filings required of such
party or any of its subsidiaries under the HSR Act with respect to the
transactions contemplated by the Merger Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents, or other material received by such party or any of its subsidiaries
from any Governmental Entity in respect of such filings or such transactions,
and (iii) cooperate with the other party in connection with any such filing and
in connection with resolving any investigation or other inquiry of any such
agency or other Governmental Entity under any Antitrust Laws (as defined below)
with respect to any such filing or any such transaction. Each of CA and the
Company has agreed, pursuant to the Merger Agreement, to promptly inform the
other of any communication with, and any proposed understanding, undertaking, or
agreement with, any Governmental Entity regarding any such filings or any such
transaction. The Merger Agreement prohibits both CA and the Company from
participating in any meeting with any Governmental Entity in respect of any such
filings, investigation, or other inquiry without giving the other notice of the
meeting and, to the extent permitted by such Governmental Entity, the
opportunity to attend and participate.
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Each of CA and the Company has agreed, pursuant to the Merger
Agreement, to use all reasonable efforts to resolve such objections, if any, as
may be asserted by any Governmental Entity with respect to the transactions
contemplated by the Merger Agreement under the HSR Act, the Sherman Act, as
amended, the Clayton Act, as amended, the Federal Trade Commission Act, as
amended, and any other Federal, state or foreign statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade
(collectively, "Antitrust Laws"). In connection therewith, if any administrative
or judicial action or proceeding is instituted (or threatened to be instituted)
challenging any transaction contemplated by the Merger Agreement as violative of
any Antitrust Law, and, if by mutual agreement, CA and the Company decide that
litigation is in their best interests, each of CA and the Company have agreed,
pursuant to the Merger Agreement, to cooperate and use all reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents, or restricts consummation of the Merger or any
such other transactions. Pursuant to the Merger Agreement, each of CA and the
Company have agreed to use all reasonable efforts to take such action as may be
required to cause the expiration of the notice periods under the HSR Act or
other Antitrust Laws with respect to such transactions as promptly as possible
after the execution of the Merger Agreement.
Subject to the fiduciary duties of the Board of Directors of the
Company as advised in writing by counsel to the Company, each of CA and the
Company has agreed, pursuant to the Merger Agreement, to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger, and the other
transactions contemplated by the Merger Agreement.
Notwithstanding the foregoing, the Merger Agreement provides that
(i) neither CA nor any of its subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, (ii) neither CA nor any of
its subsidiaries shall be required to take or agree to take any other action or
agree to any limitation that could reasonably be expected to have a material
adverse effect on the business, assets, financial condition, results of
operations or prospects of CA and its subsidiaries taken as a whole or of CA
combined with the Surviving Corporation after the Effective Time, (iii) neither
the Company nor its subsidiaries shall be required to divest any of their
respective businesses, product lines or assets, or to take or agree to take any
other action or agree to any limitation that could reasonably be expected to
have a Material Adverse Effect, (iv) no party shall be required to agree to the
imposition of, or to comply with, any condition, obligation or restriction on CA
or any of its subsidiaries or on the Surviving Corporation or any of its
subsidiaries of the type described in paragraph (a) or (b) under "--Conditions
of the Offer" above and (v) neither CA nor the Purchaser shall be required to
waive any of the conditions to the Offer or any of the conditions to the Merger.
Agreements with respect to Employee Matters. CA has agreed in the
Merger Agreement to honor in accordance with their terms all of the Company's
employee benefit plans (including employment agreements) previously delivered to
CA and all accrued benefits vested thereunder; provided that nothing in the
Merger Agreement shall prevent CA from terminating any such benefit plan in
accordance with its terms. CA has also
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agreed to provide employees of the Company and its subsidiaries retained by CA
with employee benefits in the aggregate no less favorable than those benefits
provided to CA's similarly situated employees; provided that CA shall be under
no obligation to retain any employee or group of employees of the Company or its
subsidiaries.
Pursuant to the Merger Agreement, at the Effective Time, each of
the then outstanding Company Options (as defined below) shall by virtue of the
Merger, and without any further action on the part of any holder thereof, become
fully exercisable and vested and be assumed by CA and converted into an option
to purchase that number of shares of common stock, par value $.10 per share ("CA
Common Stock"), of CA determined by multiplying the number of Shares subject to
such Company Option at the Effective Time by the quotient obtained by dividing
(x) $30.50 by (y) the average closing price of CA Common Stock on the New York
Stock Exchange Composite Tape for the 20 consecutive trading days immediately
prior to the Effective Time (such quotient, the "Conversion Number"), at an
exercise price per share of CA Common Stock equal to the quotient obtained by
dividing (x) the exercise price per Share of such Company Option immediately
prior to the Effective Time by (y) the Conversion Number. If the foregoing
calculation results in an assumed Company Option being exercisable for a
fraction of a share of CA Common Stock, then the number of shares of CA Common
Stock subject to such option shall be rounded down to the nearest whole number
of shares. Except as otherwise set forth in the Merger Agreement, the term,
status as an "incentive stock option" under Section 422 of the Internal Revenue
Code of 1986, as amended, if applicable, and all other terms and conditions of
Company Options will, to the extent permitted by law and otherwise reasonably
practicable, be unchanged. Pursuant to the Merger Agreement, the Company agreed
to take, or cause to be taken, all actions which are necessary, proper or
advisable under the Stock Plans (as defined below) to make effective the
transactions described in this paragraph. "Company Options" means any option
granted, and not exercised or expired, to a current or former employee, director
or independent contractor of the Company or any of its subsidiaries or any
predecessor thereof to purchase Shares pursuant to any stock option, stock
bonus, stock award, or stock purchase plan, program, or arrangement of the
Company or any of its subsidiaries or any predecessor thereof (collectively, the
"Stock Plans") or any other contract or agreement entered into by the Company or
any of its subsidiaries.
Pursuant to the Merger Agreement, CA has agreed to take all
corporate action necessary to reserve for issuance a sufficient number of
shares of CA Common Stock for delivery pursuant to the terms described in the
immediately preceding paragraph. Pursuant to the Merger Agreement, CA agreed to
cause the shares of CA Common Stock issuable upon exercise of the assumed
Company Options to be registered, or to be issued pursuant to a then effective
registration statement, no later than 90 days after the Effective Time on
Form S-8 promulgated by the Commission, and to use its best efforts to maintain
the effectiveness of such registration statement or registration statements
for so long as such assumed Company Options remain outstanding. The Merger
Agreement provides that, with respect to those individuals who subsequent to
the Merger will be subject to the reporting requirements under Section 16(a)
of the Securities Exchange Act of 1936, as amended (the "Exchange Act"), CA
shall administer the Company Options assumed pursuant to the Merger Agreement
in a manner that complies with Rule 16b-3 promulgated by the Commission under
the Exchange Act, but shall have no responsibility for such compliance by the
Company or its predecessors.
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Other Offers. Pursuant to the Merger Agreement, the Company has
agreed that the Company and its subsidiaries will not, and will not authorize
or permit the officers, directors, employees or other agents of the Company
and its subsidiaries to, directly or indirectly, (i) take any action to
solicit, initiate or encourage any Acquisition Proposal or (ii) subject to the
fiduciary duties of the Board of Directors under applicable law, as advised in
writing by counsel to the Company, engage in negotiations with, or disclose
any nonpublic information relating to the Company or any of its subsidiaries or
afford access to the properties, books or records of the Company or any of its
subsidiaries to, any person that has advised the Company or otherwise publicized
the fact that it may be considering making, or that has made, an Acquisition
Proposal; provided, nothing herein shall prohibit the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act. The Company has agreed to promptly notify CA after
receipt of any Acquisition Proposal or any notice that any person is considering
making an Acquisition Proposal or any request for nonpublic information relating
to the Company or any of its subsidiaries or for access to the properties,
books or records of the Company or any of its subsidiaries by any person that
has advised the Company or otherwise publicized the fact that it may be
considering making, or that has made, an Acquisition Proposal and will keep CA
informed of the status and details of any such Acquisition Proposal, indication
or request. "Acquisition Proposal" means any offer or proposal for, or any
written indication of interest in, a merger or other business combination
involving the Company or any of its subsidiaries or the acquisition of any
significant equity interest in, or a significant portion of the assets of, the
Company or any of its subsidiaries, other than the transactions contemplated
by the Merger Agreement.
Rights Agreement. In connection with the execution of the Merger
Agreement, the Company amended the Rights Agreement to make it and the Rights
inapplicable to the Offer and the Merger. The Merger Agreement provides that,
except with respect to amending the Rights Agreement to make it and the Rights
inapplicable to the Offer and the Merger, the Company shall not redeem the
Rights or amend or terminate the Rights Agreement prior to the Effective Time
unless required to do so by a court of competent jurisdiction. See "Item 8.
Additional Information to be Furnished -- Rights Agreement Amendment."
Agreement with respect to Director and Officer Indemnification
and Insurance. Pursuant to the Merger Agreement, CA has agreed, subject to any
limitation imposed from time to time under applicable law, that, for a period of
six years after the Effective Time, it will indemnify and hold harmless the
present and former officers, directors, employees and agents of the Company in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent provided under the Company's certificate of incorporation and by-laws in
effect on the date of the Merger Agreement. CA has further agreed that, for four
years after the Effective Time, it will cause the Surviving Corporation to
provide officers' and directors' liability insurance in respect of acts or
omissions occurring on or prior to the Effective Time covering each such person
currently covered by the Company's officers' and directors' liability insurance
policy on terms substantially similar to those of such policy in effect on the
date of the Merger Agreement, provided that in satisfying such obligation, CA is
not obligated to cause the Surviving Corporation to pay premiums in excess of
105% of the amount per annum the Company paid in its last full fiscal year, and
if the Surviving Corporation is unable to obtain such insurance, it shall obtain
as much comparable insurance as possible for an annual premium equal to such
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maximum amount. CA has also agreed that, in the event any such indemnified
person is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter relating to the Merger, the Offer or
the Merger Agreement occurring on or prior to the Effective Time, it will pay as
incurred such indemnified person's reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith.
Other Agreements. CA has agreed that it will take all action
necessary to cause the Purchaser to perform its obligations under the Merger
Agreement and to consummate the Offer and the Merger on the terms and conditions
set forth in the Merger Agreement. CA also agreed, pursuant to the Merger
Agreement, to hold in confidence all confidential information concerning the
Company and its subsidiaries in accordance with the terms of the Confidentiality
Agreement, dated October 1, 1996, between CA and the Company, a copy of which is
filed as Exhibit 5 to this Schedule 14D-9 and is incorporated herein by
reference.
Conditions to the Merger. Pursuant to the Merger Agreement, the
respective obligations of each party to consummate the Merger are subject to the
satisfaction or waiver, where permissible, at or before the Effective Time of
the following conditions: (i) CA or the Purchaser shall have purchased Shares in
an amount equal to at least the Minimum Condition pursuant to the Offer, (ii)
the adoption and approval of the Merger Agreement by the affirmative vote of the
stockholders by requisite vote in accordance with Delaware Law, if such vote is
required by Delaware Law, (iii) no provision of any applicable law or regulation
and no judgment, injunction, order or decree shall prohibit the consummation of
the Merger, (iv) any applicable waiting period under the HSR Act relating to the
Merger shall have expired, and (v) other than filing the certificate of merger
in accordance with Delaware Law, all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with or exemptions
by (collectively, "Consents") any Federal, state or local government or any
court, administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity") required to
consummate the Merger shall have been filed, occurred or been obtained (other
than any such Consents the failure to occur, obtain or file, in the aggregate,
could not reasonably be expected to (a) have a Material Adverse Effect or (b)
prevent or materially delay the consummation of the Merger).
Termination. The Merger Agreement may be terminated at any time
prior to the Effective Time (notwithstanding any approval of the Merger
Agreement by the stockholders) (i) by mutual written consent of the Company and
CA, (ii) by either the Company or CA, if the Merger has not been consummated by
April 7, 1997 (provided that the party seeking to terminate the Merger Agreement
shall not have breached its obligations under the Merger Agreement in any
material respect), (iii) by either the Company or CA, if there shall be any law
or regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining CA or the
Company from consummating the Merger is entered and such judgment, injunction,
order or decree shall become final and nonappealable, (iv) by either the Company
or CA, (a) if CA shall have failed to commence the Offer within five business
days following the date of the Merger Agreement (provided that CA shall not be
entitled to terminate the Merger Agreement in the circumstance described in this
sub-clause (a) as a result of its breach of the Merger Agreement), (b) if CA or
the Purchaser shall not have purchased any Shares pursuant to the Offer prior to
February 21, 1997 or (c) if the Offer shall have been
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terminated without CA or the Purchaser having purchased any Shares pursuant to
the Offer, (v) by CA, upon the occurrence of any Trigger Event (as defined
below), or (vi) by the Company, if the Company shall have entered into, or shall
have publicly announced its intention to enter into, an agreement or an
agreement in principle with respect to any Acquisition Proposal.
Fees and Expenses. Each party to the Merger Agreement has agreed
to pay its own fees and expenses and there are no provisions for payment by the
Company of the fees and expenses of CA or the Purchaser or vice versa, if the
Merger Agreement is terminated, except as stated below. The Company has agreed
to pay CA a fee in immediately available funds, promptly, but in no event later
than two business days, after the termination of the Merger Agreement as a
result of the occurrence of any of the events set forth below (a "Trigger
Event") in an amount equal to (a) $37,500,000, in the case of the occurrence of
a Trigger Event described in clause (i) or (iii) below and (b) $20,000,000, in
the case of the occurrence of a Trigger Event described in clause (ii) below:
(i) the Company shall have entered into, or shall have publicly announced its
intention to enter into, an agreement or an agreement in principle with respect
to any Acquisition Proposal, (ii) the Company shall have breached or failed to
perform in any respect any of its obligations, covenants or agreements under the
Merger Agreement or any representation or warranty of the Company set forth in
the Merger Agreement (other than breaches or failures to perform or comply that,
in the aggregate, do not have a Material Adverse Effect), or (iii) the Board of
Directors of the Company (or any special committee thereof) shall have withdrawn
or materially modified its approval or recommendation of the Offer, the Merger
or the Merger Agreement.
The Company has also agreed that, if the Merger Agreement is
terminated as a result of the occurrence of a Trigger Event, it shall assume and
pay, or reimburse CA for, all fees payable and expenses incurred by CA
(including the fees and expenses of its counsel) in connection with the Merger
Agreement and the transactions contemplated by the Merger Agreement, up to a
maximum of $5,000,000.
Timing. The exact timing and details of the Merger will depend
upon legal requirements and a variety of other factors, including the number of
Shares acquired by the Purchaser pursuant to the Offer. Although CA has agreed
to cause the Merger to be consummated on the terms set forth above, there can be
no assurance as to the timing of the Merger.
Appraisal Rights. Stockholders do not have dissenters' rights as
a result of the Offer. However, if the Merger is consummated, stockholders of
the Company at the time of the Merger who do not vote in favor of or consent in
writing to the Merger will have the right under Delaware Law to dissent and
demand appraisal of their Shares in accordance with Section 262 of the Delaware
Law. Under Delaware Law, dissenting stockholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) and to receive payment of such fair
value in cash, together with a fair rate of interest, if any. Any such judicial
determination of the fair value of the Shares could be based upon considerations
other than or in addition to the price paid in the Offer (or the Merger) and the
market value of the Shares. Stockholders should recognize that the value so
determined could be higher or lower than the price per Share paid pursuant to
the Offer or the Merger. Moreover, CA or
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the Purchaser may argue in an appraisal proceeding that, for purposes of such a
proceeding, the fair value of the Shares is less than the price paid in the
Offer (or the Merger). THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING
STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE THEIR DISSENTERS' RIGHTS.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
The Company's Board of Directors has unanimously approved the
Merger Agreement and determined that the Offer and the Merger are fair to and in
the best interests of the stockholders of the Company (other than CA and its
subsidiaries) and recommends that all stockholders of the Company accept the
Offer and tender all their Shares pursuant to the Offer. This recommendation is
based in part upon an opinion received by the Company from Lazard Freres & Co.
LLC ("Lazard Freres") that the consideration to be received by the Company's
stockholders in the Offer and received by the Company's stockholders in the
Merger, taken as a whole, is fair to the stockholders (other than CA and its
subsidiaries) from a financial point of view. The full text of the fairness
opinion received by the Company from Lazard Freres is filed as Exhibit 3 to this
Schedule 14D-9 and is also attached hereto as Annex B. Stockholders are urged to
read such opinion in its entirety.
As set forth in the Offer Documents, the Purchaser will purchase
Shares tendered prior to the close of the Offer if the Minimum Condition has
been satisfied by that time and if all other conditions to the Offer have been
satisfied (or waived). Stockholders considering not tendering their Shares in
order to wait for the Merger should note that if the Minimum Condition is not
satisfied or any of the other conditions to the Offer are not satisfied, the
Purchaser is not obligated to purchase any Shares, and can terminate the Offer
and the Merger Agreement and not proceed with the Merger. Under Delaware Law,
the approval of the Board and the affirmative vote of the holders of a majority
of the outstanding Shares are required to approve the Merger. Accordingly, if
the Minimum Condition is satisfied, the Purchaser will have sufficient voting
power to cause the approval of the Merger without the affirmative vote of any
other stockholder.
The Offer is scheduled to expire at 12:00 Midnight, New York City
time, on Friday, November 8, 1996, unless the Purchaser, in its sole discretion,
elects to extend the period of time for which the Offer is open. A copy of the
press release issued jointly by the Company and the Purchaser on October 7, 1996
announcing the Merger and the amended Offer is filed as Exhibit 4 to this
Schedule 14D-9 and is incorporated herein by reference in its entirety.
(b) Background of the Offer; Reasons for the Recommendation.
In reaching its conclusions described in paragraph (a) above, the
Board of Directors of the Company considered a number of factors, including,
without limitation, the following:
(i) the financial and other terms and conditions of the Offer
and the Merger Agreement;
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(ii) the Company's business, financial condition, results of
operations, assets, liabilities, business strategy and prospects, as
well as various uncertainties associated with those prospects, including
the view of the Company's management that the Company would likely face
increasing difficulties as a stand-alone company in its changing
competitive environment because, among other things, it lacked the size
and capital base necessary to fully exploit the diverse and growing
markets which it serves;
(iii) the facts that the $30.50 per Share price to be received by the
Company's stockholders in both the Offer and the Merger represents a 36%
premium over the closing market price of $22-3/8 per Share on October 4,
1996, the last full trading day prior to the announcement of the
execution of the Merger Agreement, and premiums of 53% and 60% over the
average closing prices for the 30-day period and the 60-day period,
respectively, preceding October 4, 1996; and that such price would be
payable in cash, thus eliminating any uncertainties in valuing the
consideration to be received by the Company's stockholders;
(iv) the fact that the Offer and the Merger would not be subject to
any financing condition, that CA has represented that the funds
necessary to consummate the Offer and the Merger will be provided and
has agreed to cause the Purchaser to fully perform all of the
Purchaser's obligations under the Merger Agreement;
(v) the oral opinion of Lazard Freres, confirmed in writing, that
the consideration to be received by the Company's stockholders pursuant
to the Offer and the Merger is fair to such stockholders from a
financial point of view; a copy of Lazard Freres' written opinion is
attached to this Schedule 14D-9 as Annex B and is incorporated herein by
reference. Such opinion should be read in its entirety for a description
of the procedures followed, assumptions and qualifications made, matters
considered and limitations of the review undertaken by Lazard Freres;
(vi) the presentation of Lazard Freres to the Board of Directors at
its meeting on October 7, 1996, as to various financial and other
matters deemed relevant to the Board of Director's consideration,
including, among other things, (a) a review of the Company's historical
and projected operating performance, (b) a review of various financial
forecasts and other data provided to Lazard Freres relating to the
Company's business, (c) a review of the historical stock prices and
trading volumes of the Shares, (d) a review of the trading performance
of certain publicly traded software companies, (e) a review of certain
transactions in the software industry, (f) a review of premiums paid in
certain other transactions, (g) a discounted cash flow valuation of the
Company, and (h) an analysis of the Offer Price as a multiple of various
measures of the Company's operating performance;
(vii) the fact that, despite the extensive publicity over an extended
period following the rejection by the Company of a takeover attempt by
McAfee Associates, Inc. ("McAfee") which highlighted the Company as a
potential candidate for sale, no other potential acquiror had expressed
any substantial interest in engaging in a business combination or other
strategic transaction with the Company, no acquisition proposals had
been received and no discussions had been held;
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(viii) the opinion of the Company's management that the strategic fit
between CA and the Company would likely yield significant business and
operational synergies, a significant portion of which could be passed on
to the Company's current stockholders in the form of a premium over the
preexisting market price for the Shares;
(ix) the fact that CA had indicated its intention to retain all of
the Company's employees and was willing to announce such intention in
the press release announcing that it had entered into the Merger
Agreement with the Company; and
(x) the fact that, to the extent required by the fiduciary
obligations of the Board of Directors of the Company to the stockholders
under Delaware Law, the Company may terminate the Merger Agreement in
order to approve a tender offer or exchange offer for the Shares or
other proposed business combination by a third party on terms more
favorable to the Company's stockholders than the Offer and the Merger
taken together, upon the payment of a $37,500,000 termination fee and up
to $5,000,000 of CA's expenses associated with the Offer and the Merger.
