UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 7, 1996
CHEYENNE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-9189 13-3175893
(State or Other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
3 Expressway Plaza, Roslyn Heights, NY 11577
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 465-4000
Page 1 of 4<PAGE>
ITEM 5. OTHER EVENTS.
On October 7, 1996, Cheyenne Software, Inc., a
Delaware corporation (the "Company"), entered into an Agree-
ment and Plan of Merger (the "Merger Agreement") with Com-
puter Associates International, Inc., a Delaware corporation
("CA"), and Tse-Tsehese-Staestse, Inc., a Delaware corpora-
tion and a wholly owned subsidiary of CA ("Sub"), pursuant to
which, among other things, Sub agreed to commence a cash ten-
der offer (the "Offer") to acquire all shares of common
stock, par value $.01 per share, of the Company ("Company
Common Stock"), at a price of $30.50 per share, net to the
seller in cash. The Offer is conditioned upon, among other
things, there having been validly tendered pursuant to the
Offer and not withdrawn a number of shares of Company Common
Stock which, together with the shares then owned by Sub and
CA, would represent at least a majority of the total number
of outstanding shares on a fully diluted basis, and the expi-
ration or termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act and associ-
ated rules.
The Merger Agreement further contemplates that,
subsequent to the Offer, Sub would be merged with and into
the Company, with the Company surviving as a wholly-owned
subsidiary of CA (the "Merger"). In connection with the
Merger, each share of Company Common Stock (other than shares
then owned by CA or the Company and dissenting shares) would
be converted into the right to receive $30.50 in cash.
The preceding description of the Merger Agreement
is qualified in its entirety by reference to the copy of the
Merger Agreement included as Exhibit 2(i) to this Current
Report on Form 8-K and which is incorporated herein by refer-
ence.
On October 7, 1996, CA and the Company jointly an-
nounced the anticipated Offer and Merger and the terms of the
Merger Agreement. A copy of the press release is attached as
Exhibit 2(ii) to this Current Report on Form 8-K and
incorporated herein by reference.
Page 2 of 4<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2(i) Agreement and Plan of Merger, dated as of
October 7, 1996, by and among Computer
Associates International, Inc. Tse-
Tsehese-Staestse, Inc. and Cheyenne Soft-
ware, Inc.
2(ii) Press release, dated October 7, 1996,
jointly issued by Computer Associates
International, Inc. and Cheyenne Soft-
ware, Inc.
Page 3 of 4<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Ex-
change Act of 1934, the registrant has duly caused this re-
port to be signed on its behalf by the undersigned hereunto
duly authorized.
CHEYENNE SOFTWARE, INC.
Date: October 8, 1996 /s/ Elliot Levine
Name: Elliot Levine
Title: Executive Vice
President, Senior
Financial Officer
and Treasurer
Page 4 of 4<PAGE>
EXHIBIT LIST
2(i) Agreement and Plan of Merger, dated as of
October 7, 1996, by and among Computer
Associates International, Inc. Tse-Tsehese-
Staestse, Inc. and Cheyenne Software, Inc.
2(ii) Press release, dated October 7, 1996, jointly
issued by Computer Associates International,
Inc. and Cheyenne Software, Inc.