See "Item 3. Identity and Background -- Merger Agreement --
Termination."
BACKGROUND.
The Company has had contacts and entered into agreements from
time to time in the ordinary course of its business with CA and certain of its
subsidiaries, including the licensing of certain technology of the Company to CA
for integration with CA's products and the distribution of certain CA products
by the Company. In light of the physical proximity of the Company and CA on Long
Island, New York and the ongoing business relationships between them, the
Company and CA have been very familiar with each other for several years and
there have been many contacts between senior executives of the two companies
unrelated to this transaction.
In April 1996, the Company received an unsolicited proposal from
McAfee for a business combination which implied a price of $27.50 per Share in
McAfee stock, which the Board of Directors of the Company, after due
consideration, rejected as financially inadequate and as lacking in technology
and management synergies. McAfee withdrew its acquisition proposal and the
Company did not receive any substantial expressions of interest from any third
parties at that time. The Company, having considered various alternatives
available to it, determined to continue to pursue its strategic plan.
During May 1996, Charles B. Wang, Chairman and Chief Executive
Officer of Computer Associates, Sanjay Kumar, President and Chief Operating
Officer of Computer Associates, and ReiJane Huai, Chairman and Chief Executive
Officer of the Company, met to discuss the existing relationships and synergies
of the companies and ways of expanding the existing relationships between them.
On June 2, 1996, at CA's suggestion, Mr. Huai met at Mr. Kumar's
home with Mr. Wang, Mr. Kumar and certain other executives of the companies, to
discuss the possibility of a business combination between the parties.
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At a meeting of the Board of Directors held on June 16, 1996, Mr.
ReiJane Huai, Chairman of the Board, President and Chief Executive Officer of
the Company, reviewed with the other members of the Board of Directors the fact
that CA had contacted the Company with regard to a possible business
combination. In June 1996, the Company engaged Lazard Freres to act as the
Company's financial advisor, and Wachtell, Lipton, Rosen & Katz to act as its
legal counsel, in connection with a possible sale of the Company. Both of such
firms had advised the Company in connection with the McAfee bid.
In June 1996, there were further discussions between senior
executives of CA and the Company, at which a possible business combination
transaction between CA and the Company was discussed. However, no information
was exchanged and such discussions did not result in any proposals being made or
negotiations being held at that time.
At a meeting of the Board of Directors held on July 12, 1996, Mr.
Huai again reviewed with the other members of the Board of Directors the
discussions which had taken place with CA, and the Board of Directors approved
the Company's entering into a confidentiality agreement with CA, and commencing
mutual due diligence investigations. However, discussions with CA ceased with no
confidentiality agreement having been entered into at that time.
Representatives of the Company and CA and their respective
advisors had a number of conversations in July regarding a possible combination
of the Company and CA in a stock for stock transaction, but these conversations
did not result in a proposal being made by CA or in negotiations with respect to
a transaction. There was some discussion regarding mutual due diligence reviews;
however the parties did not agree on the terms of a confidentiality agreement at
that time and discussions ceased.
On August 7, 1996, representatives of the parties met, at the
initiation of CA, and again discussed the possibility of a business combination
in the form of a stock-for-stock transaction. At that time, the exchange ratio
for the Shares which was discussed represented a materially lower valuation
per Share than the $30.50 cash price in the Offer. No understanding was reached
with respect to the basic financial terms. Accordingly, the parties determined
not to enter into a confidentiality agreement, exchange information or engage
in further discussions at that time.
On September 27, 1996, Mr. Huai was meeting with Mr. Wang on
unrelated business, when the possibility of a combination was again raised.
Later that day, Mr. Kumar contacted Mr. Huai and a representative of Lazard
Freres by telephone and requested a meeting to discuss a possible acquisition of
the Company by CA at a substantial premium to the market price for the Shares.
Mr. Kumar met on September 29, 1996, with representatives of
Lazard Freres, and indicated that CA was willing to consider an all-cash
transaction at a substantial premium to acquire the Company. The representatives
of Lazard Freres indicated that they would discuss such proposal with the
Company. Later on September 29, 1996, Mr. Kumar telephoned Mr. Huai and
discussed with him the terms of a possible acquisition of the Company by CA.
A subsequent conversation between Mr. Kumar and the Lazard Freres
representatives ensued.
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On October 1, 1996, following a meeting between Mr. Kumar and Mr.
Huai and certain other executives of CA and the Company, the Company and CA
entered into a confidentiality agreement and, later that day, the Company
provided detailed legal and operating data to CA, and members of the Company's
management met with members of management of CA to discuss certain aspects of
the Company's business. The parties decided to begin working on all aspects of
the transaction other than price immediately so that, if agreement could be
reached on the financial terms on Sunday, October 6, 1996, the agreement could
be completed and announced on Monday, October 7, 1996 and the necessary
documents filed with the Commission promptly thereafter. Accordingly,
representatives of CA and the Company participated in further due diligence
and merger agreement discussions on October 2 and 3, 1996.
On October 4, 1996, the Board of Directors met by telephone and
reviewed the status of the proposed transaction with CA. After considering
various factors, it was the consensus of the Board of Directors that management,
together with the Company's advisors, continue negotiations with CA.
On October 6, 1996, the parties met with their legal counsel and,
in the case of the Company, financial advisors, in an effort to resolve the
remaining economic points of the transaction and to finalize the merger
agreement. Late in the morning, negotiations between the Company and CA reached
an impasse with CA offering a price of $30.30 per Share and the Company seeking
a higher price. Following a lunch meeting between Mr. Kumar and Mr. Huai which
failed to resolve the difference in price level, Mr. Kumar delivered a letter to
Mr. Huai, addressed to the Board of Directors of the Company, which reflected a
proposal by CA subject, among other things, to approval of the CA Board of
Directors, to acquire all of the outstanding Shares at a price of $28.50 per
Share in cash.
At 4.00 p.m. on October 6, 1996, the Board of Directors of the
Company met, as previously scheduled, and unanimously rejected the $28.50
proposal by CA as inadequate. CA was promptly informed of the Company Board of
Directors action.
Later that evening, Mr. Kumar telephoned Mr. Huai and, after
expressing CA's firm resolve to acquire the Company, telecopied to Mr. Huai a
second letter, in which CA offered to acquire all of the Shares at a price of
$30.30 per Share in cash. The second letter was not conditioned on the approval
of the CA Board of Directors and indicated that CA intended to announce
publicly its offer to acquire the Company the following morning.
Following a telephone conversation between Mr. Kumar and
representatives of Lazard Freres, the parties decided to meet later that night
in an attempt to resolve the remaining issues between them. In negotiations
involving certain executive officers of the Company and CA, the purchase price
of $30.50 per Share, the termination fees and the principal remaining issues
on the merger agreement were agreed upon.
The Board of Directors of the Company met early in the morning of
October 7, 1996 and, after a discussion and receipt of the fairness opinion of
Lazard Freres, unanimously approved the Merger Agreement and the transactions
contemplated thereby, subject to approval of the final terms by the officers of
the Company.
The Merger Agreement was then finalized and executed and was
publicly announced on October 7, 1996. On October 11, 1996, the Purchaser
commenced the Offer.
-18-
<PAGE>
<PAGE>
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained Lazard Freres as its financial advisor in
connection with the Offer and the Merger. Pursuant to its agreements with the
Company, dated April 18, 1996 and June 7, 1996, Lazard Freres (i) became
entitled to receive $1,000,000 upon execution of the Merger Agreement and the
public announcement of the Offer and Merger, and (ii) Lazard Freres will be
entitled to receive, immediately prior to the consummation of the Offer, an
amount equal to 0.425% of the aggregate consideration to be paid by the
Purchaser less the $1,000,000 previously paid pursuant to clause (i). For the
purposes of the determination of the fee owed to Lazard Freres, "aggregate
consideration" means the total amount of cash and the fair market value (on the
date of payment) of all other property paid or payable by the Purchaser or CA to
the Company or its securityholders in connection with the Offer and the Merger,
including amounts paid or payable in respect of options or similar rights,
whether or not vested, plus the principal amount of all indebtedness for
borrowed money as set forth in the most recent consolidated balance sheet prior
to consummation of the Offer and Merger. In addition, whether or not the Offer
and the Merger is completed, the Company has agreed to pay Lazard Freres a
quarterly financial advisory fee of $50,000 (up to a maximum of $200,000, which
fee commenced with the execution of the initial engagement letter on April 18,
1996), to reimburse Lazard Freres periodically for its reasonable out-of-pocket
expenses, including the fees and disbursements of its counsel, and to indemnify
Lazard Freres and its partners, employees, agents, affiliates or controlling
persons against certain liabilities relating to or arising out of its
engagement, including liabilities under Federal securities laws.
Except as set forth above, neither the Company nor any person
acting on its behalf has or currently intends to employ, retain or compensate
any person to make solicitations or recommendations to the stockholders of the
Company on its behalf with respect to the Offer and the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past sixty days, no transactions in the Shares
have been effected by the Company or, to the best of the Company's knowledge, by
any executive officer, director, affiliate, or subsidiary of the Company, except
as follows:
(i) On September 17, 1996, the Company granted 150,000 stock
options to Mr. Huai and 120,000 stock options to Mr. Yuda Doron at an
exercise price of $20.25 per Share.
(ii) Between August 12 and October 11, 1996, the Company
repurchased in the open market an aggregate of 109,000 Shares pursuant
to its previously announced stock repurchase program. The aggregate
purchase price for such Shares was $2,020,155 (including commissions)
and the price per Share ranged from $18 to $18 7/8. The Company has not
repurchased Shares since September 17, 1996.
(b) To the best knowledge of the Company, all of its executive
officers and directors currently intend to tender pursuant to the Offer all
Shares held of record or beneficially owned by them (other than Shares issuable
upon exercise of Company Options and Shares, if any, which if tendered could
cause such persons to incur liability under the provisions of Section 16(b) of
the Exchange Act). One executive officer of the Company has advised the Company
that while he currently intends to tender all of his Shares, he may transfer or
gift Shares to family members or to a charitable remainder trust for estate
planning purposes.
-19-
<PAGE>
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary thereof; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary thereof; (iii) a tender offer for or other acquisition of securities
by or of the Company; or (iv) any material change in the present capitalization
or dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board
resolution, agreement in principle or signed contract in response to the Offer
that relates to or would result in one or more of the events referred to in Item
7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
SECTION 203
As a Delaware corporation, the Company is subject to Section 203
("Section 203") of the Delaware Law. Section 203 would prevent an "Interested
Shareholder" (generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Shareholder unless: (i) before such
person became an Interested Shareholder, the board of directors of the
corporation approved the transaction in which the Interested Shareholder became
an Interested Shareholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Shareholder
becoming an Interested Shareholder, the Interested Shareholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an Interested Shareholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of shareholders by the affirmative vote of the holders of at least
66-2/3% of the outstanding voting stock of the corporation not owned by the
Interested Shareholder. In accordance with the provisions of the Company's
Certificate of Incorporation and Section 203, the Board of Directors of the
Company has approved the Merger Agreement and the Purchaser's acquisition of
Shares pursuant to the Offer and the Merger and the transactions contemplated
thereby and, therefore, the restrictions of Section 203 are inapplicable to the
Merger and the related transactions.
ANTITRUST
Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") and the FTC and certain
-20-
<PAGE>
<PAGE>
waiting period requirements have been satisfied. The acquisition of Shares by
the Purchaser pursuant to the Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, CA filed the
required Notification and Report Forms (the "Forms") with the Antitrust Division
and the FTC on October 9, 1996, and the Company filed the Forms with such
agencies on October 10, 1996. The statutory waiting period applicable to the
purchase of Shares pursuant to the Offer is to expire at 11:59 P.M., New York
City time, on Thursday, October 24, 1996. However, prior to such date, the
Antitrust Division or the FTC may extend the waiting periods by requesting
additional information or documentary material relevant to the acquisition. If
such a request is made, the waiting period will be extended until 11:59 P.M.,
New York City time, on the tenth day after substantial compliance by the
Purchaser with such request. Thereafter, such waiting periods can be extended
only by court order. A request is being made pursuant to the HSR Act for early
termination of the applicable waiting period. There can be no assurance,
however, that the waiting period will be terminated early. The Merger Agreement
provides that, if by the expiration of the Offer, the applicable waiting period
under the HSR Act shall not have expired or been terminated, Merger Subsidiary
shall extend the Offer from time to time until the earlier of (x) the date that
is 30 days after the first scheduled expiration date and (y) the date that such
waiting period has expired or been terminated.
The Antitrust Division and the FTC frequently scrutinize the
legality under the antitrust laws of transactions. At any time before or after
the consummation of any such transactions, the Antitrust Division or the FTC
could, notwithstanding termination of the waiting period, take such action under
the antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of the Purchaser or the Company. Private parties may also bring legal
actions under the antitrust laws. There can be no assurance that a challenge to
the Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See Item 3, "Identity and Background -- Merger
Agreement -- Conditions of the Offer" and "-- Conditions to the Merger."
RIGHTS AGREEMENT AMENDMENT
Prior to the execution of the Merger Agreement, the Board of
Directors authorized, the Company executed, and prior to the commencement of the
Offer, the Rights Agent executed, an amendment to the Rights Agreement (the
"Rights Agreement Amendment"), which renders the Rights Agreement inapplicable
to the Offer and the Merger by providing, among other things, that the execution
of the Merger Agreement, the announcement or making of the Offer the acquisition
of Shares pursuant to the Offer and the Merger and the other transactions
contemplated in the Merger Agreement will not (a) result in either CA or the
Purchaser or any of their affiliates being considered an Acquiring Person or (b)
cause the occurrence of a Distribution Date or a Shares Acquisition Date. The
Rights Agreement provides that the Rights become exercisable upon the occurrence
of certain triggering events, including the acquisition of 20% or more of the
outstanding Shares. Should a triggering event occur, holders of Rights (other
than any holder whose action triggered the Rights) would generally be entitled
to purchase Shares with a market value
-21-
<PAGE>
<PAGE>
aggregating $200 for a price of $100. Except as expressly provided in the Rights
Agreement Amendment, the Rights Agreement remains in full force in effect.
A copy of the Rights Agreement Amendment has been filed as
Exhibit 2 to this Schedule 14D-9, and is incorporated herein by reference, and
the foregoing summary is qualified in its entirety by reference thereto.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
1 Merger Agreement
2 Rights Agreement Amendment
3 Opinion of Lazard Freres, dated October 7, 1996 (Attached to Schedule
14D-9 mailed to stockholders as Annex B)
4 Press Release of the Company and CA, issued October 7, 1996
5 Confidentiality Agreement dated October 1, 1996 between CA and the
Company
6 Article Nine of the Restated Certificate of
Incorporation of the Company
7 Section Seven of the Restated By-Laws of the Company
8 Letter dated October 11, 1996 from ReiJane Huai to the stockholders
of the Company (Included with Schedule 14D-9 mailed to stockholders)
-22-
<PAGE>
<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.
October 11, 1996
CHEYENNE SOFTWARE, INC.
By /s/ Elliott Levine
---------------------------------
Name: Elliot Levine
Title: Executive Vice President,
Senior Financial Officer
and Treasurer
-23-
<PAGE>
<PAGE>
ANNEX A
INFORMATION STATEMENT PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about October
11, 1996, with the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Cheyenne Software, Inc. (the "Company") with respect to the
Offer to Purchase dated October 11, 1996 (as supplemented, the "Offer to
Purchase") of Tse-tsehese-staetse, Inc. (the "Purchaser"), a wholly owned
subsidiary of Computer Associates International, Inc. ("CA"). The Purchaser is
offering to purchase all outstanding shares of Common Stock, par value $.01 per
share (the "Common Stock") of the Company, together with the associated
preferred share purchase rights, at a price of $30.50 per share, net to the
seller in cash (the "Offer"). The Offer is being made pursuant to the Agreement
and Plan of Merger, dated as of October 7, 1996 (the "Merger Agreement"), by and
among CA, the Purchaser and the Company. You are receiving this Information
Statement in connection with the possible election of persons designated by CA
(the "CA Designees") to a majority of the seats on the Board of Directors (the
"Board") of the Company pursuant to the Merger Agreement. The Merger Agreement
is more fully described under Item 3 of the Schedule 14D-9, to which this
Information Statement is attached as Annex A. Capitalized terms used and not
defined herein have the meanings assigned to them in the Schedule 14D-9.
The information with respect to the CA Designees has been
supplied to the Company by CA for inclusion or incorporation by reference
herein, and the Company assumes no responsibility for the accuracy or
completeness of such information.
This Information Statement is required by Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action.
THE CA DESIGNEES
Pursuant to the Merger Agreement and subject to compliance with
applicable law, upon the Purchaser's acceptance for payment of
shares of Common Stock pursuant to the Offer, CA will be entitled to designate
such number of directors on the Board as will constitute a majority of such
directors. The foregoing notwithstanding, the Merger Agreement further provides
that at least one director who was a director of the Company as of the date of
the Merger Agreement and who is not an officer of the Company (such director,
the "Independent Director") shall continue to serve on the Board until the
effectiveness of the Merger. The Company has agreed to take all action necessary
to effect the election of the CA Designees to the Board, including, in
connection therewith, increasing the size of the Board or seeking and obtaining
the resignation of such number of its current directors or both to enable CA
Designees to be elected to the Board as provided above.
CA has informed the Company that it will choose the CA Designees
from the directors and executive officers listed in Schedule I to the
Purchaser's Offer to Purchase, a copy of which is being mailed to the Company's
stockholders together with the Schedule 14D-9. CA has informed the Company that
each of the directors and executive officers
A-1
<PAGE>
<PAGE>
listed in Schedule I to the Offer of Purchase has consented to act as a
director, if so designated. The information on such Schedule I is incorporated
herein by reference. The business address of each such person is c/o Computer
Associates International, Inc., One Computer Associates Plaza, Islandia, New
York 11788-7000.
It is expected that the CA designees may assume office at any
time following the purchase by the Purchaser of the specified minimum number of
shares of Common Stock pursuant to the Offer, which purchase cannot be earlier
than November 8, 1996.
CERTAIN INFORMATION CONCERNING THE COMPANY
The shares of Common Stock constitute the only class of voting
securities of the Company. As of the close of business on October 4, 1996, there
were 37,711,424 shares of Common Stock outstanding. Each share of Common Stock
entitles its record holder to one vote. Stockholders of the Company do not have
cumulative voting rights. None of the Company's 5,000,000 authorized shares of
preferred stock, $.01 par value, have been issued. The Board currently consists
of five members.
THE CURRENT MEMBERS OF THE BOARD AND EXECUTIVE OFFICERS OF THE COMPANY
To the extent the Board will consist of persons who are not CA
Designees, the Board is expected to continue to consist of those persons who are
currently directors of the Company who do not resign. The current directors and
executive officers of the Company, their ages, and their positions and terms of
office with the Company are set forth below.
<TABLE>
<CAPTION>
Director
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
ReiJane Huai(1) 37 Chairman of the Board, President, and
Chief Executive Officer of the Company 1993
Elliot Levine 60 Executive Vice President, Senior
Financial Officer, and Treasurer
of the Company
Alan Kaufman 58 Executive Vice President - Sales and
Secretary of the Company
Yuda Doron 44 Executive Vice President
Doris A. Granatowski 46 Executive Vice President
Rino Bergonzi(1)(2) 52 Director of the Company 1994
Richard F. Kramer(2)(4) 52 Director of the Company 1987
Bernard Rubien(3)(4) 78 Director of the Company 1985
Ginette Wachtel(1)(3)(4) 61 Director of the Company 1987
</TABLE>
- --------------
(1) Member of the Executive Committee of the Company.
(2) Member of the Audit Committee of the Company.
(3) Member of the Compensation Committee of the Company.
(4) Member of the Option Committee of the Company.
A-2
<PAGE>
<PAGE>
ReiJane Huai became a director and President and Chief Executive
Officer of the Company on October 7, 1993. He was elected Chairman of the Board
of the Company effective May 20, 1994. He served as Vice President-Engineering
of the Company from March 1990 through October 7, 1993. From August 1988 to
March 1990, he served as a director of engineering of the Company. From August
1987 to August 1988, he was a systems engineer for AT&T Bell Laboratories. He
served as manager of research and development at the Company from June 1985 to
August 1987.
Elliot Levine became Executive Vice President of the Company on
October 7, 1993. He served as a Vice President of the Company from March 1990
through October 7, 1993. He has been Senior Financial Officer of the Company
since March 1990 and Treasurer of the Company since December 1991. From
September 1989 to March 1990, he served as a consultant to the Company.
Alan Kaufman became Secretary of the Company in August 1988 and
Executive Vice President -- Sales on October 7, 1993. He served as a Vice
President of the Company from February 1987 through October 7, 1993. From
April 1986 to February 1987, he served as director of marketing of the Company.
Yuda Doron became Executive Vice President of the Company
effective June 1, 1995. He served as President of Cheyenne Communications,
Inc., a wholly owned subsidiary of the Company ("Cheycomm") from July 1, 1993
through June 8, 1995. From April 5, 1993 to July 1, 1993, he served as a
consultant to the Company. From January 1993 to July 1993, Mr. Doron was a Vice
President of Business Development at Elron Corp. From July 1988 to December
1992, he served as a division manager at Texas Instruments, Inc.
Doris A. Granatowski became a Vice President on November 16,
1994, and Executive Vice President on December 14, 1995. From September, 1994,
to October 1994, Ms. Granatowski served as Vice President, Operations,
Technology Group of Henry Schein, Inc. From 1988 to July, 1994, Ms. Granatowski
was the Managing Director of Imrex Systems International Ltd. and Senior Vice
President of Imrex Computer Systems, Inc.
Richard F. Kramer has been a director of the Company since 1987.
He is Chief Executive Officer and Treasurer of FAXplus, Inc., a
telecommunications and computer products marketing company he founded in 1988.
He also is President of Corporate Development, Inc., a marketing and consulting
firm he founded in 1987.
Rino Bergonzi has been a director of the Company since
April 21, 1994. Mr. Bergonzi has been Vice President and Division
Executive of Corporate Information Technology Services at AT&T Corp.
since November 1993. From 1985 to 1993, Mr. Bergonzi was Vice President of
United Parcel Service Information Services. In January 1995, he became a
director of Enteractive, Inc., a multimedia software company.
Bernard Rubien has been a director of the Company since June
1985.
Ginette Wachtel has been a director of the Company since 1987.
She served as a Senior Vice President of Application Development of Marsh &
McClennan, Inc., an insurance brokerage firm and insurance holding company,
through September 30, 1993,
A-3
<PAGE>
<PAGE>
and was an officer of such company since 1984. She currently provides consulting
services in the computer systems area.
BOARD MEETINGS AND COMMITTEES
The Board has a standing Audit Committee, a standing Compensation
Committee, a standing Executive Committee, and a standing Option Committee. The
Audit Committee reviews the Company's financial accounting procedures, internal
controls, and the reports of the Company's independent auditors. The Audit
Committee met twice in the fiscal year ended June 30, 1996. The members of the
Audit Committee are Mr. Kramer and Mr. Bergonzi. The Compensation Committee
makes recommendations to the Board concerning compensation arrangements for
directors, executive officers, and certain other senior management of the
Company. The Compensation Committee did not meet in the fiscal year ended June
30, 1996. The members of the Compensation Committee are Ms. Wachtel and Mr.
Rubien. The Executive Committee is authorized to exercise the powers of the
Board when the Board does not meet. The Executive Committee did not meet during
the fiscal year ended June 30, 1996. The members of the Executive Committee are
Ms. Wachtel, Mr. Bergonzi, and Mr. Huai. The Option Committee administers the
Company's 1989 Stock Incentive Plan and Non-Qualified Plan (as defined herein).
The Option Committee met three times in the fiscal year ended June 30, 1996.
The Option Committee members are Mr. Kramer, Mr. Rubien, and Ms. Wachtel.
The Board held twelve meetings in the fiscal year ended June 30,
1996. Each director attended at least seventy-five (75%) percent of the
aggregate of (i) the total number of meetings of the Board plus (ii) the total
number of meetings held by all committees of the Board on which the director
served.
There is no family relationship between any director or executive
officer of the Company.
PRINCIPAL HOLDERS OF VOTING SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of October 8, 1996, to the knowledge of the Company, no person
owned beneficially (as defined in Rule 13d-3 under the Exchange Act) more than
5% of the shares of the outstanding Common Stock.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of October 8, 1996, for each
of (i) each member of the Board, the Company's Chief Executive Officer and
each of the next four most highly compensated executive officers of the
Company and (ii) all directors and executive officers as a group the number of
shares and percentage of outstanding Common Stock of the Company beneficially
owned. Each person named in the table has sole investment power and sole voting
power with respect to the shares of the Common Stock set forth opposite such
person's name, except as otherwise indicated.
A-4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of Common
Beneficial Owner Beneficially Owned(1)(3) Stock Outstanding(2)(3)
- ---------------- ------------------------ -----------------------
<S> <C> <C>
ReiJane Huai, Chairman of the Board,
President and Chief Executive Officer 506,480(4) 1.33%
Rino Bergonzi, Director 36,250(5) *
Richard F. Kramer, Director 101,250(6) *
Bernard Rubien, Director 50,625(7) *
Ginette Wachtel, Director 67,500(8) *
Yuda Doron, Executive Vice President 180,500(9) *
Doris A. Granatowski, Executive Vice President 6,250(10) *
Alan Kaufman, Executive Vice President
and Secretary 220,833(11) *
Elliot Levine, Executive Vice President,
Senior Financial Officer and Treasurer 343,833(12) *
All executive officers and directors as a group
(11 persons) 1,544,420(13) 4.08%
</TABLE>
- --------------
* Less than 1%.
(1) Includes shares of Common Stock issuable pursuant to options exercisable
within sixty (60) days from the date hereof.
(2) Based upon (i) 37,711,424 shares of Common Stock outstanding (excluding
2,343,900 shares of treasury stock), plus, when appropriate (ii) the
number of shares of Common Stock which may be acquired by the named
person or by all persons included in the group pursuant to the exercise
of options exercisable within sixty (60) days from the date hereof.
(3) All shares of Common Stock have been adjusted to reflect the 1992, 1993,
and 1994 three-for-two stock splits paid in the form of 50% stock
dividends with respect to the issued and outstanding shares of Common
Stock (the "1992 Stock Split", "1993 Stock Split", and "1994 Stock
Split", respectively). The 1992 Stock Split was paid on March 25, 1992
to stockholders of record at the close of business on March 3, 1992; the
1993 Stock Split was paid on April 8, 1993 to stockholders of record at
the close of business on March 12, 1993; and the 1994 Stock Split was
paid on March 29, 1994 to stockholders of record at the close of
business on March 1, 1994.
(4) Consists of 177,317 shares of Common Stock currently held by Mr. Huai,
and 329,167 shares of Common Stock acquirable pursuant to the exercise
of non-qualified stock options granted under the Company's 1987
Non-Qualified Option Plan, as amended and restated (the "Non-Qualified
Plan").
(5) Consists of 2,500 shares of Common Stock owned by the wife of Rino
Bergonzi and 33,750 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's 1992
Stock Option Plan for Outside Directors. Mr. Bergonzi disclaims
beneficial ownership of the shares owned by his wife.
(6) Consists of 33,750 shares of Common Stock currently held by Mr. Kramer
and 67,500 shares of Common Stock acquirable pursuant to the exercise of
non-qualified stock options granted under the Company's 1992 Stock
Option Plan for Outside Directors.
A-5
<PAGE>
<PAGE>
(7) Consists of 50,625 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's 1992
Stock Option Plan for Outside Directors.
(8) Consists of 67,500 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Company's 1992
Stock Option Plan for Outside Directors.
(9) Consists of 500 shares of Common Stock owned by the wife of Yuda Doron,
and 180,000 shares of Common Stock acquirable pursuant to the exercise
of non-qualified stock options granted under the Non-Qualified Plan.
Mr. Doron disclaims beneficial ownership of the shares owned by his
wife.
(10) Consists of 6,250 shares of Common Stock acquirable pursuant to the
exercise of incentive stock options granted under the Incentive Plan.
(11) Consists of 220,833 shares of Common Stock acquirable pursuant to the
exercise of non-qualified stock options granted under the Non-Qualified
Plan.
(12) Consists of 123,000 shares of Common Stock currently held by Mr. Levine,
and 220,833 shares of Common Stock acquirable pursuant to the exercise
of non-qualified stock options granted under the Non-Qualified Plan.
(13) Includes an aggregate of 353,212 shares of Common Stock currently held
by certain executive officers and directors of the Company, and
1,191,208 shares of Common Stock acquirable pursuant to the exercise of
options which are exercisable within sixty (60) days.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the three most recently ended
fiscal years, the compensation paid or accrued for those years to the Chief
Executive Officer of the Company and to each of the four most highly compensated
executive officers of the Company other than the Chief Executive Officer whose
aggregate annual salary and bonus paid in compensation for services rendered in
all the capacities in which they served exceeded $100,000 for the Company's last
fiscal year (the "Named Executives"):
A-6
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------
Annual Compensation Awards Payouts
-------------------------- ------------------- -------
Name and Other Restricted Securities All Other
Principal Annual Stock Underlying LTIP Compensation
Position Year Salary($) Bonus($) Compensation($)(7) Awards($) Options(8) Payouts($) ($) (8)
- ---------- ---- --------- -------- ------------------ --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ReiJane Huai - Chairman, 1994 180,625 -0- 3,364,171 -0- 262,500 -0- 11,313
President, and Chief 1995 205,000 -0- 169,130 -0- 200,000 -0- 19,036
Executive Officer(1)(2) 1996 212,500 -0- 4,181,533 -0- -0- -0- 19,167
Elliot Levine - Executive 1994 170,833 -0- 3,918,556 -0- 187,500 -0- 23,400
Vice President, Senior 1995 180,000 -0- 707,939 -0- 100,000 -0- 23,281
Financial Officer and 1996 180,000 -0- 653,544 -0- -0- -0- 25,087
Treasurer(1)(3)
Alan Kaufman - Executive 1994 165,000 -0- 2,769,264 -0- 187,500 -0- 8,255
Vice President - Market- 1995 180,000 -0- -0- -0- 100,000 -0- 8,090
ing and Secretary(1)(4) 1996 180,000 -0- -0- -0- -0- -0- 12,009
Yuda Doron - Executive 1994 125,000 -0- -0- -0- -0- -0- 4,694
Vice President(1)(5) 1995 134,653 25,000 -0- -0- 240,000 -0- 7,822
1996 187,680 -0- -0- -0- -0- -0- 8,360
Doris A. Granatowski - 1994 -0- -0- -0- -0- -0- -0- 0
Executive Vice 1995 109,375 10,000 -0- -0- 25,000 -0- 4,500
President(1)(6) 1996 179,166 -0- -0- -0- 70,000 -0- 9,440
</TABLE>
- --------------
(1) All of the executive employment agreements discussed herein provide that the
executive officers receive the fringe benefits generally available to all
employees of the Company and contain non-disclosure and non-competition
provisions for the benefit of the Company.
(2) On September 5, 1991, Mr. Huai entered into a three-year employment
agreement with the Company to serve as Vice President-Engineering. The
agreement provides for a base annual salary of $140,000, with increases of
$5,000 per annum under certain circumstances, and for a death benefit and
severance payments equal to 50% of his current base salary. On October 7,
1993, the term of Mr. Huai's agreement was extended to September 5, 1997 and
was further amended to provide that Mr. Huai shall serve as President and
Chief Executive Officer of the Company at a base salary of $205,000 per
annum. On April 29, 1996, the Board increased Mr. Huai's annual base salary
to $250,000, effective May 1, 1996. As amended, the agreement no longer
provides for $5,000 increases in base salary each year. Upon termination of
his status as Chairman of the Company, Mr. Huai is entitled to lifetime
medical benefits from the Company.
(3) On September 1, 1992, Mr. Elliot Levine entered into a three-year employment
agreement with the Company to serve as a Vice President, Senior Financial
Officer, and Treasurer of the Company. Mr. Levine's agreement provides for a
base annual salary of $150,000, with increases of $10,000 per annum under
certain circumstances. Mr. Levine's agreement provides for a death benefit
and severance provision equal to 100% of his current base salary and
provides for continuation of his spouse's major medical insurance benefits
for a period of five years after his death. Mr. Levine also receives
reimbursement in the amount of $12,000 per annum for split dollar life
insurance premiums and $8,000 per annum for automobile expenses. On October
7, 1993, Mr. Levine's agreement was amended to provide that Mr. Levine shall
serve as Executive Vice President, Senior Financial Officer, and Treasurer
at a base salary of $180,000
A-7
<PAGE>
<PAGE>
per annum. As amended, the agreement no longer provides for $10,000
increases in base salary each year. On October 24, 1994, Mr. Levine's
agreement was amended to provide for $13,500 per annum in reimbursement to
Mr. Levine for split dollar life insurance premiums. On August 30, 1995, Mr.
Levine's agreement was amended to provide for (a) an extension of the
employment term to August 31, 1998, (b) $10,000 per annum in reimbursement
to Mr. Levine for automobile expenses, (c) a death benefit of 150% of his
current base salary, and (d) a continuation of his spouse's major medical
insurance benefits for a period of ten years after his death.
(4) Mr. Alan Kaufman entered into a three-year employment agreement with the
Company, effective January 1, 1993, to serve as a Vice President and
Secretary of the Company. The agreement provides for a base annual salary of
$140,000, with increases of $5,000 per annum under certain circumstances.
Mr. Kaufman's employment agreement contains a death benefit and severance
provision equal to 100% of his current base salary and provides for
continuation of his spouse's major medical insurance benefits for a period
of five years after his death. Mr. Kaufman also receives reimbursement in an
amount equal to a maximum of $8,000 per annum for automobile expenses. On
October 7, 1993, Mr. Kaufman's agreement was amended to provide that Mr.
Kaufman shall serve as Executive Vice President and Secretary of the Company
at a base salary of $180,000 per annum. As amended, the agreement no longer
provides for $5,000 increases in base salary each year. On
December 30, 1995, Mr. Kaufman's agreement was amended to provide for
(a) an extension of the employment period to December 31, 1998, (b)
$13,000 per annum in reimbursement to Mr. Kaufman for automobile
expenses, (c) reimbursement annually of $13,500 for life insurance
premium, (d) a death benefit of 150% of his current base salary and
(e) continuation of his spouse's major medical insurance benefits for a
period of ten (10) years after his death.
(5) On September 29, 1993, Mr. Doron entered into a three-year employment
agreement with Cheycomm, to serve as Cheycomm's President. The agreement
provided for a base salary of $125,000 per annum, a death and disability
benefit equal to up to 50% of his base salary, payments not to exceed $1,708
per annum for a portion of life insurance policy premiums and $3,723 per
annum for a portion of disability policy premiums, and $3,600 per annum for
automobile expenses. On June 8, 1995, Mr. Doron entered into a new
three-year employment agreement to serve as Executive Vice President of the
Company and General Manager of the Netware Division. The agreement provides
for a base salary of $180,000 per annum, a severance provision equal to 100%
of his current base salary, payments not to exceed $2,562 per annum for a
portion of life insurance policy premiums, and $5,585 per annum for a
portion of disability policy premiums. Mr. Doron also receives reimbursement
in the amount of $3,600 per annum for automobile expenses. On April 29, 1996
the Board increased Mr. Doron's annual base salary to $225,000, effective
May 1, 1996.
(6) On November 16, 1994, Ms. Granatowski entered into an employment agreement
with the Company to serve as a Vice President of the Company. The agreement
provides for a base salary of $175,000. Ms. Granatowski's employment
agreement contains a death benefit equal to 100%, and a severance provision
equal to 30%, of her current base salary. Ms. Granatowski also receives
$7,200 per annum for automobile expenses. On December 14, 1995, the Board
promoted Ms. Granatowski to Executive Vice President. On April 29, 1996, the
Board increased Ms. Granatowski's annual base salary to $200,000, effective
May 1, 1996.
A-8
<PAGE>
<PAGE>
(7) Includes information regarding value realized (market value on date of
exercise less exercise price) on stock options previously granted under the
Company's option plans and exercised during the three fiscal years ended
June 30, 1996 by the Named Executives.
(8) Includes car allowances, 401(k) matching contributions by the Company, and
miscellaneous perquisites. Car allowances for fiscal 1996 for the Named
Executives were as follows: Mr. Huai - $16,726, Mr. Levine - $9,661, Mr.
Kaufman - $9,669, Ms. Granatowski - $7,200, and Mr. Doron - $3,600. 401(k)
matching contributions for fiscal 1996 for the Named Executives were as
follows: Mr. Huai - $2,441, Mr. Levine - $2,310, Mr. Kaufman - $2,310, Ms.
Granatowski - $2,240, and Mr. Doron - $2,787. Reimbursement for split dollar
life insurance premiums for fiscal 1996 for Mr. Levine - $13,116 and Mr.
Doron - $1,974.
STOCK OPTION GRANTS
The following table sets forth information concerning the grant
of stock options made during the fiscal year ended June 30, 1996 to Ms.
Granatowski, the only Named Executive receiving option grants during the fiscal
year ended June 30, 1996:
A-9
<PAGE>
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants(1)
-----------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Percent of For Option Term(2)
Number of Total ---------------------------
Securities Options/
Underlying SARs
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ---- ------- --------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
ReiJane Huai (3) 0 N/A N/A N/A N/A N/A
Elliot Levine 0 N/A N/A N/A N/A N/A
Alan Kaufman 0 N/A N/A N/A N/A N/A
Yuda Doron (4) 0 N/A N/A N/A N/A N/A
Doris A. Granatowski 60,000 5.0% $23.25 November 6, 2002 $568,200 $1,323,600
10,000 0.8% $20.50 May 30, 2003 $83,500 $194,500
</TABLE>
- --------------
(1) The options in the table were granted on November 6, 1995 (in the case of
the 60,000 options granted to Ms. Granatowski) and May 30, 1996 (in the
case of the 10,000 options granted to Ms. Granatowski)
under the Incentive Plan and have exercise prices equal to the fair market
value of the Common Stock on the date of grant. The options become
exercisable in 25% increments on the second and third anniversary dates of
the grant date, and the remaining 50% becomes exercisable on the fourth
anniversary date of the grant date.