Exhibit 2(i)
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>
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.1. The Offer.................................. 1
SECTION 1.2. Company Action............................. 2
SECTION 1.3. Directors.................................. 4
ARTICLE II
THE MERGER
SECTION 2.1. The Merger................................. 5
SECTION 2.2. Conversion of Shares....................... 5
SECTION 2.3. Surrender and Payment...................... 6
SECTION 2.4. Dissenting Shares.......................... 7
SECTION 2.5. Stock Options.............................. 8
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation............... 9
SECTION 3.2. Bylaws..................................... 9
SECTION 3.3. Directors and Officers..................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 1.1. Representations and Warranties of the
Company.................................. 9
(a) Organization, Standing and Corporate Power..... 9
(b) Subsidiaries................................... 10
(c) Capital Structure.............................. 11
(d) Authority; Noncontravention.................... 12
(e) SEC Documents; Financial Statements;
No Undisclosed Liabilities................... 13
(f) Disclosure Documents........................... 14
(g) Absence of Certain Changes or Events........... 15
(h) Litigation..................................... 16<PAGE>
Page
(i) Absence of Changes in Stock and Benefit Plans.. 17
(j) Participation and Coverage in Benefit Plan..... 17
(k) ERISA Compliance............................... 18
(l) Taxes .......................................19
(m) State Takeover Statutes; Rights Agreement...... 21
(n) Brokers; Schedule of Fees and Expenses......... 21
(o) Permits; Compliance with Laws.................. 21
(p) Contracts; Debt Instruments.................... 22
(q) Opinion of Financial Advisor................... 24
(r) Interests of Officers and Directors............ 24
(s) Technology..................................... 24
(t) Change of Control.............................. 26
SECTION 4.2. Representations and Warranties of Parent
and Merger Subsidiary.................... 26
(a) Organization, Standing and Corporate Power..... 26
(b) Authority; Noncontravention.................... 26
(c) Disclosure Documents........................... 27
(d) Brokers........................................ 28
(e) Delaware Law................................... 28
(f) Financing...................................... 28
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business........................ 28
SECTION 5.2. Stockholder Meeting; Proxy Material........ 31
SECTION 5.3. Access to Information...................... 31
SECTION 5.4. Other Offers............................... 32
SECTION 5.5. State Takeover Statutes; Rights Agreement.. 33
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary........... 33
SECTION 6.2. Voting of Shares........................... 33
SECTION 6.3. Indemnification............................ 33
SECTION 6.4. Employees.................................. 34
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Page
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts;
Notification............................. 34
SECTION 7.2. Public Announcements....................... 37
SECTION 7.3. Confidentiality............................ 37
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of
Each Party............................... 38
ARTICLE IX
TERMINATION
SECTION 9.1. Termination................................ 38
SECTION 9.2. Effect of Termination...................... 39
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and
Warranties.............................. 39
SECTION 10.2. Notices................................... 39
SECTION 10.3. Amendments; No Waivers.................... 40
SECTION 10.4. Fees and Expenses......................... 41
SECTION 10.5. Successors and Assigns.................... 42
SECTION 10.6. Governing Law............................. 42
SECTION 10.7. Counterparts; Effectiveness;
Interpretation.......................... 42
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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 sub-
sidiary of Parent ("Merger Subsidiary"), and
Cheyenne Software, Inc., a Delaware corpora
tion (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 Sub-
sidiary 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, com-
mence 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; pro-
vided 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 addi-
tion to those set forth in Annex I, changes or waives the Mini-
mum Condition, extends the Offer (except as set forth in the
following sentence), or makes any other change to any condition<PAGE>
to the Offer set forth in Annex I which is adverse to the hold-
ers of Shares. Subject to the terms of the Offer in this Agre-
ement and the satisfaction (or waiver to the extent permitted
by this Agreement) of the conditions to the Offer, Merger Sub-
sidiary 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 with-
drawn 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 sched-
uled 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 commence-
ment 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 form of the related let-
ter 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. Par-
ent, 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 Sub-
sidiary 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
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Directors, at a meeting duly called and held, has (i) unani-
mously determined that this Agreement and the transactions con-
templated 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) unani-
mously 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 Direc-
tors its opinion that the consideration to be paid in the Offer
and the Merger is fair to the holders of Shares from a finan-
cial 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 deposito-
ries, 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 Direc-
tors 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 informa-
tion 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 neces-
sary 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 rea-
sonable opportunity to review and comment on the Schedule 14D-9
prior to its being filed with the SEC.
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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 addi-
tional directors pursuant to this Section) and (ii) the per-
centage 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 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 Direc-
tors 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 effec-
tive without the approval of the Independent Director. At such
times, the Company will use its best efforts to cause individu-
als 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 informa-
tion with respect to itself and its nominees, officers, direc-
tors and affiliates required by Section 14(f) and Rule 14f-1.