(2) The potential realizable value assumes that the stock price increases from
the date of grant until the end of the option term (7 years) at the annual
rate of 5% and 10%. The assumed annual rates of appreciation are computed in
accordance with the rules and regulations of the Securities and Exchange
Commission (the "Commission"). No assurance can be given that the annual
rates of appreciation assumed for the purposes of the table will be
achieved, and actual results may be lower or higher. The closing price of
the Common Stock on the American Stock Exchange on June 28, 1996 was $19.25.
(3) During the current fiscal year, on September 17, 1996, the Company granted
Mr. Huai 150,000 options under the Non-Qualified Plan to purchase Common
Stock at an exercise price of $20.25. Half of the options granted vest on
the first anniversary of the grant and the remaining half vest on the
second anniversary of the grant. The options expire on the seventh
anniversary of the grant.
(4) During the current fiscal year, on September 17, 1996, the Company granted
Mr. Duron 120,000 options under the Non-Qualified Plan to purchase Common
Stock at an exercise price of $20.25. Half of the options granted vest on
the first anniversary of the grant and the remaining half vest on the second
anniversary of the grant. The options expire on the seventh anniversary
of the grant.
A-10
<PAGE>
<PAGE>
STOCK OPTION EXERCISES
The following table sets forth information concerning the exercise of
stock options during the fiscal year ended June 30, 1996 by each of the Named
Executives and the value of unexercised options at the fiscal year-end:
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Option/SARs at In-the-Money Option/SARs at
Acquired FY-End (#) FY-End ($) (1)
on Value -------------------------- --------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------ ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ReiJane Huai 224,705 4,181,533 241,667 220,833 433,333 866,667
Elliot Levine 52,500 653,544 158,333 129,167 216,667 433,333
Alan Kaufman -0- -0- 158,333 129,167 216,667 433,333
Yuda Doron -0- -0- 120,000 120,000 780,000 780,000
Doris A. Granatowski -0- -0- -0- 95,000 -0- 165,625
</TABLE>
- ---------
(1) Based on the fair market value per share of the Common Stock at year end,
minus the exercise or base price on "in-the-money" options. The closing
price of the Common Stock on the American Stock Exchange on June 28, 1996
was $19.25.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of the Company
receive a directors' fee of $10,000 per annum, payable in installments of
$2,500 per quarter, and a $1,000 fee for each Board meeting attended, plus
expenses. Directors do not receive any fee for attending meetings of committees
of the Board. The Company's 1992 Stock Option Plan for Outside Directors
provides for automatic annual grants of options for 16,875 shares of Common
Stock on each January 1 to directors who are not also employees of the Company.
All options granted under the 1992 Stock Option Plan for Outside Directors are
immediately exercisable, and the exercise price per share of each option will be
equal to the fair market value of the shares of Common Stock on the date of
grant.
Former Chairmen of the Company (including Mr. Huai, upon
termination of his status as Chairman) are entitled to lifetime medical benefits
from the Company.
EMPLOYMENT AGREEMENTS
The Company's employment agreements with the Named Executives are
described in the footnotes to the Summary Compensation Table on pages A-6 and
A-7 of this Information Statement.
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
As of May 20, 1996, the Company has entered into individual
Change of Control Employment Agreements (the "Agreements") with each of the
Named Executives.(1)
- --------------
(1) The Company also entered into similar agreement with certain other
officers of the Corporation. Those Agreements generally have the same provisions
as the Agreements
(footnote continued)
A-11
<PAGE>
<PAGE>
Each Agreement provides for the continued employment of the Named Executive
during the three-year period (the "Employment") upon the occurrence (the
"Effective Date") of a Change of Control (as defined in the Agreements) (A
Change of Control, as defined in the Agreements, would occur upon the
consummation of the Offer). During the Employment Period, the Company is
obligated to pay to the Named Executive a monthly base salary equal to or
greater than the highest monthly base salary paid to the Named Executive by the
Company during the previous year, an annual bonus in cash at least equal to the
highest aggregate bonus paid to the Named Executive in any of the three calendar
years prior to the Effective Date (the "Highest Annual Bonus"), and incentive,
savings, welfare benefit, fringe benefit and retirement plan participation at
least equal to the most favorable which were in effect during the 120-day period
prior to the Effective Date.
If a Named Executive's employment is terminated by the Company
during the Employment Period or in connection with or in anticipation of a
Change of Control by the Company for any reason other than death, disability or
Cause (as defined in the Agreements), or if the Named Executive terminates his
employment for Good Reason (as defined in the Agreements) or voluntarily during
the 30-day period beginning on the first anniversary of the Effective Date,
the Company must pay to the Named Executive a lump sum severance payment equal
to the sum of (a) the Named Executive's base salary through the date of
termination, (b) a pro rata bonus for the year of termination based upon
the Highest Annual Bonus, (c) three times the sum of the Named Executive's
base salary, Highest Annual Bonus and annual car allowance and (d) unpaid
deferred compensation and vacation pay. In addition, such Named Executive is
entitled to payment in cash or stock equal to the spread on any then-unvested
options (but not in excess of the fair market value of the options), to
continued employee welfare benefits for three years after the date of
termination, and to outplacement services. Finally, if any payment or
distribution by the Company to the Named Executive is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code, the Company will make an
additional payment to the Named Executive in an amount such that after the
payment of all income and excise taxes, the Named Executive will be in the same
after-tax position as if no excise tax under Section 4999 of the Internal
Revenue Code had been imposed.
Benefits under the Agreements are in lieu of severance amounts
payable under a Named Executive's employment agreement.
INDEMNIFICATION
Section Nine of the Restated Certificate of Incorporation of the
Company, limits the personal liability of directors of the Company and Section
Seven of the By-Laws of the Company provides for indemnification of the officers
and directors of the Company. A copy of such Article Nine of the Restated
Certificate of Incorporation has been filed as Exhibit 6 to the Schedule 14D-9
and is incorporated herein by reference in its entirety. A copy of Section Seven
of the By-Laws has been filed as Exhibit 7 to the Schedule 14D-9 and is
incorporated herein by reference in its entirety.
- --------------
(footnote continued)
described herein, but in some cases provide for smaller payments and fewer
benefits upon a termination of employment following a Change of Control.
A-12
<PAGE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 1996, the Compensation
Committee consisted of Ms. Wachtel and Mr. Rubien. During fiscal 1996, none
of the executive officers of the Company served on the board of directors
or on the compensation committee of any other entity, any of whose officers
served either on the Board or on the Compensation Committee of the Company.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee of the Board (the "Committee") is
composed of non-employee directors, and is responsible for determining and
administering the Company's compensation policies for the remuneration of the
Company's senior management. The Committee annually evaluates individual and
corporate performance from both a short-term and long-term perspective, and its
recommendations regarding all members of senior management are subject to the
approval of the full Board.
PHILOSOPHY
The Company's executive compensation program is designed to
reward and retain highly qualified executives, and to encourage the achievement
of business objectives and superior corporate performance. The program seeks to
foster a performance-oriented environment, to enhance management's long-term
focus on maximizing stockholder value through equity-based incentives, and to
adjust the variable portion of an executive's compensation based upon corporate
and individual performance. In determining an executive's compensation,
consideration is given to the employee's total compensation package, overall
corporate financial performance, and the employee's role in attaining such
results.
COMPONENTS OF EXECUTIVE COMPENSATION
Historically, the Company's executive employees have received
cash-based and equity-based compensation.
CASH-BASED COMPENSATION: Base salary represents the primary cash
component of an executive employee's compensation, and is determined by
evaluating the responsibilities associated with an employee's position at the
Company and the employee's overall level of experience. In addition, the
Committee, in its discretion, may award bonuses. However, the Committee and the
Board believe that the Company's management and employees are best motivated
through stock option awards rather than solely through cash incentives.
EQUITY-BASED COMPENSATION: Equity-based compensation principally
has been in the form of stock options granted pursuant to the Incentive Plan and
the Non-Qualified Plan. The Committee believes that stock options represent an
important component of a well-balanced compensation program. Because stock
option awards provide value only in the event of share price appreciation, stock
options enhance management's focus on maximizing long-term stockholder value.
Stock options serve to align the interests of executive officers closely with
the stockholders because of the direct benefit executive officers receive from
improved stock performance. Stock options provide a direct relationship
A-13
<PAGE>
<PAGE>
between an executive's compensation and the stockholders' interests. Option
awards to employees are based upon the evaluation of each employee's overall
past and expected future contributions to the success of the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The philosophy and policies of the Compensation Committee
generally applicable to the Company's senior management are applicable to the
Chief Executive Officer.
SECTION 162(m)
It is the Company's policy to seek to qualify compensation paid
to executive officers for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). This section of the Code
prohibits the Company from deducting compensation to its Chief Executive Officer
and its four other highest paid executive officers that is in excess of
$1,000,000 per individual in any fiscal year, unless the compensation is
"performance based". None of the Chief Executive Officer and the four other
highest paid executive officers had cash compensation in excess of $1,000,000
for the fiscal year ended June 30, 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") requires the Company's executive officers and directors,
and persons who own more than ten percent of a registered class of the Company's
equity securities (the "Ten Percent Stockholders"), to file reports of ownership
on Form 3 and reports of changes in ownership on Form 4 or Form 5 with the
Commission. Executive officers, directors and the Ten Percent Stockholders are
required to furnish the Company with copies of such reports. Based solely on its
review of the copies of such Forms received by the Company, or written
representations that no other reports were required, the Company believes that
during the fiscal year ended June 30, 1996, the Company's executive officers,
directors, and Ten Percent Stockholders complied with all applicable Section
16(a) filing requirements.
COMPARATIVE STOCK PERFORMANCE GRAPH
The following is a graph comparing the annual percentage change
in the cumulative total shareholder return of the Company's common stock with
the cumulative total returns of the S&P 500 Index and The Peer Group Weighted
Average Index for the Company's last five (5) fiscal years. The comparison
assumes $100 invested in the Common Stock, the S&P 500 Index and a peer group
index at the close of business on June 28, 1991 (the Company's fiscal year end),
and that all the dividends were reinvested. The Peer Group is comprised of the
following companies: Banyan Systems, Inc., Computer Associates International,
Inc., Informix Corp., Microsoft Corp., Novell, Inc., Oracle Systems Corp.,
Sterling Software, Inc. and Symantec Corp.
A-14
<PAGE>
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS AMONG
CHEYENNE SOFTWARE, INC., S&P 500 INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
6/28/91 6/30/92 6/30/93 6/30/94 6/30/95 6/28/96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cheyenne Software, Inc. 100.00 154.7 590.7 239.1 527.3 541.4
Peer Group Weighted 100.00 167.6 231.2 258.5 433.1 573.0
Average
S&P 500 Comp-Ltd 100.00 113.4 128.9 130.7 164.8 207.6
</TABLE>
A-15
<PAGE>
<PAGE>
ANNEX B
[LETTERHEAD OF LAZARD FRERES & CO. LLC]
October 7, 1996
Cheyenne Software, Inc.
The Board of Directors
3 Expressway Plaza
Roslyn Heights, NY 11577
Dear Members of the Board:
We understand that Cheyenne Software, Inc. (the "Company"), Computer
Associates International, Inc. (the "Acquiror") and a wholly-owned subsidiary of
Acquiror (the "Merger Subsidiary") have entered into an agreement dated October
7, 1996 (the "Agreement") pursuant to which Merger Subsidiary will make a tender
offer (the "Offer") for any and all shares of the Company's common stock, par
value $0.01 per share (the "Shares"), at $30.50 per Share in cash. The Agreement
also provides that, following consummation of the Offer, Merger Subsidiary will
be merged with and into the Company in a transaction (the "Merger") in which
each remaining Share will be converted into the right to receive $30.50 in cash.
You have requested our opinion as to the fairness, from a financial
point of view, of the proposed cash consideration to be received by the holders
of the Shares (other than Acquiror and its affiliates) in the Offer and the
Merger. In connection with this opinion, we have:
(i) reviewed the financial terms and conditions of the Agreement;
(ii) analyzed certain historical business and financial information
relating to the Company;
(iii) reviewed certain financial forecasts and other data provided to
us by the Company relating to its business;
(iv) conducted discussions with members of the senior management of
the Company with respect to its business and prospects;
(v) reviewed public information with respect to certain other
companies in lines of businesses we believe to be generally
comparable to the business of the Company;
(vi) reviewed the financial terms of certain business combinations
involving companies in lines of business we believe to be
generally comparable to the business of the Company;
B-1
<PAGE>
<PAGE>
(vii) reviewed the historical stock prices and trading volumes of the
Shares; and
(viii) conducted such other financial studies, analyses and
investigations as we deemed appropriate.
We have relied upon the accuracy and completeness of the foregoing
financial and other information, and have not assumed any responsibility for any
independent verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of the Company. With respect to
the financial forecasts referred to above, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of management of the Company as to the future financial
performance of the Company. We assume no responsibility for and express no view
as to such forecasts or the assumptions on which they are based.
Further, our opinion is necessarily based on economic, monetary, market
and other conditions as in effect on, and the information made available to us
as of, the date hereof.
In rendering our opinion, we have assumed that the Offer and the Merger
will be consummated on the terms described in the Agreement that we reviewed,
without any waiver of any material terms or conditions by the Company. We were
not requested to, and did not, solicit third party indications of interest in
acquiring the Company.
Lazard Freres & Co. LLC is acting as financial advisor to the Company in
connection with the Offer and the Merger and will receive a fee for our
services, a substantial portion of which is contingent upon the consummation of
the Offer.
Our engagement and the opinion expressed herein are solely for the
benefit of the Company's Board of Directors and are not on behalf of, and are
not intended to confer rights or remedies upon, the Acquiror, Merger Subsidiary,
any shareholders of the Company or Acquiror or any other person. It is
understood that this letter may not be disclosed or otherwise referred to
without our prior consent, except as may otherwise be required by law or by a
court of competent jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
proposed cash consideration to be paid to the holders of the shares (other than
Acquiror and its affiliates) pursuant to the Offer and the Merger is fair to
such shareholders from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ Gerald Rosenfeld
_________________________
Managing Director
B-2
<PAGE>
<PAGE>
EXHIBIT 1
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 7, 1996
AMONG
COMPUTER ASSOCIATES INTERNATIONAL, INC.,
TSE-TSEHESE-STAESTSE, INC.
AND
CHEYENNE SOFTWARE, INC.
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
THE OFFER
SECTION 1.1. The Offer................................................. 1
SECTION 1.2. Company Action............................................ 2
SECTION 1.3. Directors................................................. 2
ARTICLE II
THE MERGER
SECTION 2.1. The Merger................................................ 3
SECTION 2.2. Conversion of Shares...................................... 3
SECTION 2.3. Surrender and Payment..................................... 4
SECTION 2.4. Dissenting Shares......................................... 5
SECTION 2.5. Stock Options............................................. 5
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation.............................. 6
SECTION 3.2. Bylaws.................................................... 6
SECTION 3.3. Directors and Officers.................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 1.1. Representations and Warranties of the
Company............................................ 6
(a) Organization, Standing and Corporate Power............... 6
(b) Subsidiaries............................................. 7
(c) Capital Structure........................................ 7
(d) Authority; Noncontravention.............................. 7
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities............................. 8
(f) Disclosure Documents..................................... 9
(g) Absence of Certain Changes or Events..................... 9
(h) Litigation............................................... 10
(i) Absence of Changes in Stock and Benefit Plans............ 11
(j) Participation and Coverage in Benefit Plan............... 11
(k) ERISA Compliance......................................... 11
(l) Taxes ................................................ 12
(m) State Takeover Statutes; Rights Agreement................ 13
(n) Brokers; Schedule of Fees and Expenses................... 13
(o) Permits; Compliance with Laws............................ 13
(p) Contracts; Debt Instruments.............................. 14
(q) Opinion of Financial Advisor............................. 15
(r) Interests of Officers and Directors...................... 15
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(s) Technology............................................... 15
(t) Change of Control........................................ 16
SECTION 4.2. Representations and Warranties of Parent
and Merger Subsidiary.............................. 16
(a) Organization, Standing and Corporate Power............... 16
(b) Authority; Noncontravention.............................. 16
(c) Disclosure Documents..................................... 17
(d) Brokers ................................................ 17
(e) Delaware Law............................................. 18
(f) Financing................................................ 18
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business....................................... 18
SECTION 5.2. Stockholder Meeting; Proxy Material....................... 20
SECTION 5.3. Access to Information..................................... 20
SECTION 5.4. Other Offers.............................................. 20
SECTION 5.5. State Takeover Statutes; Rights Agreement................. 20
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary.......................... 21
SECTION 6.2. Voting of Shares.......................................... 21
SECTION 6.3. Indemnification........................................... 21
SECTION 6.4. Employees................................................. 21
</TABLE>
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts;
Notification......................................... 22
SECTION 7.2. Public Announcements...................................... 23
SECTION 7.3. Confidentiality........................................... 23
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of
Each Party........................................... 24
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ARTICLE IX
TERMINATION
SECTION 9.1. Termination............................................... 24
SECTION 9.2. Effect of Termination..................................... 25
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and
Warranties.......................................... 25
SECTION 10.2. Notices.................................................. 25
SECTION 10.3. Amendments; No Waivers................................... 26
SECTION 10.4. Fees and Expenses........................................ 26
SECTION 10.5. Successors and Assigns................................... 27
SECTION 10.6. Governing Law............................................ 27
SECTION 10.7. Counterparts; Effectiveness;
Interpretation......................................... 27
</TABLE>
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AGREEMENT AND PLAN OF MERGER dated as of October 7, 1996
among Computer Associates International, Inc., a Delaware
corporation ("Parent"), Tse-tsehese-staestse, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent
("Merger Subsidiary"), and Cheyenne Software, Inc., a
Delaware corporation (the "Company").
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the
date hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence an offer (the "Offer") to
purchase all of the outstanding shares of common stock, par value $.01 per share
(the "Shares"), including the associated Rights (defined below in Section
4.1(c)) of the Company at a price of $30.50 per Share (including such associated
Rights), net to the seller in cash. The Offer shall be subject to the condition
that there shall be validly tendered in accordance with the terms of the Offer
prior to the expiration date of the Offer and not withdrawn a number of Shares
which, together with the Shares then owned by Parent and Merger Subsidiary,
represents at least a majority of the total number of outstanding Shares,
assuming the exercise of all outstanding options, rights and convertible
securities (if any) and the issuance of all Shares that the Company is obligated
to issue (such total number of outstanding Shares being hereinafter referred to
as the "Fully Diluted Shares") (the "Minimum Condition") and to the other
conditions set forth in Annex I hereto. Parent and Merger Subsidiary expressly
reserve the right to waive the conditions to the Offer; provided that, without
the written consent of the Company, no change may be made which changes the form
of consideration to be paid, decreases the price per Share or the number of
Shares sought in the Offer, imposes conditions to the Offer in addition to those
set forth in Annex I, changes or waives the Minimum Condition, extends the Offer
(except as set forth in the following sentence), or makes any other change to
any condition to the Offer set forth in Annex I which is adverse to the holders
of Shares. Subject to the terms of the Offer in this Agreement and the
satisfaction (or waiver to the extent permitted by this Agreement) of the
conditions to the Offer, Merger Subsidiary shall accept for payment all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the applicable expiration date of the Offer and shall pay for all such
Shares promptly after acceptance; provided that Merger Subsidiary may extend the
Offer if, at the scheduled expiration date of the Offer or any extension thereof
any of the conditions to the Offer shall not have been satisfied, until such
time as such conditions are satisfied or waived, and Merger Subsidiary may
extend the Offer for a further period of time of not more than 20 business days
to meet the objective (which is not a condition to the Offer) that there be
validly tendered, in accordance with the terms of the Offer, prior to the
expiration date of the Offer (as so extended) and not withdrawn a number of
Shares, which together with Shares then owned by Parent and Merger Subsidiary,
represents at least 90% of the Fully Diluted Shares. Subject to Section 9.1, if
the condition set forth in clause (ii) of the first paragraph of Annex I is not
satisfied as of the date the Offer would otherwise have expired, Merger
Subsidiary shall extend the Offer until the earlier of (i) the date that
is 30 days after the first scheduled expiration date and (ii) the date the
condition set forth in clause (ii) of the first paragraph of Annex I is
satisfied.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall (i) file with the SEC (defined below in
Section 4.1(a)) a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer which will contain the offer to purchase and
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form of the related letter of transmittal (together with any supplements
or amendments thereto, collectively the "Offer Documents") and (ii) cause
the Offer Documents to be disseminated to holders of Shares. Parent,
Merger Subsidiary and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect.
Parent and Merger Subsidiary agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-1 prior to its being
filed with the SEC.
SECTION 1.2. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (defined below in
Section 2.1), are fair to and in the best interest of the Company's
stockholders, (ii) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, which approval
satisfies in full the requirements of Section 203 of the General Corporation Law
of the State of Delaware (the "Delaware Law"), and (iii) unanimously resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders. The Company further represents that Lazard
Freres & Co. LLC has delivered to the Company's Board of Directors its opinion
that the consideration to be paid in the Offer and the Merger is fair to the
holders of Shares from a financial point of view. The Company has been advised
that all of its directors and executive officers presently intend either to
tender their Shares pursuant to the Offer or to vote in favor of the Merger. The
Company will promptly furnish Parent and Merger Subsidiary with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case as of
the most recent practicable date, and will provide to Parent and Merger
Subsidiary such additional information (including, without limitation, updated
lists of stockholders, mailing labels and lists of securities positions) and
such other assistance as Parent or Merger Subsidiary may reasonably request in
connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced the
Company will file with the SEC and disseminate to holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which shall reflect the recommendations of the Company's Board of Directors
referred to above, subject to the fiduciary duties of the Board of Directors of
the Company as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to
the Company. The Company, Parent and Merger Subsidiary each agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC.
SECTION 1.3. Directors. (a) Effective upon the acceptance for payment
by Merger Subsidiary of a majority of the Shares pursuant to the Offer, Parent
shall be entitled to designate the number of directors, rounded up to the next
whole number, on the Company's Board of Directors that equals the product of (i)
the total number of directors on the Company's Board of Directors (giving effect
to the election of any additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by Parent or Merger Subsidiary
(including Shares accepted for payment) bears to the total number of Shares
outstanding, and the Company shall take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors,
including, without limitation, increasing the number of directors, or seeking
and accepting resignations of
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incumbent directors, or both; provided that, prior to the Effective Time
(defined below in Section 2.1), the Company's Board of Directors shall
always have one member who is neither a designee nor an affiliate of Parent
or Merger Subsidiary nor an employee of the Company (an "Independent Director").
If the number of Independent Directors is reduced below one for any reason
prior to the Effective Time, the departing Independent Director shall
be entitled to designate a person to fill such vacancy. No action proposed
to be taken by the Company to amend or terminate this Agreement or waive
any action by Parent or Merger Subsidiary shall be effective without the
approval of the Independent Director. At such times, the Company will use its
best efforts to cause individuals designated by Parent to constitute the same
percentage as such individuals represent on the Company's Board of Directors of
(x) each committee of the Board, (y) each board of directors of each subsidiary
(defined below in Section 4.1(a)) and (z) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (defined below
in Section 4.1(d)) and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.3. Parent will supply to the Company in writing
and be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "Merger") with and into the Company in accordance with the
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "Surviving
Corporation").
(b) The closing of the Merger (the "Closing") shall take place on the
later of (x) November 30, 1996 and (y) the first business day on which all of
the conditions set forth in Article VIII hereof shall be fulfilled or waived in
accordance with this Agreement. As soon as practicable following the Closing,
the Company and Merger Subsidiary will file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by Delaware Law in connection with the Merger. The Merger
shall become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of Delaware or, with the consent of the
Independent Director, at such later time as is specified in the certificate of
merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or
owned by Parent, Merger Subsidiary or any subsidiary of either of them
immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share
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of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation; and
(c) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section 2.2(a) or
as provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$30.50 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration").
SECTION 2.3. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint a bank or trust company (the "Exchange Agent") for the
purpose of exchanging certificates representing Shares for the Merger
Consideration. Parent will make available to the Exchange Agent, as needed, the
Merger Consideration to be paid in respect of the Shares (the "Exchange Fund").
For purposes of determining the Merger Consideration to be made available,
Parent shall assume that no holder of Shares will perfect his right to appraisal
of his Shares. Promptly after the Effective Time, Parent will send, or will
cause the Exchange Agent to send, to each holder of Shares at the Effective Time
a letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Exchange Agent).
The Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided in this Section 2.3. The Exchange Fund shall not be used for
any other purpose, except as provided in this Agreement.
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares and such other documents as
may be reasonably requested, will be entitled to receive the Merger
Consideration payable in respect of such Shares. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article II.
(e) Any portion of the Exchange Fund made available to the Exchange
Agent pursuant to Section 2.3(a) that remains unclaimed by the holders of Shares
six months after the Effective Time shall be returned to Parent, upon demand,
and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section 2.3 prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by
holders of
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Shares immediately prior to such time as such amounts would otherwise escheat
to or become property of any governmental entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear of any claims or
interest of any person previously entitled hereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Parent, upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal. If
after the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.5. Stock Options. (a) At the Effective Time, each of the
then outstanding Company Options (defined below) shall by virtue of the Merger,
and without any further action on the part of any holder thereof, become fully
exercisable and vested and be assumed by Parent and converted into an option to
purchase that number of shares of common stock, par value $.10 per share
("Parent Common Stock"), of Parent determined by multiplying the number of
Shares subject to such Company Option at the Effective Time by the quotient
obtained by dividing (x) $30.50 by (y) the average closing price of Parent
Common Stock on the New York Stock Exchange Composite Tape for the 20
consecutive trading days immediately prior to the Effective Time (such quotient,
the "Conversion Number"), at an exercise price per share of Parent Common Stock
equal to the quotient obtained by dividing (x) the exercise price per Share of
such Company Option immediately prior to the Effective Time by (y) the
Conversion Number. If the foregoing calculation results in an assumed Company
Option being exercisable for a fraction of a share of Parent Common Stock, then
the number of shares of Parent Common Stock subject to such option shall be
rounded down to the nearest whole number of shares. Except as otherwise set
forth in this Section 2.5, the term, status as an "incentive stock option" under
Section 422 of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder (the "Code"), if applicable, and all other terms and
conditions of the Company Options will, to the extent permitted by law and
otherwise reasonably practicable, be unchanged. The Company shall take, or cause
to be taken, all actions which are necessary, proper or advisable under the
Stock Plans to make effective the transactions contemplated by this Section 2.5.
"Company Options" means any option granted, and not exercised or expired, to a
current or former employee, director or independent contractor of the Company or
any of its subsidiaries or any predecessor thereof to purchase Shares pursuant
to any stock option, stock bonus, stock award, or stock purchase plan, program,
or arrangement of the Company or any of its subsidiaries or any predecessor
thereof (collectively, the "Stock Plans") or any other contract or agreement
entered into by the Company or any of its subsidiaries.
(b) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
pursuant to the terms set forth in this Section 2.5. Parent shall cause the
shares of Parent Common Stock issuable upon exercise of the assumed Company
Options to be registered, or to be issued pursuant to a then effective
registration statement, no later than 90 days after the Effective Time on Form
S-8 promulgated by the SEC and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements for so
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long as such assumed Company Options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, Parent shall administer
the Company Options assumed pursuant to this Section 2.5 in a manner that
complies with Rule 16b-3 promulgated by the SEC under the Exchange Act, but
shall have no responsibility for such compliance by the Company or its
predecessors.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to the name of the Company.
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation, and (ii) the officers
of the Merger Subsidiary at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Merger Subsidiary as follows:
(a) Organization, Standing, and Corporate Power. Each of the Company
and each of its Significant Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and each of
its Significant Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) could not reasonably be expected
to have a material adverse effect on the financial condition, business or
results of operations of the Company and its subsidiaries taken as a whole
except that occurrences due solely to a disruption of the Company's or its
subsidiary's businesses solely as a result of the announcement of the execution
of this Agreement and the transactions proposed to be consummated by this
Agreement shall be excluded from consideration for purposes of the effect of an
action or inaction on the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). The Company has delivered to Parent complete and
correct copies of its Certificate of Incorporation and By-Laws and the
certificates of incorporation and by-laws of its Significant Subsidiaries which
are incorporated in the United States, in each case as amended to the date of
this Agreement. For purposes of this Agreement, a "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or
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indirectly by such first person; and a "Significant Subsidiary" means any
subsidiary of a person that constitutes a significant subsidiary of such
person within the meaning of Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC").
(b) Subsidiaries. Section 4.1(b) of the disclosure schedule delivered
by the Company to Parent and Merger Subsidiary prior to the execution of this
Agreement (the "Disclosure Schedule") lists each subsidiary of the Company and
its respective jurisdiction of incorporation and indicates whether such
subsidiary is a Significant Subsidiary. All the outstanding shares of capital
stock of each such subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company, by another subsidiary of the Company
or by the Company and another such subsidiary, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock), other than such Liens, limitations or
restrictions arising in the ordinary and normal course under applicable law.
Except for the capital stock of its subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). At the time of
execution of this Agreement, (i) 37,711,424 shares of Common Stock were issued
and outstanding, including associated Preferred Share Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of April 15, 1996
(the "Rights Agreement"), between the Company and Continental Stock Transfer and
Trust Company, as Rights Agent (the "Rights Agent"), (ii) no shares of Preferred
Stock were issued and outstanding, (iii) 2,343,900 shares of Common Stock were
held by the Company in its treasury or by any of the Company's subsidiaries, and
(iv) 5,003,136 shares of Common Stock were reserved for issuance pursuant to
outstanding Company Options. Except as set forth above, at the time of execution
of this Agreement, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are, and all shares which may be issued pursuant
to the Stock Plans will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Other than the
Shares, there are not any bonds, debentures, notes or other indebtedness or
securities of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as set forth above and in Section
4.1(c) of the Disclosure Schedule, there are not any securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
rights, commitments, agreements, arrangements or undertakings of any kind
obligating the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock or other voting securities of the
Company or any of its subsidiaries or any securities of the type described in
the two immediately preceding sentences (other than in connection with the
exercise of outstanding Company Options). The Company has
delivered to Parent complete and correct copies of the Stock Plans and all forms
of Company Options. Section 4.1(c) of the Disclosure Schedule sets forth a
complete and accurate list of all Company Options outstanding as of the date of
this Agreement and the exercise price of each outstanding Company Option.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, except for any
required approval by the Company's
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stockholders in connection with the consummation of the Merger, to consummate
the transactions contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Company, except for
any required approval by the Company's stockholders in connection with the
consummation of the Merger. This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes a valid
and binding agreement of Parent and Merger Subsidiary, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets, of the Company
or any of its subsidiaries under, (i) the Certificate of Incorporation or
By-Laws of the Company or the comparable charter or organizational documents of
any of its Significant Subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clause (ii) or (iii) above, any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate could not reasonably be expected to (A) have a Material Adverse
Effect, (B) impair the ability of the Company to perform its obligations under
this Agreement or (C) prevent or materially delay consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with or exemption by
(collectively, "Consents") any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is required
by or with respect to the Company or any of its subsidiaries in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated by this Agreement, except for
(i) the filing of a premerger notification and report form by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), (ii) compliance with any
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act"), (iii) the filing of a
certificate of merger in accordance with Delaware Law and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (iv) such notices, filings and consents as may be required under
relevant state property transfer laws, and (v) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as (A) may be
required under the laws of any foreign country in which the Company or any
of its subsidiaries conducts any business or owns any property or assets
or (B) as to which the failure to obtain or make could not reasonably be
expected to (x) have a Material Adverse Effect or (y) prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
(e) SEC Documents; Financial Statements; No Undisclosed Liabilities.
The Company has filed all required reports, schedules, forms, statements and
other documents with the SEC since July 1, 1993 (the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), or the Exchange Act, as the case
may be, applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material
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respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the Company
Filed SEC Documents, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) and there is no existing condition, situation
or set of circumstances which are required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto, except for liabilities
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(f) Disclosure Documents. (i) Each document required to be filed by
the Company with the SEC in connection with the transactions contemplated by
this Agreement (the "Company Disclosure Documents"), including, without
limitation, the Schedule 14D-9, the proxy or information statement of the
Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(ii) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement and at the
time of any distribution thereof, such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.1(f)(ii) will not apply to statements
or omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger Subsidiary specifically
for use therein.
(iii) The information with respect to the Company or any subsidiary
that the Company furnishes to Parent or Merger Subsidiary in writing
specifically for use in the Offer Documents will not, at the time of the filing
thereof, at the time of any distribution thereof and at the time of the
consummation of the Offer, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(g) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this Agreement
(the "Company Filed SEC Documents") and in Section 4.1(g) of the Disclosure
Schedule, since June 30, 1996, the Company has conducted its business only in
the ordinary course consistent with past practice, and there has not been (i)
any event, occurrence or development of a state of circumstances which has had
or could reasonably be expected to have a Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock or any repurchase, redemption or other acquisition by the Company
or any of its subsidiaries of any outstanding shares of capital stock or other
securities of the Company or any of its subsidiaries, (iii) any split,
combination or reclassification of any of its capital stock or any issuance or
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the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (iv) (A) any granting by
the Company or any of its subsidiaries to any current or former director,
officer or employee of the Company or any of its subsidiaries of any increase in
compensation or benefits or severance or termination pay or benefits, except in
the ordinary course of business consistent with past practice or as was required
under employment, severance or termination agreements or plans in effect as of
June 30, 1996, or (B) any entry by the Company or any of its subsidiaries into
any employment, deferred compensation, severance or termination agreement with
any such current or former director, officer or employee, except in the ordinary
course of business consistent with past practice, (v) any damage, destruction or
loss, whether or not covered by insurance, that has had or could have a Material
Adverse Effect, (vi) any change in accounting methods, principles or practices
by the Company or any of its subsidiaries, except insofar as may have been
required by a change in generally accepted accounting principles, (vii) any
amendment of any material term of any outstanding security of the Company or any
of its subsidiaries, (viii) any incurrence, assumption or guarantee by the
Company or any of its subsidiaries of any indebtedness for borrowed money in the
amount of more than $1,000,000 in the aggregate, (ix) any creation or assumption
by the Company or any of its subsidiaries of any Lien on any asset other than in
the ordinary course of business consistent with past practice, but in no event
in the amount of more than $500,000 for any one transaction or $1,000,000 in the
aggregate, (x) any making of any loan, advance or capital contributions to or
investment in any person other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more than
$500,000 for any one transaction or $1,000,000 in the aggregate and other than
investments in marketable securities made in the ordinary course of business
consistent with past practice, (xi) any transaction or commitment made, or any
contract or agreement entered into, by the
Company or any of its subsidiaries relating to its assets or business (including
the acquisition or disposition of any assets or the merger or consolidation with
any person) or any relinquishment by the Company or any of its subsidiaries of
any contract or other right, in either case, material to the Company and its
subsidiaries taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practice and those contemplated
by this Agreement, but (without the consent of Parent which shall not be
unreasonably withheld or delayed) in no event representing commitments on behalf
of the Company or any of its subsidiaries of more than $500,000 for any
transaction or $1,000,000 for any series of transactions, (xii) any material
labor dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any of its subsidiaries, which employees were not subject to a
collective bargaining agreement at June 30, 1996, or any material lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees or (xiii) any agreement, commitment, arrangement or undertaking by the
Company or any of its subsidiaries to perform any action described in clauses
(i) through (xii).
(h) Litigation. Except as disclosed in the Company Filed SEC Documents
or in Section 4.1(h) of the Disclosure Schedule, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to (i) have a Material Adverse Effect,
(ii) impair the ability of the Company to perform its obligations under this
Agreement or (iii) prevent or materially delay the consummation of the Offer,
the Merger or any of the other transactions contemplated by this Agreement, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future would
have, any such effect. Section 4.1(h) of the Disclosure Schedule sets forth as
of the date hereof, with respect to any pending suit, action or proceeding to
which the Company or any its subsidiaries is a party and which involves claims
which if adversely determined would exceed $500,000, the forum, the parties
thereto, the subject matter thereof and the amount of damages claimed.
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(i) Absence of Changes in Stock and Benefit Plans. Except as disclosed
in the Company Filed SEC Documents or Section 4.1(i) of the Disclosure Schedule,
since June 30, 1996, there has not been (i) any adoption or amendment by the
Company or any of its subsidiaries of any Stock Plan or any acceleration,
amendment or change of the period of exercisability or vesting of any Company
Options or restricted stock, stock bonus or other awards under the Stock Plans
(including any discretionary acceleration of the exercise periods or vesting by
the Company's Board of Directors or any committee thereof or any other persons
administering a Stock Plan) or authorization of cash payments in exchange for
any Company Options, restricted stock, stock bonus or other awards granted under
any of such Stock Plans; or (ii) any adoption or amendment by the Company or any
of its subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, stock appreciation
right, retirement, vacation, severance, disability, death benefit,
hospitalization, medical, workers' compensation, supplementary unemployment
benefits or other plan, arrangement or understanding providing benefits to any
current or former employee, officer or director of the Company or any of its
subsidiaries or any beneficiary thereof entered into, maintained or contributed
to, as the case may be, by the Company or any of its subsidiaries (collectively,
"Benefit Plans") where the expense of such Benefit Plan, or amendment thereto,
as the case may be, is material, other than those Benefit Plans maintained
outside of the United States primarily for the benefit of persons substantially
all of whom are non-resident aliens with respect to the United States
("Foreign Benefit Plans").
(j) Participation and Coverage in Benefit Plan. Except for amendments
and other actions described in Section 4.1(i) of the Disclosure Schedule, except
with respect to changes required by applicable law, and except as disclosed in
the Company Filed SEC Documents or Section 4.1(j) of the Disclosure Schedule,
there has been no written interpretation or announcement (whether or not
written) by the Company or any of its subsidiaries relating to, or change in
employee participation or coverage under, any Benefit Plan, other than a Foreign
Benefit Plan, which would increase materially the expense of maintaining such
Benefit Plan above the level of the expense incurred in respect thereof for the
fiscal year ended on June 30, 1996.
(k) ERISA Compliance. (i) Section 4.1(k) of the Disclosure Schedule
contains a list of (A) all "employee pension benefit plans" (defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), "employee welfare benefit plans" (defined in Section 3(l) of ERISA)
and all other Benefit Plans maintained, or contributed to, by the Company or any
of its subsidiaries or ERISA affiliates (defined below) for the benefit of any
current or former employees, officers or directors of the Company or any of its
subsidiaries or ERISA affiliates or under which the Company or any of its
subsidiaries or ERISA affiliates has any liability other than Foreign Benefit
Plans ("U.S. Benefit Plans") and (B) all Stock Plans. For purposes of this
Agreement, "ERISA affiliate" of the Company means any person which, together
with the Company or any of its subsidiaries, would be treated as a single
employer under Section 414 of the Code. The only Benefit Plans described in
clause (A) of the preceding sentence which constitute an "employee pension
benefit plan" defined in Section 3(2) of ERISA (the "Pension Plans") are
identified as such in Section 4.1(k) of the Disclosure Schedule.
(ii) Each material U.S. Benefit Plan has been maintained and
administered in compliance in all material respects with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations, and is, to the extent required by applicable law or contract, fully
funded without having any material deficit or material unfunded actuarial
liability. Any Benefit Plan intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified and,
except as set forth in Section 4.1(k) of the Disclosure Schedule, nothing has
occurred to cause the loss of such qualified status except where such occurrence
could reasonably be expected to be cured without the incurrence by the Company
of any liability or expense that would be material to the Company and its
subsidiaries.
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(iii) No Benefit Plan is covered by Title IV of ERISA or Section 412
of the Code. Neither the Company nor any of its subsidiaries has incurred or
expects to incur any liability under Title IV of ERISA that has not already been
satisfied or any liability or penalty under Section 4975 or 4980B of the Code or
Section 502(i) of ERISA that has not already been satisfied.