-4-<PAGE>
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 certifi-
cate 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 "Effec-
tive 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, dis-
abilities 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 subsid-
iary 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 Sub-
sidiary outstanding immediately prior to the Effective
Time shall be converted into and become one share of com-
mon 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 capi-
tal stock of the Surviving Corporation; and
-5-<PAGE>
(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 exer-
cised, 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 com-
pany (the "Exchange Agent") for the purpose of exchanging cer-
tificates 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 irre-
vocable instructions, make the payments provided in this Sec-
tion 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 sur-
render 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 docu-
ments 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 surren-
dered 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.
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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 politi-
cal subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no fur-
ther registration of transfers of Shares. If, after the Effec-
tive 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 Effec-
tive 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 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 Effec-
tive 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 Consider-
ation, unless such holder fails to perfect or withdraws or oth-
erwise 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
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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 exercis-
able 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 deter-
mined by multiplying the number of Shares subject to such Com-
pany 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 Effec-
tive Time (such quotient, the "Conversion Number"), at an exer-
cise price per share of Parent Common Stock equal to the quo-
tient 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 Rev-
enue 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 inde-
pendent 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 subsidiar-
ies 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 Com-
mon Stock issuable upon exercise of the assumed Company Options
to be registered, or to be issued pursuant to a then effective
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registration statement, no later than 90 days after the Effec-
tive Time on Form S-8 promulgated by the SEC and shall use its
best efforts to maintain the effectiveness of such registration
statement or registration statements for so long as such
assumed Company Options remain outstanding. With respect to
those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the
Exchange Act, Parent shall administer the Company Options
assumed pursuant to this Section 2.5 in a manner that complies
with Rule 16b-3 promulgated by the SEC under the Exchange Act,
but shall have no responsibility for such compliance by the
Company or its predecessors.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The cer-
tificate 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 appli-
cable 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 Subsid-
iary in effect at the Effective Time shall be the bylaws of the
Surviving Corporation until amended in accordance with appli-
cable 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
-9-<PAGE>
standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and author-
ity 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 mate-
rial 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 Agree-
ment shall be excluded from consideration for purposes of the
effect of an action or inaction on the Company and its subsid-
iaries 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 certifi-
cates of incorporation and by-laws of its Significant Subsid-
iaries 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 per-
son, 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 govern-
ing body (or, if there are no such voting interests, 50% or
more of the equity interests of which) is owned directly or
indirectly by such first person; and a "Significant Subsidiary"
means any subsidiary of a person that constitutes a significant
subsidiary of such person within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the
"SEC").
(b) Subsidiaries. Section 4.1(b) of the disclosure
schedule delivered by the Company to Parent and Merger Subsid-
iary prior to the execution of this Agreement (the "Disclosure
Schedule") lists each subsidiary of the Company and its respec-
tive 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 val-
idly 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
-10-<PAGE>
(including any restriction on the right to vote, sell or other-
wise 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 indi-
rectly, 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) 5,161,716
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 autho-
rized, 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 secu-
rities 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 Disclo-
sure Schedule, there are not any securities, options, warrants,
calls, rights, commitments, agreements, arrangements or under-
takings of any kind to which the Company or any of its subsid-
iaries 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 Com-
pany 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 outstand-
ing rights, commitments, agreements, arrangements or undertak-
ings of any kind obligating the Company or any of its subsid-
iaries to repurchase, redeem or otherwise acquire any shares of
capital stock or other voting securities of the Company or any
-11-<PAGE>
of its subsidiaries or any securities of the type described in
the two immediately preceding sentences (other than in connec-
tion 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 Com-
pany's stockholders in connection with the consummation of the
Merger, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, except
for any required approval by the Company's stockholders in con-
nection with the consummation of the Merger. This Agreement
has been duly executed and delivered by the Company and, assum-
ing 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 provi-
sions 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 termina-
tion, 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 Incorpo-
ration or By-Laws of the Company or the comparable charter or