(iv) Except as disclosed in Section 4.1(k)(iv) of the Disclosure
Schedule, there are no pending or anticipated claims against or otherwise
involving any of the Benefit
Plans and no suit, action or other litigation has been brought against or with
respect to any Benefit Plan (excluding, in each case, claims for benefits
incurred in the ordinary course of Benefit Plan activities) which would be
material to the Company and its Subsidiaries.
(v) All material contributions, reserves or premium payments required
to be made as of the date hereof to or with respect to the Benefit Plans have
been made or provided for except to the extent failure to do so would not impair
the continued operation of the relevant Benefit Plan.
(vi) Except as required by law or as disclosed in Section 4.1(k)(vi)
of the Disclosure Schedule, neither the Company nor any of its subsidiaries has
any material obligations for post-retirement or post-termination health and life
benefits under any U.S. Benefit Plan.
(l) Taxes. As used in this Agreement, "tax" or "taxes" shall include
all Federal, state, local and foreign income, property, sales, excise and other
taxes, tariffs or governmental charges or assessments of any nature whatsoever
as well as any interest, penalties and additions thereto. Except as disclosed in
Schedule 4.1(l) of the Disclosure Schedule:
(i) The Company and each of its subsidiaries have timely filed all tax
returns, statements, reports and forms required to be filed with any tax
authority and in accordance with all applicable laws. All such tax returns are
correct and complete in all material respects. All taxes owed by the Company and
any of its subsidiaries (whether or not shown on any tax return) have been paid
other than where failure to do so could reasonably be expected to be cured
without the incurrence by the Company of any material liability. There are no
material Liens on any of the assets of the Company or any of its subsidiaries
that arose in connection with any failure (or alleged failure) to pay any tax.
(ii) The Company and each of its subsidiaries has withheld and timely
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party other than where failure to do so could
reasonably be expected to be cured without the incurrence by the Company of any
material liability.
(iii) Neither the Company nor any of its subsidiaries expect any
authority to assess any additional taxes against the Company or any of its
subsidiaries for any period for which tax returns have been filed. No dispute or
claim concerning any tax liability of the Company or any of its subsidiaries has
been proposed or claimed in writing by any authority.
(iv) Neither the Company nor any of its subsidiaries has waived any
statute of limitations in respect of taxes or agreed to any extension of time
with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has filed a
consent pursuant to Section 341(f) of the Code concerning collapsible
corporations. Neither the Company nor any of its subsidiaries is a party to any
tax allocation or sharing agreement. Neither the Company nor any of its
subsidiaries has any material liability for the taxes of any person (other than
the Company and any of its
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subsidiaries that is currently a member of the Company's affiliated group
filing a consolidated federal income tax return) under Treas. Reg. Sect.
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(vi) As of the date of the most recent financial statements included
in the Company Filed SEC Documents, the unpaid taxes of the Company and its
subsidiaries did not exceed the liability for taxes (rather than any reserve for
deferred taxes established to reflect timing differences between book and tax
income) set forth on the face of such financial statements.
(vii) Neither the Company nor any of its subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code (or
similar provisions of other law or regulations) in its current or in any future
taxable period by reason of a change in accounting method; nor does the Company
or any of its subsidiaries have any knowledge that the Internal Revenue Service
(or other taxing authority) has proposed or is considering proposing, any such
change in accounting method. Neither the Company nor any of its subsidiaries is
a party to any agreement, contract, or arrangement that, individually or
collectively, could give rise to the payment of any material amount (whether in
cash or property, including Shares) that would not be deductible pursuant to the
terms of Sections 162(a)(1), other than amounts which may be required to be
capitalized pursuant to Section 263 or other applicable sections of the Code,
162(m), 162(n) or 280G of the Code.
(m) State Takeover Statutes; Rights Agreement. (i) The Board of
Directors of the Company has approved the Offer, the Merger and this Agreement,
and such approval is sufficient to render inapplicable to the Offer, the Merger,
this Agreement and the other transactions contemplated hereby, the provisions of
Section 203 of Delaware Law. To the best of the Company's knowledge, no other
"fair price", "moratorium", "control share acquisition", or other anti-takeover
statute or similar statute or regulation, applies or purports to apply to the
Offer, the Merger, this Agreement or any of the other transactions contemplated
hereby.
(ii) The Company has delivered to Parent a complete and correct copy
of the Rights Agreement, including all amendments and exhibits thereto. The
Company has taken, and as soon as possible after the date hereof (but in no
event later than two business days after the date hereof), the Rights Agent will
take, all actions necessary or appropriate to amend the Rights Agreement to
ensure that the execution of this Agreement, the announcement or making of the
Offer, the acquisition of Shares pursuant to the Offer and the Merger and the
other transactions contemplated in this Agreement will not cause Parent or any
of its affiliates to be considered an Acquiring Person (defined in the Rights
Agreement), the occurrence of a Distribution Date or Shares Acquisition Date
(each defined in the Rights Agreement) or the separation of the Rights from the
underlying Shares, and will not give the holders thereof the right to acquire
securities of any party hereto.
(n) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Lazard Freres & Co. LLC
and Broadview Associates LLC, the fees and expenses of which will be paid by the
Company (and a copy of whose engagement letters and a calculation of the fees
that would be due thereunder has been provided to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its subsidiaries.
Assuming consummation of the Offer and the Merger, no such engagement letter
obligates the Company to continue to use their services or pay fees or expenses
in connection with any future transaction.
(o) Permits; Compliance with Laws. Each of the Company and its
subsidiaries has in effect all federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
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properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit except for the absence of Permits
and for defaults under Permits which absence or defaults, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
The Company and its subsidiaries have been, and are, in compliance in all
material respects with all applicable statutes, laws or material ordinances,
regulations, rules, judgments, decrees or orders of any Governmental Entity, and
neither the Company nor any of its subsidiaries has received any notice from any
Governmental Entity or any other person that either the Company or any of its
subsidiaries is in violation of, or has violated, in any material respect any
applicable statutes, laws or material ordinances, regulations, rules, judgments,
decrees or orders.
(p) Contracts; Debt Instruments. (i) Except as otherwise disclosed in
Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule, neither the Company nor any
of its subsidiaries is a party to or subject to:
(A) any union contract, or any employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement
providing for future payments, written or oral, with any current or
former officer, consultant, director or employee which (1) exceeds
$200,000 per annum or (2) requires aggregate annual payments or total
payments over the life of such agreement, contract or arrangement to
such current or former officer, consultant, director or employee in
excess of $100,000 or $250,000, respectively, and is not terminable by
it or its subsidiary on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(B) any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of
revenues of $1,000,000 per annum or more with other persons;
(C) any lease for real or personal property in which the amount
of payments which the Company is required to make on an annual basis
exceeds $1,000,000;
(D) to the Company's knowledge, any material agreement, contract,
policy, license, Permit, document, instrument, arrangement or commitment
which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired or adversely
affected by reason of the execution of this Agreement, the closing of
the Offer or the Merger, or the consummation of the other transactions
contemplated hereby;
(E) any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment that limits in any material
respect the freedom of the Company or any subsidiary of the Company to
compete in any line of business or with any person or in any geographic
area or which would so limit in any material respect the freedom of
the Company or any subsidiary of the Company after the Effective
Time; or
(F) any other agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment not made in the ordinary
course of business which is material to the Company and its subsidiaries
taken as a whole.
(ii) Neither the Company nor any subsidiary of the Company is in
default in any material respect under the terms of any exclusive license or
distribution agreement or arrangement that, by its terms, provides for payments
to the Company or any of its subsidiaries of $500,000 or more per annum. To the
knowledge of the Company, as of the date hereof, none of the parties to any of
the contracts identified in Section 4.1(p)(i)(A)-(F) of the Disclosure Schedule
or otherwise disclosed in the
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Company Filed SEC Documents has terminated, or in any way expressed an intent
to materially reduce or terminate the amount of, its business with the Company
or any of its subsidiaries in the future.
(iii) Set forth in Section 4.1(p)(iii) of the Disclosure Schedule is
(A) a list of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments pursuant to which any indebtedness of the
Company or any of its subsidiaries in an aggregate principal amount in excess of
$500,000 is outstanding or may be incurred and (B) the respective principal
amounts currently outstanding thereunder. For purposes of this Section
4.1(p)(iii), "indebtedness" shall mean, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (B) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such person upon which interest charges are customarily paid,
(D) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (E) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (F) all capitalized lease obligations of such person,
(G) all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof), (I) all letters of
credit issued for the account of such person (excluding letters of credit issued
for the benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such person to
purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(K) all guarantees and arrangements having the economic effect of a guarantee of
such person of any indebtedness of any other person.
(q) Opinion of Financial Advisor. The Company has received the opinion
of Lazard Freres & Co. LLC, dated the date hereof, a copy of which has been or,
within three business days of the date hereof, will be provided to Parent, to
the effect that, as of such date, the consideration to be paid in the Offer and
the Merger is fair to the Company's stockholders from a financial point of view.
(r) Interests of Officers and Directors. None of the Company's or any
of its subsidiaries' officers or directors has any interest in any property,
real or personal, tangible or intangible, including inventions, patents,
copyrights, trademarks, trade names, trade secrets or knowhow, used in or
pertaining to the business of the Company or that of its subsidiaries, or any
supplier, distributor or customer of the Company or any of its subsidiaries,
except for the normal rights of a stockholder and rights under existing employee
benefit plans and except for any such interest which would not be required to be
disclosed under the Exchange Act.
(s) Technology. (i) The Company and its subsidiaries exclusively own,
or are licensed to use, the rights to all patents, trademarks, trade names,
service marks, copyrights and any applications therefor, maskworks, net lists,
schematics, inventories, technology, trade secrets, source codes, know-how,
computer software programs or applications and tangible or intangible
proprietary information or material that in any material respect are used or
proposed by the Company to be used in the business of the Company and any of its
subsidiaries as currently conducted or proposed by the Company to be conducted
(the "Company Intellectual Property Rights"). Section 4.1(s)(i) of the
Disclosure Schedule lists, as of the date hereof, all material: (A) patents,
trademarks, trade names, service marks, registered and unregistered copyrights,
and any applications therefor included in the Company Intellectual Property
Rights, the Company's currently marketed software products and a list of which,
if any, of such products have been registered for copyright protection with the
United States Copyright Office and any foreign offices; and (B) licenses and
other agreements to which the Company or any of its subsidiaries is a party and
pursuant to which the Company or any of its subsidiaries is
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authorized to use any Company Intellectual Property Right. Neither the Company
nor any of its subsidiaries is, or as a result of the execution, delivery or
performance of the Company's obligations hereunder will be, in material
violation of, or lose any rights pursuant to, any material license or agreement
described in Section 4.1(s) of the Disclosure Schedule.
(ii) As of the date hereof, no claims with respect to the Company
Intellectual Property Rights have been asserted or, to the knowledge of the
Company, are threatened by any person nor does the Company or any subsidiary of
the Company know of any valid grounds for any bona fide claims against the use
by the Company or any subsidiary of the Company of any Company Intellectual
Property Rights. All granted and issued patents and all registered trademarks
and service marks listed in Section 4.1(s)(i) of the Disclosure Schedule and all
copyrights held by the Company or any of its subsidiaries are valid, enforceable
and subsisting. To the Company's knowledge, as of the date hereof, there has not
been and there is not any material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any third
party, employee or former employee.
(iii) No Company Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has entered into any agreement to
indemnify any other person against any charge of infringement of any Company
Intellectual Property Right, except infringement indemnities agreed to in the
ordinary course included as part of the Company's license agreements. Neither
the Company nor any of its subsidiaries has entered into any agreement granting
any third party the right to bring infringement actions with respect to, or
otherwise to enforce rights with respect to, any Company Intellectual Property
Right owned by the Company. The Company and its subsidiaries have the exclusive
right to file, prosecute and maintain all applications and registrations with
respect to the Company Intellectual Property Rights owned by the Company.
(t) Change of Control. Except as set forth in Section 4.1(i),
4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in or increase in any material respect the amount of any payment
or benefit (including a payment or benefit contingent on the occurrence of one
or more events including, without limitation, termination of employment)
becoming due to any current or former employee, director or independent
contractor of the Company or any of its subsidiaries, from the Company or any of
its subsidiaries under the terms of any Stock Plan, Benefit Plan or employment
or change of control agreement, or (ii) result in the acceleration of the time
of payment, exercise or vesting of any such payment or benefits.
SECTION 4.2. Representations and Warranties of Parent and Merger
Subsidiary. Parent and Merger Subsidiary represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Merger Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to carry on its business as now being conducted.
(b) Authority; Noncontravention. Parent and Merger Subsidiary have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Merger Subsidiary. This Agreement has been duly executed
and delivered by Parent and Merger Subsidiary and, assuming this Agreement
constitutes a valid and binding agreement of the Company, constitutes a valid
and binding obligation of such party,
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enforceable against such party in accordance with its terms. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination or cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws
of Parent or Merger Subsidiary or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or Merger Subsidiary or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent,
Merger Subsidiary or any other subsidiary of Parent or their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (A) have a material adverse effect on Parent and its
subsidiaries taken as a whole, (B) impair the ability of Parent and Merger
Subsidiary to perform their respective obligations under this Agreement or (C)
prevent the consummation of any of the transactions contemplated by this
Agreement. No Consent is required by or with respect to Parent, Merger
Subsidiary or any other subsidiary of Parent in connection with the
execution and delivery of this Agreement or the consummation by
Parent or Merger Subsidiary, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the filing
of a premerger notification and report form under the HSR Act, (ii)
compliance with any applicable requirements of the Exchange Act, (iii) the
filing of a certificate of merger in accordance with Delaware Law and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iv) such notices, filings and consents as
may be required under relevant state property transfer laws and (v) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as (A) may be required under the laws of any foreign country in which
the Company or any of its subsidiaries conducts any business or owns any
property or assets or (B) as to which the failure to obtain or make could not
reasonably be expected to (x) have a Material Adverse Effect or (y) prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
(c) Disclosure Documents. (i) The information with respect to Parent
and its subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain, any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (A) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (B) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of the filing thereof and at the time of any distribution thereof.
(ii) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
apply to statements or omissions in the Offer Documents based upon information
furnished to Parent or Merger Subsidiary in writing by the Company specifically
for use therein.
(d) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection
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with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Merger Subsidiary.
(e) Delaware Law. As of the time immediately prior to the execution of
this Agreement, neither Parent nor any of its subsidiaries was (i) an
"interested stockholder", as such term is defined in Section 203 of the Delaware
Law or (ii) an Acquiring Person under the Rights Agreement.
(f) Financing. Parent will provide or cause to be provided to Merger
Subsidiary the funds necessary to consummate the Offer and the Merger in
accordance with their terms and the terms of this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business. During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior written
approval of Parent:
(a)(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by any direct or indirect wholly owned subsidiary of the Company
to its parent, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities (other than in connection with
the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Shares upon the
exercise of Company Options outstanding on the date of this Agreement in
accordance with their terms on such date);
(c) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(d)(i) mortgage or otherwise encumber or subject to any Lien, any of
the Company Intellectual Property Rights or any other material properties or
assets, (ii) except in the ordinary course of business consistent with past
practice and pursuant to existing contracts or commitments, sell, lease,
transfer or otherwise dispose of any of the Company Intellectual Property Rights
or any other material properties or assets, or (iii) except in the ordinary
course of business consistent with past practice or pursuant to existing
contracts or commitments, license any of the Company Intellectual Property
Rights;
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(e) make or agree to make any new capital expenditures individually in
excess of $250,000;
(f) make any material tax election (unless required by law) or settle
or compromise any material income tax liability;
(g) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice and in accordance with their terms, of (i)
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or (ii) liabilities incurred in the
ordinary course of business consistent with past practice, or, subject to the
fiduciary duties of the Board of Directors of the Company as advised in writing
by Wachtell, Lipton, Rosen & Katz, counsel to the Company, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(h) commence a lawsuit other than (i) for the routine collection of
bills or (ii) to enforce this Agreement or (iii) in such cases where the Company
in good faith determines that the failure to commence suit would result in a
material impairment of a valuable aspect of the Company's business, provided
that the Company consults with Parent prior to filing such suit;
(i)(i) enter into or amend any employment agreement, (ii) enter into
any customer sale or license agreement with non-standard terms or at discounts
from list prices from that typically granted to similarly situated customers in
accordance with past practice; provided that such action with respect to a
customer sale or license agreement that is immaterial in amount and term will
not be deemed to violate this provision if the Company has (A) used its best
efforts to ensure compliance with this provision and (B) taken prompt corrective
action in the event of a violation sufficient to ensure that no similar
violation will occur in the future, (iii) pay commissions to sales employees
except pursuant to quarterly draws consistent with past practice or on the basis
of executed customer contracts with respect to products actually delivered to
customers, (iv) without the consent of Parent which shall not be unreasonably
withheld or delayed, enter into any contract or series of related contracts in
excess of $500,000 for any contract or $1,000,000 for any series of related
contracts, (v) enter into or amend any agreement or arrangement for professional
services or advice except in the ordinary course of business consistent with
past practice, (vi) enter into any customer agreements providing for product
replacements except in the ordinary course of business consistent with past
practice or (vii) make any determination as to amounts payable under any plan,
arrangement, or agreement, providing for discretionary incentive compensation or
bonus to any officer, director, employee or independent contractor of the
Company or any of its subsidiaries;
(j) hire additional employees except in accordance with existing
budgets; provided that the aggregate number of employees of the Company and its
subsidiaries shall not be increased by more than eight percent per quarter over
the number of employees on the date of this Agreement;
(k) authorize any of, or commit or agree to take any of, the foregoing
actions; or
(l)(i) take or agree or commit to take any action that would make any
representation or warranty of the Company hereunder inaccurate in any respect
at, or as of any time prior to, the Effective Time or (ii) omit or agree or
commit to omit to take any action necessary to prevent any such representation
or warranty from being inaccurate in any respect at any such time.
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SECTION 5.2. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable following Merger
Subsidiary's acquisition of Shares in the Offer for the purpose of voting on the
approval and adoption of this Agreement and the Merger unless a vote of
stockholders of the Company is not required by Delaware Law. The Directors of
the Company shall, subject to their fiduciary duties as advised in writing by
Wachtell, Lipton, Rosen & Katz, counsel to the Company, recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with such meeting, the Company (i) will promptly prepare and file
with the SEC, will use all reasonable efforts to have cleared by the SEC and
will thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (ii) subject to
the fiduciary duties of the Board of Directors of the Company as advised in
writing by Wachtell, Lipton, Rosen & Katz, counsel to the Company, will use its
best efforts to obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby and (iii) will otherwise
comply with all legal requirements applicable to such meeting.
SECTION 5.3. Access to Information. From the date hereof until the
Effective Time, the Company will give Parent, its counsel, financial advisors,
auditors and other authorized representatives access (during normal business
hours and upon reasonable notice) to the offices, properties, books and records
of the Company and the subsidiaries, will furnish to Parent, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such persons may reasonably request
and will instruct the Company's employees, counsel and financial advisors to
cooperate with Parent in its investigation of the business of the Company and
the subsidiaries; provided that no investigation pursuant to this Section 5.3
shall affect any representation or warranty given by the Company to Parent
hereunder.
SECTION 5.4. Other Offers. Until the termination of this Agreement,
the Company and its subsidiaries will not, and will not authorize or permit the
officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal (defined below) or (ii) subject
to the fiduciary duties of the Board of Directors of the Company under
applicable law, as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel
to the Company, engage in negotiations with, or disclose any nonpublic
information relating to the Company or any of its subsidiaries or afford access
to the properties, books or records of the Company or any of its subsidiaries
to, any person that has advised the Company or otherwise publicized the fact
that such person may be considering making, or that has made, an Acquisition
Proposal; provided, nothing herein shall prohibit the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act. The Company will promptly notify Parent after receipt of
any Acquisition Proposal or any notice that any person is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Company or any of its subsidiaries or for access to the properties, books or
records of the Company or any of its subsidiaries by any person that has advised
the Company or otherwise publicized the fact that such person may be considering
making, or that has made, an Acquisition Proposal and will keep Parent informed
of the status and details of any such Acquisition Proposal, indication or
request. For purposes of this Agreement, "Acquisition Proposal" means any offer
or proposal for, or any written indication of interest in, a merger or other
business combination involving the Company or any of its subsidiaries or the
acquisition of any significant equity interest in, or a significant portion of
the assets of, the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement.