organizational documents of any of its Significant Subsidiar-
ies, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, con-
cession, 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 rea-
sonably be expected to (A) have a Material Adverse Effect, (B)
impair the ability of the Company to perform its obligations
-12-<PAGE>
under this Agreement or (C) prevent or materially delay consum-
mation of any of the transactions contemplated by this Agree-
ment. No consent, approval, order or authorization of, or reg-
istration, declaration or filing with or exemption by (col-
lectively, "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 noti-
fication 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) compli-
ance with any applicable requirements of the Securities Ex-
change Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), (iii) the filing of a certifi-
cate 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 for-
eign 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 Undis-
closed 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 neces-
sary 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 Docu-
ments comply as to form in all material respects with appli-
cable accounting requirements and the published rules and regu-
lations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles
-13-<PAGE>
(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 con-
solidated financial position of the Company and its consoli-
dated 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 Com-
pany 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 "Com-
pany Disclosure Documents"), including, without limitation, the
Schedule 14D-9, the proxy or information statement of the Com-
pany (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 adop-
tion of this Agreement, the Company Proxy Statement, as supple-
mented 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 mis-
leading. 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 representa-
tions 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
-14-<PAGE>
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 Docu-
ments 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 declara-
tion, setting aside or payment of any dividend or other distri-
bution (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, combi-
nation or reclassification of any of its capital stock or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock, (iv) (A) any granting by the Com-
pany or any of its subsidiaries to any current or former direc-
tor, officer or employee of the Company or any of its subsid-
iaries 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 com-
pensation, 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
-15-<PAGE>
material term of any outstanding security of the Company or any
of its subsidiaries, (viii) any incurrence, assumption or guar-
antee by the Company or any of its subsidiaries of any indebt-
edness for borrowed money in the amount of more than $1,000,000
in the aggregate, (ix) any creation or assumption by the Com-
pany 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 mar-
ketable securities made in the ordinary course of business con-
sistent 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 com-
mitments 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 rou-
tine 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 stop-
pages 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 Mate-
rial 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
-16-<PAGE>
or any of the other transactions contemplated by this Agree-
ment, 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 par-
ties thereto, the subject matter thereof and the amount of dam-
ages claimed.
(i) Absence of Changes in Stock and Benefit Plans.
Except as disclosed in the Company Filed SEC Documents or Sec-
tion 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 accelera-
tion, 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 discre-
tionary 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 agree-
ment or any bonus, pension, profit sharing, deferred compensa-
tion, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, stock appreciation right, retire-
ment, vacation, severance, disability, death benefit, hospital-
ization, medical, workers' compensation, supplementary unem-
ployment 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 Ben-
efit Plan, or amendment thereto, as the case may be, is mate-
rial, other than those Benefit Plans maintained outside of the
United States primarily for the benefit of persons substan-
tially 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
-17-<PAGE>
the Company Filed SEC Documents or Section 4.1(j) of the Dis-
closure 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 participa-
tion 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 pen-
sion 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 affili-
ates (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 Ben-
efit 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 main-
tained 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 subsid-
iaries.
(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
-18-<PAGE>
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 sat-
isfied.
(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 con-
tinued 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 Com-
pany nor any of its subsidiaries has any material obligations
for post-retirement or post-termination health and life bene-
fits 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 Com-
pany 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 mate-
rial 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 with-
held and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or
-19-<PAGE>
other third party other than where failure to do so could rea-
sonably 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 assess-
ment or deficiency.
(v) Neither the Company nor any of its subsidiaries
has filed a consent pursuant to Section 341(f) of the Code con-
cerning 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 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 state-
ments.
(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 Com-
pany or any of its subsidiaries have any knowledge that the
Internal Revenue Service (or other taxing authority) has pro-
posed or is considering proposing, any such change in account-
ing method. Neither the Company nor any of its subsidiaries is
a party to any agreement, contract, or arrangement that, indi-
vidually 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
-20-<PAGE>
162(a)(1), other than amounts which may be required to be capi-
talized 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 contem-
plated hereby.