SECTION 5.5. State Takeover Statutes; Rights Agreement. (a) If any
"fair price", "control share acquisition", "moratorium" or other anti-takeover
statute, or similar statute or regulation shall become applicable to the Offer,
the Merger or this Agreement, or any other transactions contemplated hereby, the
Company and its Board of Directors shall take all action necessary to ensure
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that the Offer, the Merger and the other transactions contemplated hereby, may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger and the other transactions contemplated hereby.
(b) Except as otherwise provided in Section 4.1(m)(ii), the Company
shall not redeem the Rights or amend (other than to delay the Distribution Date
or to render the Rights inapplicable to the Offer and the Merger) or terminate
the Rights Agreement prior to the Effective Time unless required to do so by a
court of competent jurisdiction.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in this Agreement.
SECTION 6.2. Voting of Shares. Parent agrees to make a quorum and vote
all Shares acquired in the Offer or otherwise beneficially owned by it in favor
of adoption of this Agreement at the Company Stockholder Meeting.
SECTION 6.3. Indemnification. For six years after the Effective Time,
Parent will indemnify and hold harmless the present and former officers,
directors, employees and agents of the Company (the "Indemnified Parties") in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent provided under the Company's certificate of incorporation and bylaws in
effect on the date hereof; provided that such indemnification shall be subject
to any limitation imposed from time to time under applicable law. For four years
after the Effective Time, Parent will cause the Surviving Corporation to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring on or prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy on
terms substantially similar to those of such policy in effect on the date
hereof, provided that in satisfying its obligation under this Section, Parent
shall not be obligated to cause the Surviving Corporation to pay premiums in
excess of 105% of the amount per annum the Company paid in its last full fiscal
year, which amount has been disclosed to Parent and if the Surviving Corporation
is unable to obtain the insurance required by this Section 6.3, it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter relating to
the Merger, the Offer or this Agreement occurring on or prior to the Effective
Time, Parent shall pay as incurred such Indemnified Party's reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith.
SECTION 6.4. Employees. (a) Parent agrees to honor in accordance with
their terms all Benefit Plans (including employment agreements) previously
delivered to Parent and all accrued benefits vested thereunder; it being
understood and agreed that nothing in this Section 6.4(a) shall prevent Parent
from terminating any such Benefit Plan in accordance with its terms. For
purposes of this Section 6.4(a), any Benefit Plan that is a Company Filed SEC
Document shall be deemed to have been delivered to Parent.
(b) Parent agrees to provide employees of the Company and its
subsidiaries retained by Parent with employee benefits in the aggregate no less
favorable than those benefits provided to Parent's similarly situated employees;
provided that Parent shall be under no obligation to retain any employee or
group of employees of the Company or its subsidiaries.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification. (a)
Each of Parent and the Company shall (i) promptly make or cause to be made the
filings required of such party or any of its subsidiaries under the HSR Act with
respect to the transactions contemplated by this Agreement, (ii) comply at the
earliest practicable date with any request under the HSR Act for additional
information, documents, or other material received by such party or any of its
subsidiaries from the Federal Trade Commission or the Department of Justice or
any other Governmental Entity in respect of such filings or such transactions,
and (iii) cooperate with the other party in connection with any such filing and
in connection with resolving any investigation or other inquiry of any such
agency or other Governmental Entity under any Antitrust Laws (defined below)
with respect to any such filing or any such transaction. Each party shall
promptly inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings or any such transaction. Neither party shall participate in any
meeting with any Governmental Entity in respect of any such filings,
investigation, or other inquiry without giving the other party notice of the
meeting and, to the extent permitted by such Governmental Entity, the
opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under the HSR
Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, and, if by mutual agreement, Parent and the
Company decide that litigation is in their best interests, each of Parent and
the Company shall cooperate and use all reasonable efforts vigorously to contest
and resist any such action or proceeding and to have vacated, lifted, reversed,
or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary, or permanent (each an "Order"), that is in effect
and that prohibits, prevents, or restricts consummation of any such
transaction. Each of Parent and the Company shall use all reasonable
efforts to take such action as may be required to cause the expiration
of the notice periods under the HSR Act or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution
of this Agreement.
(c) Subject to the fiduciary duties of the Board of Directors of the
Company as advised in writing by Wachtell, Lipton, Rosen & Katz, counsel to the
Company, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Company Disclosure Documents and the Offer Documents, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
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(d) Notwithstanding anything to the contrary in Section 7.1(a), (b) or
(c), (i) neither Parent nor any of its subsidiaries shall be required to divest
any of their respective businesses, product lines or assets, (ii) neither Parent
nor any of its subsidiaries shall be required to take or agree to take any other
action or agree to any limitation that could reasonably be expected to have a
material adverse effect on the business, assets, financial condition, results of
operations or prospects of Parent and its subsidiaries taken as a whole or of
Parent combined with the Surviving Corporation after the Effective Time, (iii)
neither the Company nor its subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect, and (iv) no party shall be required
to agree to the imposition of or to comply with, any condition, obligation or
restriction on Parent or any of its subsidiaries or on the Surviving Corporation
or any of its subsidiaries of the type referred to in clause (a) or (b) of Annex
I and (v) neither Parent nor Merger Subsidiary shall be required to waive any of
the conditions to the Offer set forth in Annex I or any of the conditions to the
Merger set forth in Section VIII.
(e) Each party shall give prompt notice to the other parties upon
learning of (i) any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it
to comply with or satisfy in any respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent or
Merger Subsidiary shall give prompt notice to the Company, of
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting it or any of
its subsidiaries (x) which, in the case of the Company, if pending on
the date of this Agreement would have been required to have been
disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l) or
4.1(s) or (y) in the case of any party, which relate to the consummation
of the transactions contemplated by this Agreement.
SECTION 7.2. Public Announcements. Parent and Merger Subsidiary, on
the one hand, and the Company, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Offer and the Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement will be
in the form previously agreed to by the parties.
SECTION 7.3. Confidentiality. Parent and its subsidiaries will hold,
and will cause their Representatives (defined in the Confidentiality Agreement,
dated October 1, 1996 (the "Confidentiality Agreement"), between Parent and the
Company) to hold, any Evaluation Material
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(defined in the Confidentiality Agreement) (including any stockholder
information provided pursuant to this Agreement) in confidence in accordance
with the terms of the Confidentiality Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if required by Delaware Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such Law;
(ii) any applicable waiting period under the HSR Act relating
to the Merger shall have expired;
(iii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of
the Merger;
(iv) Parent or Merger Subsidiary shall have purchased Shares in an
amount equal to at least the Minimum Condition pursuant to the Offer;
and
(v) other than the filing of the certificate of merger in
accordance with Delaware Law, all Consents required to permit the
consummation of the Merger including those set forth in Sections 4.1(d)
and 4.2(b) shall have been filed, occurred or been obtained (other than
any such Consents the failure to file, occur or obtain in the aggregate,
could not reasonably be expected to (i) have a Material Adverse Effect
or (ii) prevent or materially delay the consummation of the Merger).
ARTICLE IX
TERMINATION
SECTION 9.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not
been consummated by April 7, 1997 (provided that the party seeking to
terminate this Agreement shall not have breached its obligations under
this Agreement in any material respect);
(c) by either the Company or Parent, if there shall be any
law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is entered
and such judgment, injunction, order or decree shall become final and
nonappealable;
(d) by either the Company or Parent, (x) if Parent shall
have failed to commence the Offer within five business days following
the date of this Agreement (provided that Parent shall not be entitled
to terminate this Agreement pursuant to this sub-clause (x) as a
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result of its breach of this Agreement), (y) if Parent or Merger
Subsidiary shall not have purchased any Shares pursuant to the Offer
prior to February 21, 1997 or (z) if the Offer shall have been
terminated without Parent or Merger Subsidiary having purchased any
Shares pursuant to the Offer;
(e) by Parent, upon the occurrence of any Trigger
Event described in clauses (i) through (iii) of Section 10.4(b); or
(f) by the Company, upon the occurrence of any Trigger
Event described in clause (i) of Section 10.4(b).
SECTION 9.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in Sections 7.3, 10.4 and 10.6
shall survive the termination hereof.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 10.2. Notices. All notices, requests and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) or by
telecopy (with copies by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Subsidiary, to
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
President and
Chief Operating Officer
Fax: (516) 342-3300
with a copy to:
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith
Fax: 212-841-1010
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(b) if to the Company, to
Cheyenne Software, Inc.
3 Expressway Plaza
Roslyn Heights, New York 11577
Attention: ReiJane Huai
Chairman and Chief Executive Officer
Fax: (516) 465-5977
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Barry A. Bryer
Fax: 212-403-2000
SECTION 10.3. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Parent and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company, no such amendment
or waiver shall, without the further approval of such stockholders, alter or
change (i) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company, (ii) any term of the certificate of
incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.4. Fees and Expenses.
(a) Except as otherwise provided in this Section, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately available
funds, promptly, but in no event later than two business days, after the
termination of this Agreement as a result of the occurrence of any of the events
set forth below (a "Trigger Event") in an amount equal to (x) $37,500,000, in
the case of the occurrence of a Trigger Event described in clause (i) or (iii)
below and (y) $20,000,000, in the case of the occurrence of a Trigger Event
described in clause (ii) below:
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal;
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(ii) the Company shall have breached or failed to perform in any
respect any of its obligations, covenants or agreements under this
Agreement or any representation or warranty of the Company set forth in
this Agreement (other than any breaches or failures to perform or comply
that, in the aggregate, do not have a Material Adverse Effect); or
(iii) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or this Agreement.
(c) If this Agreement is terminated as a result of the occurrence of a
Trigger Event, in addition to any amounts paid or payable by the Company to
Parent pursuant to Section 10.4(b), the Company shall assume and pay, or
reimburse Parent for, all fees payable and expenses incurred by Parent
(including the fees and expenses of its counsel) in connection with this
Agreement and the transactions contemplated hereby, up to a maximum of
$5,000,000.
SECTION 10.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more of
Parent or any of its wholly owned subsidiaries, the right to purchase Shares
pursuant to the Offer, but any such transfer or assignment will not relieve
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
SECTION 10.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, except that
the consummation and effectiveness of the Merger shall be governed by, and
construed in accordance with, Delaware Law.
SECTION 10.7. Counterparts; Effectiveness; Interpretation. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
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The parties hereto have caused this Agreement to be signed by their
respective authorized officers as of the date first written above.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By:/s/ Sanjay Kumar
________________________
Name: Sanjay Kumar
Title: President and Chief Operating Officer
TSE-TSEHESE-STAESTSE, INC.
By:/s/ Sanjay Kumar
________________________
Name: Sanjay Kumar
Title: President
CHEYENNE SOFTWARE, INC.
By:/s/ ReiJane Huai
________________________
Name: ReiJane Huai
Title: Chairman and Chief Executive Officer
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ANNEX I
Notwithstanding any other provision of the Offer, Parent and Merger
Subsidiary shall not be required to accept for payment or pay for any Shares,
and may terminate the Offer, if (i) by the expiration of the Offer, the Minimum
Condition shall not have been satisfied, (ii) by the expiration of the Offer,
the applicable waiting period under the HSR Act shall not have expired or been
terminated, or (iii) at any time on or after October 7, 1996 and prior to the
acceptance for payment of Shares pursuant to the Offer, any of the following
conditions exist:
(a) there shall be instituted or pending any action or proceeding
by any Governmental Entity or by any other person, domestic or foreign,
before any Governmental Entity or arbitrator, (i) challenging or seeking
to make illegal, to delay materially or otherwise directly or indirectly
to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Parent or Merger
Subsidiary or the consummation by Parent or Merger Subsidiary of the
Merger, seeking to obtain material damages or otherwise directly or
indirectly relating to the transactions contemplated by this Agreement,
the Offer or the Merger, (ii) seeking to restrain or prohibit Parent's
or Merger Subsidiary's ownership or operation (or that of their
respective subsidiaries or affiliates) of all or any material portion of
the business or assets of the Company and its subsidiaries, taken as a
whole, or of Parent and its subsidiaries, taken as a whole, or to compel
Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, (iii) seeking to impose material
limitations on the ability of Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Parent or any of its subsidiaries or affiliates on
all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Parent or any of its subsidiaries or
affiliates of any Shares, or (v) that otherwise, in the judgment of
Parent, is likely to materially adversely affect the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole;
provided that, in the case of any instituted or pending action or
proceeding described in this subsection (a) above by a person other than
a Governmental Entity, there is a substantial probability of a
determination material and adverse to Parent or any of its subsidiaries
or the Company or any of its subsidiaries in such action or proceeding;
or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to this Agreement, the Offer or
the Merger, by any Governmental Entity or arbitrator other than the
application of the waiting period provisions of the HSR Act to this
Agreement, the Offer or the Merger, that, in the judgment of Parent, is
likely, directly or indirectly, to result in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a
prospective change) in the business, financial condition or results of
operations of the Company or any of its subsidiaries that, in the
reasonable judgment of Parent, is or is likely to have a Material
Adverse Effect; or
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(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the American Stock Exchange, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any material limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which would reasonably be
expected to have a Material Adverse Effect or prevent (or materially
delay) the consummation of the Offer or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, a material
acceleration or worsening thereof; or
(e) any Consent (other than the filing of a certificate of merger
or approval by the stockholders of the Company of the Merger (if
required by Delaware Law)) required to be filed, occurred or been
obtained by the Company or any of its subsidiaries or Parent of any of
its subsidiaries (including Merger Subsidiary) in connection with the
execution and delivery of this Agreement, the Offer and the consummation
of the transactions contemplated by this Agreement shall not have been
filed, occurred or been obtained (other than any such Consents the
failure to file, occur or obtain in the aggregate, could not reasonably
be expected to (i) have a Material Adverse Effect or (ii) prevent or
materially delay the consummation of the Offer or the Merger); or
(f) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this
Agreement, or any of the representations and warranties of the Company
set forth in this Agreement that is qualified as to materiality shall
not be true when made or at any time prior to consummation of the Offer
as if made at and as of such time, or any of the representations and
warranties set forth in this Agreement that is not so qualified shall
not be true in any material respect when made or at any time prior to
the consummation of the Offer as if made at and as of such time; or
(g) this Agreement shall have been terminated in accordance with
its terms; or
(h) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or this Agreement;
or
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle with respect to any Acquisition Proposal;
which, in the sole judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Merger Subsidiary)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may be asserted by Parent in its sole discretion regardless of
the circumstances (including any action or omission by Parent or Merger
Subsidiary) giving rise to any such condition or (other than the Minimum
Condition) may be waived by Parent and Merger Subsidiary in their sole
discretion in whole at any time or in part from time to time. The failure
by Parent or Merger Subsidiary at any time to exercise its rights under any
of the foregoing conditions shall not be deemed a waiver of any such right;
the waiver
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of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right
which may be asserted at any time or from time to time. Any determination
by Parent concerning the events described in this Section will be final and
binding upon all parties.
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EXHIBIT 2
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of October 7, 1996, to the Rights Agreement
between Cheyenne Software, Inc., a Delaware corporation (the "Company"), and
Continental Stock Transfer & Trust Company (the "Rights Agent"), dated as of
April 15, 1996 (the "Rights Agreement").
WHEREAS, the Company and the Rights Agent have heretofore
executed and entered into the Rights Agreement;
WHEREAS, Computer Associates International, Inc. ("CA"), a wholly
owned subsidiary of CA ("Sub"), and the Company have entered into an Agreement
and Plan of Merger (the "Merger Agreement") pursuant to which Sub will make an
offer to purchase all of the issued and outstanding shares of common stock of
the Company and, following consummation of the Offer, Sub will merge with and
into the Company (the "Merger"); and the Board of Directors of the Company has
approved the Merger Agreement, the Offer and the Merger;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company has determined that an amendment to the Rights Agreement as set forth
herein is necessary and desirable to reflect the foregoing and the Company and
the Rights Agent desire to evidence such amendment in writing; and
WHEREAS, all acts and things necessary to make this Amendment a
valid agreement, enforceable according to its terms have been done and
performed, and the execution and delivery of this Amendment by the Company and
the Rights Agent have been in all respects duly authorized by the Company and
the Rights Agent.
ACCORDINGLY, in consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by
inserting the following sentence at the end of the definition of "Acquiring
Person":
"Furthermore, notwithstanding anything in this Rights Agreement to the
contrary, neither Computer Associates International, Inc. ("CA"), nor
any of its wholly-owned, direct or indirect subsidiaries or any
associate or affiliate thereof, shall be deemed to be an Acquiring
Person solely as a result of (i) the announcement or making of the Offer
(as defined in the Merger Agreement), (ii) the acquisition of Common
Shares pursuant to the Offer and the Merger (as defined in the Merger
Agreement), (iii) the execution of the Agreement and Plan of Merger
dated October 7, 1996 among CA, Sub (as defined in the Merger Agreement)
and the Company, as amended from time to time (the "Merger Agreement")
or (iv) the consummation of the other transactions contemplated in the
Merger Agreement."
2. Section 1(g) of the Rights Agreement is amended to add the
following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the contrary, a
Distribution Date shall not be deemed to have occurred solely as the
result of (i) the announcement or making of the Offer, (ii) the
acquisition of Common Shares pursuant to the Offer and the Merger, (iii)
the execution of the Merger Agreement or (iv) the other transactions
contemplated in the Merger Agreement."
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3. Section 13 of the Rights Agreement is amended to add the
following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the contrary, (i)
the announcement or making of the Offer, (ii) the acquisition of Common
Shares pursuant to the Offer and the Merger, (iii) the execution of the
Merger Agreement or (iv) the consummation of the other transactions
contemplated in the Merger Agreement shall not cause the Rights to be
adjusted or exercisable in accordance with Section 13."
4. Section 7(a) of the Rights Agreement is hereby modified and
amended to change the reference to "April 15, 2006" to "April 15, 2006, or, if
earlier, immediately prior to the consummation of the Merger, it being agreed
that April 15, 2006 or, if applicable, such earlier date, shall for all purposes
of the Rights Agreement be deemed to be the "Final Expiration Date".
5. This Amendment to the Rights Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
6. This Amendment to the Rights Agreement may be executed in one
or more counterparts, each of which shall be an original, but such counterparts
shall together constitute one and the same instrument. Terms not defined herein
shall, unless the context otherwise requires, have the meanings assigned to such
terms in the Rights Agreement.
7. In all respects not inconsistent with the terms and provisions
of this Amendment to the Rights Agreement, the Rights Agreement is hereby
ratified, adopted, approved and confirmed. In executing and delivering this
Amendment, the Rights Agent shall be entitled to all the privileges and
immunities afforded to the Rights Agent under the terms and conditions of the
Rights Agreement.
8. If any term, provision, covenant or restriction of this
Amendment to the Rights Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment to the Rights
Agreement, and of the Rights Agreement, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and attested, all as of the date and year first above
written.
Attest: CHEYENNE SOFTWARE, INC.
By: /s/ Michael Adler By: /s/ ReiJane Huai
____________________________ ________________________________________
Name: Michael Adler Name: ReiJane Huai
Title: Assistant Secretary Title: Chairman, President and CEO
Attest: CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Thomas Jennings By: /s/ William F. Seegraber
____________________________ ________________________________________
Name: Thomas Jennings Name: William F. Seegraber
Title: Assistant Secretary Title: Vice President
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EXHIBIT 4
[JOINT LETTERHEAD OF COMPUTER ASSOCIATES AND CHEYENNE]
Contact: Doug Robinson, CA Investor Relations, (516) 342-2745
Bob Gordon, CA Public Relations, (516) 342-2391
Elliott Levine, Cheyenne Software, (516) 465-4411
Jeff Finkle, Cheyenne Software, (516) 465-5580
COMPUTER ASSOCIATES TO ACQUIRE CHEYENNE SOFTWARE, INC.