(ii) The Company has delivered to Parent a complete
and correct copy of the Rights Agreement, including all amend-
ments 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 securi-
ties 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 Par-
ent), is entitled to any broker's, finder's, financial advi-
sor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrange-
ments made by or on behalf of the Company or any of its subsid-
iaries. 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 Com-
pany and its subsidiaries has in effect all federal, state,
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local and foreign governmental approvals, authorizations, cer-
tificates, filings, franchises, licenses, notices, permits and
rights ("Permits") necessary for it to own, lease or operate
its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such
Permit except for the absence of Permits and for defaults under
Permits which absence or defaults, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect. The Company and its subsidiaries have been,
and are, in compliance in all material respects with all
applicable statutes, laws or material ordinances, regulations,
rules, judgments, decrees or orders of any Governmental Entity,
and neither the Company nor any of its subsidiaries has
received any notice from any Governmental Entity or any other
person that either the Company or any of its subsidiaries is in
violation of, or has violated, in any material respect any
applicable statutes, laws or material ordinances, regulations,
rules, judgments, decrees or orders.
(p) Contracts; Debt Instruments. (i) Except as
otherwise disclosed in Section 4.1(p)(i)(A)-(F) of the Disclo-
sure Schedule, neither the Company nor any of its subsidiaries
is a party to or subject to:
(A) any union contract, or any employment, consult-
ing, severance, termination, or indemnification agreement,
contract or arrangement providing for future payments,
written or oral, with any current or former officer, con-
sultant, 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, consult-
ant, 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 agree-
ment, contract, policy, license, Permit document instru-
ment, arrangement or commitment which has not been termi-
nated or performed in its entirety and not renewed which
-22-<PAGE>
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, Per-
mit, 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 mate-
rial 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 arrange-
ment 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 dis-
closed in the Company Filed SEC Documents has terminated, or in
any way expressed an intent to materially reduce or terminate
the amount of, its business with the Company or any of its sub-
sidiaries in the future.
(iii) Set forth in Section 4.1(p)(iii) of the Disclo-
sure 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 there-
under. For purposes of this Section 4.1(p)(iii), "indebted-
ness" shall mean, with respect to any person, without duplica-
tion, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such per-
son, (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 pur-
chased by such person, (E) all obligations of such person
issued or assumed as the deferred purchase price of property or
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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 ter-
mination 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, trade-
marks, trade names, trade secrets or knowhow, used in or per-
taining to the business of the Company or that of its subsid-
iaries, 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 subsidiar-
ies 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
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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 subsidiar-
ies is a party and pursuant to which the Company or any of its
subsidiaries is authorized to use any Company Intellectual
Property Right. Neither the Company nor any of its subsidiar-
ies is, or as a result of the execution, delivery or perfor-
mance of the Company's obligations hereunder will be, in mate-
rial violation of, or lose any rights pursuant to, any material
license or agreement described in Section 4.1(s) of the Disclo-
sure 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 Sec-
tion 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 mate-
rial 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 sub-
ject 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
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respect to the Company Intellectual Property Rights owned by
the Company.