STORAGE MANAGEMENT, ANTI-VIRUS, AND COMMUNICATIONS SOFTWARE TO
STRENGTHEN CA'S MANAGEMENT SOLUTIONS
DEAL VALUED AT APPROXIMATELY $1.2 BILLION
ISLANDIA, NY, October 7, 1996 - Computer Associates International, Inc. (NYSE:
CA) and Cheyenne Software, Inc. (AMEX: CYE) have entered into a merger agreement
for CA to acquire Cheyenne Software through a cash tender offer. A wholly-owned
subsidiary of CA will offer to purchase all outstanding shares of Cheyenne's
common stock for $30.50 per share.
The merger has been unanimously approved by the Boards of Directors of both
Cheyenne and CA. CA will fund the acquisition through cash balances and existing
credit facilities.
"We are extremely excited by the synergistic nature of this acquisition," said
CA Chairman and CEO Charles B. Wang. "Cheyenne is the recognized leader in
storage management solutions for the Windows NT and NetWare environments. The
addition of its product suite will strengthen our efforts in the desktop and LAN
environments. Cheyenne's products, along with CA's Unicenter family of
enterprise management products, will offer an unbeatable combination for solving
the complex management problems that clients are facing today."
"In addition to a strong product offering, Cheyenne's employees are an integral
part of the value in this acquisition. In recognition of their skills and
talents, CA intends to retain all of Cheyenne's employees. It is expected that
Cheyenne will operate as a division of CA, and that it will continue to
aggressively support its current distribution channel strategy."
"This is a tremendous opportunity for our clients, business partners,
employees, and shareholders," said Cheyenne Chairman and CEO ReiJane Huai. "CA's
unparalleled development and support capabilities and financial resources will
now be available to our clients, along with Cheyenne's award-winning solutions
in storage management, anti-virus, and communications software. Equally exciting
is the fact that all of us at Cheyenne will have the opportunity to participate
in the next chapter of Cheyenne's growth."
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In the tender offer, CA seeks to purchase at least a majority of Cheyenne's
outstanding shares. Consummation of the tender offer will be subject to the
expiration or termination of any applicable antitrust waiting period and the
receipt of all regulatory approvals. Following completion of the tender offer,
the subsidiary of CA will be merged into Cheyenne, and all of Cheyenne's shares
not owned by CA will be converted into the right to receive $30.50 per share in
cash.
Computer Associates International, Inc. (NYSE: CA), with headquarters in
Islandia, NY, is the world leader in mission-critical software. The company
develops, licenses, and supports more than 500 integrated products that include
enterprise computing and information management, application development,
manufacturing and financial applications. CA has 9000 people in 130 offices in
40 countries and had revenue of more than $3.5 billion in fiscal year 1996. CA
can be reached by visiting http://www.cai.com on the World Wide Web, emailing
[email protected], or calling 1-516-342-5224.
Cheyenne Software, Inc. is an international developer of essential software
solutions for NetWare, Windows NT, UNIX, Macintosh, OS/2, Windows 3.1 and
Windows 95 operating systems. Its enterprise-wide offerings include an array of
storage management, security, and communications products, including Cheyenne(R)
HSM, JETserve(TM), InocuLAN(TM), FAXserve(TM), and its flagship product line,
the ARCserve(R) family of network backup software. Cheyenne can be contacted at
(800) 243-9462 (U.S. or Canada) or (516) 465-4000, or by visiting its WWW home
page at: http://www.cheyenne.com.
# # #
All referenced product names are trademarks of their respective companies.
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EXHIBIT 5
CHEYENNE SOFTWARE, INC.
3 Expressway Plaza
Roslyn Heights, New York 11577
October 1, 1996
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
Gentlemen:
In connection with your consideration of a possible business combination
transaction (a "Transaction") with Cheyenne Software, Inc. (the "Company"), the
Company and you expect to make available to one another from time to time
certain nonpublic information concerning each other's respective business,
financial condition, operations, assets and liabilities. As a condition to such
information being furnished to each party and such party's directors, officers,
employees, agents or advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors) (collectively,
"Representatives"), each party agrees to treat any nonpublic information
concerning the other party (whether prepared by the disclosing party, its
Representatives or otherwise and irrespective of the form of communication)
which is furnished hereunder to a party or to its Representatives now or in the
future by or on behalf of the disclosing party (collectively referred to in this
Agreement as the "Evaluation Material") in accordance with the provisions of
this Agreement, and to take or abstain from taking certain other actions
hereinafter set forth. The parties acknowledge and agree that any existing
confidentiality agreements between them related to technological issues shall
not be affected by this Agreement and shall remain in full force and effect, but
in the case of a conflict between this Agreement and any such agreement with
respect to information provided under this Agreement, this Agreement shall
govern, but only to the extent that it is more restrictive than such other
agreement.
(1) Evaluation Material. The term "Evaluation Material" also shall be
deemed to include all notes, analyses, compilations, studies, interpretations or
other documents prepared by each party or its Representatives which contain,
reflect or are based upon, in whole or in part, the Evaluation Material
furnished to such party or its Representatives pursuant to this Agreement. The
term "Evaluation Material" does not include information which (i) is or becomes
generally available to the public other than as a result of a breach of this
Agreement by the receiving party or its Representatives, (ii) was within the
receiving party's possession prior to its being furnished to the receiving party
by or on behalf of the disclosing party; provided that the source of such
information was not known by the receiving party to be bound by a
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, the disclosing party or any other party, (iii)
is or becomes available to the receiving party on a non-confidential basis from
a source other than the disclosing party or any of its Representatives; provided
that such source was not known by the receiving party to be bound by a
confidentiality agreement with, or
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other contractual, legal or fiduciary obligation of confidentiality to, the
disclosing party or any other party with respect to such information, (iv) is
disclosed by the disclosing party to a third party without a duty of
confidentiality with respect to such information, or (v) is independently
developed by the receiving party without use of Evaluation Material.
(2) Use of Evaluation Material. Each party agrees that it and its
Representatives shall use the other party's Evaluation Material solely for the
purpose of evaluating a possible Transaction between the parties, and that the
disclosing party's Evaluation Material will be kept confidential and each party
and its Representatives will not disclose or use for purposes other than the
evaluation of a possible Transaction any of the other party's Evaluation
Material in any manner whatsoever; provided that any of such information may be
disclosed to the receiving party's Representatives who need to know such
information for the sole purpose of evaluating a possible Transaction between
the parties (it being understood that such Representatives shall be informed by
the receiving party of the confidential nature of such information and that by
receiving such information they are agreeing to be bound by this Agreement).
Each party agrees to be responsible for any breach of this Agreement by any of
its Representatives.
(3) Non-Disclosure of Discussions. In addition, each party agrees that,
without the prior written consent of the other party, it and its Representatives
will not disclose to any other person the fact that any Evaluation Material has
been made available hereunder, that discussions or negotiations are taking place
concerning a possible Transaction involving the parties or any of the terms,
conditions or other facts with respect thereto (including the status thereof);
provided that a party may make such disclosure if in the opinion of such party's
outside counsel, such disclosure is necessary to avoid committing a violation of
law or of any rule or regulation of any securities association, stock exchange
or national securities quotation system on which such party's securities are
listed or trade. In such event, the disclosing party shall use its best efforts
to give advance notice to the other party.
(4) Required Disclosure. In the event that a party or its
Representatives are requested or required (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to disclose any of the other
party's Evaluation Material or any of the facts disclosure of which is
prohibited under paragraph (3) of this Agreement, the party requested or
required to make the disclosure shall provide the other party with prompt notice
of any such request or requirement so that the other party may seek a protective
order or other appropriate remedy and/or waive compliance with the provisions of
this Agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver by such other party, the party requested or required to make
the disclosure or any of its Representative should nonetheless, in the opinion
of such party's or (in the case of disclosure requested or required of a
Representative) such Representative's outside counsel, disclose the other
party's Evaluation Material, the party requested or required to make the
disclosure or its Representative may, without liability hereunder, disclose only
that portion of the other party's Evaluation Material which such counsel advises
is legally required to be disclosed; provided that the party requested or
required to make the disclosure exercises its reasonable efforts to preserve the
confidentiality of the other party's Evaluation Material, including, without
limitation, by cooperating with the other party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the other party's Evaluation Material.
(5) Termination of Discussions. If either party decides that it does not
wish to proceed with negotiating a Transaction with the other party, the party
so deciding will promptly
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inform the other party of that decision. In that case, or at any time upon the
request of either disclosing party for any reason, each receiving party will
promptly deliver to the disclosing party or, at the option of the receiving
party, destroy all written (and electronic) Evaluation Material (and all copies
thereof and extracts therefrom) furnished to the receiving party or its
Representatives by or on behalf of the disclosing party pursuant hereto. In the
event of such a decision or request, all other Evaluation Material prepared by
the requesting party shall be destroyed and no copy thereof shall be retained,
and in no event shall either party be obligated to disclose or provide the
Evaluation Material prepared by it or its Representatives to the other party.
Notwithstanding the return or destruction of the Evaluation Material, each party
and its Representatives will continue to be bound by their obligations of
confidentiality and other obligations hereunder.
(6) No Representation of Accuracy. Each party understands and
acknowledges that neither party nor any of its Representatives makes any
representation or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material made available by it or to it. Each
party agrees that neither party nor any of its Representatives shall have any
liability to the other party or to any of its Representatives relating to or
resulting from the use of or reliance upon such other party's Evaluation
Material or any errors therein or omissions therefrom. Only those
representations or warranties which are made in a final definitive agreement
regarding the Transaction, when, as and if executed, and subject to such
limitations and restrictions as may be specified therein, will have any legal
effect.
(7) Definitive Agreements. Each party understands and agrees that no
contract or agreement providing for any Transaction involving the parties shall
be deemed to exist between the parties unless and until a final definitive
agreement has been executed and delivered. Each party also agrees that unless
and until a final definitive agreement regarding a Transaction between the
parties has been executed and delivered, neither party will be under any legal
obligation of any kind whatsoever with respect to such a Transaction by virtue
of this Agreement except for the matters specifically agreed to herein. For
purposes of this paragraph, the term "definitive agreement" does not include an
executed letter of intent or any other preliminary written agreement. Both
parties further acknowledge and agree that each party reserves the right, in its
sole discretion, to provide or not provide Evaluation Material to the receiving
party under this Agreement, to reject any and all proposals made by the other
party or any of its Representatives with regard to a Transaction between the
parties, and to terminate discussions and negotiations at any time.
(8) Injunctive Relief. It is further understood and agreed that money
damages would not be a sufficient remedy for any breach of this Agreement by
either party or any of its Representatives and that the non-breaching party
shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach. Such remedies shall not be deemed
to be the exclusive remedies for a breach of this Agreement but shall be in
addition to all other remedies available at law or equity.
(9) Waiver; Invalidity. It is understood and agreed that no failure or
delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or future exercise thereof or the exercise of any
other right, power or privilege hereunder. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
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Please confirm your agreement with the foregoing by signing and
returning one copy of this letter to the undersigned, whereupon it shall become
our binding agreement to be governed by New York law.
Very truly yours,
CHEYENNE SOFTWARE, INC.
By: /s/ ReiJane Huai
-----------------------
Name: ReiJane Huai
Title: Chairman and Chief
Executive Officer
Accepted and Agreed as of the date first written above:
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: /s/ Sanjay Kumar
----------------------------
Name: Sanjay Kumar
Title: President and Chief Operating Officer
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EXHIBIT 6
Article Nine of the Restated Certificate of Incorporation of Cheyenne Software,
Inc. (the "Corporation") states that:
No director of the Corporation shall be personally liable
to the Corporation or its stockholders for any monetary damages
resulting from a breach of his fiduciary duty as a director
provided that no director shall be relieved from any personal
liability for (i) any breach of his duty of loyalty to the
Corporation or its stockholders; (ii) acts or omissions not taken
in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) any violation under Section 174
of the Delaware General Corporation Law; or (iv) any transaction
from which he derived an improper personal benefit. This Article
shall not eliminate or limit the liability of a director for any
act or omission occurring prior to the time this Article became
effective.
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EXHIBIT 7
Section Seven of the Restated By-Laws of Cheyenne Software, Inc. states that:
(A) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a
person of whom he or she is the legal representative is or was a
director or officer of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
maintained or sponsored by the corporation, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the
General Corporation Law of the State of Delaware as the same exists or
may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the corporation to provide
broader indemnification rights than said law permitted the corporation
to provide prior to such amendment), against all expense, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that
except as provided in Section 7(C) of this ARTICLE VII of these by-laws,
the corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such
person only if such proceeding (or part thereof) was authorized by the
board of directors. The right to indemnification conferred in this
Section 7 of this ARTICLE VII of these by-laws shall be a contract right
and shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition, such advances to be paid by the corporation within 20 days
after the receipt by the corporation of a statement or statements from
the claimant requesting such advance or advances from time to time;
provided, however, that if the General Corporation Law of the State of
Delaware requires, the payment of such expenses incurred by a director
or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the corporation of an
undertaking by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section
7 of this ARTICLE VII of these by-laws or otherwise.
(B) To obtain indemnification under this Section 7 of this
ARTICLE VII of these by-laws, a claimant shall submit to the corporation
a written request, including therein or therewith such documentation and
information as is reasonably available to the claimant and is reasonably
necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this Section 7(B) of
this ARTICLE VII of these by-laws, a determination, if required by
applicable law, with respect to the claimant's entitlement thereto shall
be made as follows: (1) if requested by the claimant, by Independent
Counsel (as hereinafter defined), or (2) if no request is made by the
claimant for a determination by Independent Counsel, (i) by the board of
directors by a majority vote of a quorum consisting of Disinterested
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Directors (as hereinafter defined), or (ii) if a quorum of the board of
directors consisting of Disinterested Directors is not obtainable or,
even if obtainable, such quorum of Disinterested Directors so directs,
by Independent Counsel in a written opinion to the board of directors, a
copy of which shall be delivered to the claimant, or (iii) if a quorum
of Disinterested Directors so directs, by the stockholders of the
corporation. In the event the determination of entitlement to
indemnification is to be made by Independent Counsel at the request of
the claimant, the Independent Counsel shall be selected by the board of
directors unless there shall have occurred within two years prior to the
date of the commencement of the action, suit or proceeding for which
indemnification is claimed a Change of Control (as hereinafter defined),
in which case the Independent Counsel shall be selected by the claimant
unless the claimant shall request that such selection be made by the
board of directors. If it is so determined that the claimant is entitled
to indemnification, payment to the claimant shall be made within 10 days
after such determination.
(C) If a claim under Section 7(A) of this ARTICLE VII of
these by-laws is not paid in full by the corporation within thirty days
after a written claim pursuant to Section 7(B) of this ARTICLE VII of
these by-laws has been received by the corporation, the claimant may at
any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation)
that the claimant has not met the standard of conduct which makes it
permissible under the General Corporation Law of the State of Delaware
for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its board of
directors, Independent Counsel or stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual
determination by the corporation (including its board of directors,
Independent Counsel or stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard of conduct.
(D) If a determination shall have been made pursuant to
Section 7(B) of this ARTICLE VII of these by-laws that the claimant is
entitled to indemnification, the corporation shall be bound by such
determination in any judicial proceeding commenced pursuant to Section
7(C) of this ARTICLE VII of these by-laws.
(E) The corporation shall be precluded from asserting in
any judicial proceeding commenced pursuant to Section 7(C) of this
ARTICLE VII of these by-laws that the procedures and presumptions of
this Section 7 of this ARTICLE VII of these by-laws are not valid,
binding and enforceable and shall stipulate in such proceeding that the
corporation is bound by all the provisions of this Section 7 of this
ARTICLE VII of these by-laws.
(F) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section 7 of this ARTICLE VII of these
by-laws shall not be exclusive of any
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other right which any person may have or hereafter acquire under any
statute, provision of the certificate of incorporation, by-laws,
agreement, vote of stockholders or Disinterested Directors or otherwise.
No repeal or modification of this Section 7 of this ARTICLE VII of these
by-laws shall in any way diminish or adversely affect the rights of any
director, officer, employee or agent of the corporation hereunder in
respect of any occurrence or matter arising prior to any such repeal or
modification.
(G) The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the corporation or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such
person against such expense, liability or loss under the General
Corporation Law of the State of Delaware. To the extent that the
corporation maintains any policy or policies providing such insurance,
each such director or officer, and each such agent or employee to which
rights to indemnification have been granted as provided in Section 7(H)
of this ARTICLE VII of these by-laws, shall be covered by such policy or
policies in accordance with its or their terms to the maximum extent of
the coverage thereunder for any such director, officer, employee or
agent.
(H) The corporation may, to the extent authorized from
time to time by the board of directors, grant rights to indemnification,
and rights to be paid by the corporation the expenses incurred in
defending any proceeding in advance of its final disposition, to any
employee or agent of the corporation to the fullest extent of the
provisions of this Section 7 of this ARTICLE VII of these by-laws with
respect to the indemnification and advancement of expenses of directors
and officers of the corporation.
(I) If any provision or provisions of this Section 7 of
this ARTICLE VII of these by-laws shall be held to be invalid, illegal
or unenforceable for any reason whatsoever: (1) the validity, legality
and enforceability of the remaining provisions of this Section 7 of this
ARTICLE VII of these by-laws (including, without limitation, each
portion of any subsection of this Section 7 of this ARTICLE VII of these
by-laws containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and
(2) to the fullest extent possible, the provisions of this Section 7 of
this ARTICLE VII of these by-laws (including, without limitation, each
such portion of any subsection of this Section 7 of this ARTICLE VII of
these by-laws containing any such provision held to be invalid, illegal
or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
(J) For purposes of this Section 7 of this ARTICLE VII of
these by-laws:
(1) "Change of Control" means:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (i) the then outstanding shares of common stock
of the corporation (the "Outstanding Corporation Common Stock")
or (ii) the combined voting power of the then
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outstanding voting securities of the corporation entitled to vote
generally in the election of directors (the "Outstanding
Corporation Voting Securities"); provided, however, that for
purposes of this Section 7(J)(1)(a) of this ARTICLE VII of these
by-laws, the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the corporation,
(ii) any acquisition by the corporation, (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or
maintained by the corporation or any other corporation controlled
by the corporation or (iv) any acquisition by any other
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of Section 7(J)(1)(c) of this ARTICLE VII of
these by-laws; or
(b) Individuals who, as of the date hereof,
constitute the board of directors (the "Incumbent Board") cease
for any reason to constitute at least a majority of the board of
directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the corporation's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the board of directors; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstanding Corporation
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, another corporation
which as a result of such transaction owns the corporation or all
or substantially all of the corporation's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Corporation Common Stock
and Outstanding Corporation Voting Securities, as the case may
be, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related
trust) of the corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the
board of directors, providing for such Business Combination; or
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(d) Approval by the stockholders of the corporation
of a complete liquidation or dissolution of the corporation.
(2) "Disinterested Director" means a director of the
corporation who is not and was not a party to the matter in respect of
which indemnification is sought by the claimant.
(3) "Independent Counsel" means a law firm, a member of a
law firm, or an independent practitioner, that is experienced in matters
of corporation law and shall include any person who, under the
applicable standards of professional conduct then prevailing, would not
have a conflict of interest in representing either the corporation or
the claimant in an action to determine the claimant's rights under this
Section 7 of this ARTICLE VII of these by-laws.
(K) Any notice, request or other communication required or
permitted to be given to the corporation under this Section 7 of this ARTICLE
VII of these by-laws shall be in writing and either delivered in person or sent
by telex, telegram or facsimile transmission, or overnight mail or courier
service, or certified or registered mail, postage prepaid, return receipt
requested, to the secretary of the corporation and shall be effective only upon
receipt by the secretary.