(t) Change of Control. Except as set forth in Sec-
tion 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 consumma-
tion 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 lim-
itation, 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 Par-
ent and Merger Subsidiary. Parent and Merger Subsidiary repre-
sent 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 contem-
plated by this Agreement have been duly authorized by all nec-
essary corporate action on the part of Parent and Merger Sub-
sidiary. 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, con-
stitutes a valid and binding obligation of such party, enforce-
able against such party in accordance with its terms. The
execution and delivery of this Agreement do not, and the con-
summation 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
-26-<PAGE>
Subsidiary or the comparable charter or organizational docu-
ments 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 govern-
mental 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 per-
form their respective obligations under this Agreement or (C)
prevent the consummation of any of the transactions contem-
plated 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 noti-
fication 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 sub-
sidiaries conducts any business or owns any property or assets
or (B) as to which the failure to obtain or make could not rea-
sonably 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 Dis-
closure 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
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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 require-
ments of the Exchange Act and will not at the time of the fil-
ing 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 cir-
cumstances under which they were made, not misleading, pro-
vided, 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, finan-
cial advisor or other person is entitled to any broker's,
finder's, financial advisor's or other similar fee or commis-
sion in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Par-
ent 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 Com-
pany 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 con-
sistent 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, lic-
ensees, distributors and others having business dealings with
-28-<PAGE>
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 capi-
tal stock, other than dividends and distributions by any direct
or indirect wholly owned subsidiary of the Company to its par-
ent, (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 sub-
sidiaries or any other securities thereof or any rights, war-
rants or options to acquire any such shares or other securities
(other than in connection with the exercise of Company Op-
tions);
(b) issue, deliver, sell, pledge or otherwise encum-
ber any shares of its capital stock, any other voting securi-
ties or any securities convertible into, or any rights, war-
rants 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 Intellec-
tual Property Rights or any other material properties or
assets, or (iii) except in the ordinary course of business con-
sistent with past practice or pursuant to existing contracts or
commitments, license any of the Company Intellectual Property
Rights;
(e) make or agree to make any new capital expendi-
tures individually in excess of $250,000;
(f) make any material tax election (unless required
by law) or settle or compromise any material income tax lia-
bility;
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(g) pay, discharge or satisfy any claims, liabili-
ties 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 agree-
ment to which the Company or any of its subsidiaries is a
party;
(h) commence a lawsuit other than (i) for the rou-
tine 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, pro-
vided 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 vio-
lation 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,
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arrangement, or agreement, providing for discretionary incen-
tive compensation or bonus to any officer, director, employee
or independent contractor of the Company or any of its subsid-
iaries;
(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 num-
ber 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.
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 appli-
cable 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
-31-<PAGE>
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 finan-
cial 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 here-
under.
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, ini-
tiate 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 Pro-
posal; 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 consider-
ing 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 Com-
pany 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 Pro-
posal" means any offer or proposal for, or any written indica-
tion of interest in, a merger or other business combination
involving the Company or any of its subsidiaries or the acqui-
sition of any significant equity interest in, or a significant
portion of the assets of, the Company or any of its subsidiar-
ies, other than the transactions contemplated by this Agree-
ment.
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SECTION 5.5. State Takeover Statutes; Rights Agree-
ment. (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 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 contem-
plated 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. Par-
ent will take all action necessary to cause Merger Subsidiary
to perform its obligations under this Agreement and to consum-
mate 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 oth-
erwise 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 incorpora-
tion 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
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the Company's officers' and directors' liability insurance pol-
icy 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 compara-
ble 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 connec-
tion 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 Com-
pany and its subsidiaries retained by Parent with employee ben-
efits 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.
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 Fed-
eral Trade Commission or the Department of Justice or any other
-34-<PAGE>
Governmental Entity in respect of such filings or such transac-
tions, 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 Gov-
ernmental 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 meet-
ing with any Governmental Entity in respect of any such fil-
ings, 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 par-
ticipate.
(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 fed-
eral, 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 con-
nection therewith, if any administrative or judicial action or
proceeding is instituted (or threatened to be instituted) chal-
lenging any transaction contemplated by this Agreement as vio-
lative of any Antitrust Law, and, if by mutual agreement, Par-
ent 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 execu-
tion 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 par-
ties 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
-35-<PAGE>
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 neces-
sary actions or nonactions, waivers, consents and approvals
from Governmental Entities and the making of all other neces-
sary registrations and filings (including other filings with
Governmental Entities, if any), (ii) the obtaining of all nec-
essary consents, approvals or waivers from third parties, (iii)
the preparation of the Company Disclosure Documents and the
Offer Documents, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this
Agreement.
(d) Notwithstanding anything to the contrary in Sec-
tion 7.1(a), (b) or (c), (i) neither Parent nor any of its sub-
sidiaries 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 Effec-
tive Time, (iii) neither the Company nor its subsidiaries shall
be required to divest any of their respective businesses, prod-
uct 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 inac-
curate 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.
-36-<PAGE>
(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 contem-
plated 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 Agree-
ment would have been required to have been disclosed pur-
suant 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 consul-
tation, except as may be required by applicable law, court pro-
cess 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 transac-
tions contemplated by this Agreement will be in the form previ-
ously agreed to by the parties.
SECTION 7.3. Confidentiality. Parent and its sub-
sidiaries 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 (defined in the Con-
fidentiality Agreement) (including any stockholder information
provided pursuant to this Agreement) in confidence in accor-
dance with the terms of the Confidentiality Agreement.
-37-<PAGE>
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each
Party. The obligations of the Company, Parent and Merger Sub-
sidiary to consummate the Merger are subject to the satisfac-
tion 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 pro-
hibit the consummation of the Merger;
(iv) Parent or Merger Subsidiary shall have purchased
Shares in an amount equal to at least the Minimum Condi-
tion 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 includ-
ing 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 Agree-
ment 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
-38-<PAGE>
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 judg-
ment, 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 (pro-
vided that Parent shall not be entitled to terminate this
Agreement pursuant to this sub-clause (x) as a result of
its breach of this Agreement), (y) if Parent or Merger
Subsidiary shall not have purchased any Shares pursuant to
the Offer prior to February 21, 1997 or (z) if the Offer
shall have been terminated without Parent or Merger Sub-
sidiary having purchased any Shares pursuant to the Offer;
(e) by Parent, upon the occurrence of any Trig-
ger Event described in clauses (i) through (iii) of Sec-
tion 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 Agree-
ment 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
-39-<PAGE>
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 fol-
lowing 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
(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 pro-
vision of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in
-40-<PAGE>
writing and signed, in the case of an amendment, by the Com-
pany, Parent and Merger Subsidiary or in the case of a waiver,
by the party against whom the waiver is to be effective; pro-
vided that after the adoption of this Agreement by the stock-
holders 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 Sur-
viving 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 Com-
pany.
(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 reme-
dies 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 Agree-
ment shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in imme-
diately 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;
(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
-41-<PAGE>
(iii) the Board of Directors of the Company (or any
special committee thereof) shall have withdrawn or materi-
ally 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 (includ-
ing 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 provi-
sions 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 effective-
ness of the Merger shall be governed by, and construed in
accordance with, Delaware Law.
SECTION 10.7. Counterparts; Effectiveness; Interpre-
tation. This Agreement may be signed in any number of counter-
parts, 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 Sec-
tion 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".
-42-<PAGE>
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
-43-<PAGE>
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 condi-
tions 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 own-
ership or operation (or that of their respective subsid-
iaries or affiliates) of all or any material portion of
the business or assets of the Company and its subsidiar-
ies, taken as a whole, or of Parent and its subsidiaries,
taken as a whole, or to compel Parent or any of its sub-
sidiaries 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 Par-
ent 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 exer-
cise 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 affili-
ates on all matters properly presented to the Company's
stockholders, (iv) seeking to require divestiture by Par-
ent 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 Com-
pany 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 proba-
bility of a determination material and adverse to Parent<PAGE>
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 applica-
ble to this Agreement, the Offer or the Merger, by any
Governmental Entity or arbitrator other than the applica-
tion 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 threat-
ened (or any development shall have occurred or been
threatened involving a prospective change) in the busi-
ness, 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
(d) there shall have occurred (i) any general sus-
pension of trading in, or limitation on prices for, secu-
rities 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 certifi-
cate of merger or approval by the stockholders of the Com-
pany 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 subsidiar-
ies (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
-2-<PAGE>
file, occur or obtain in the aggregate, could not reason-
ably 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 representa-
tions 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 materi-
ally 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 omis-
sion 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 Condi-
tion) 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 of
any such right with respect to particular facts and circum-
stances 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
-3-<PAGE>
time. Any determination by Parent concerning the events
described in this Section will be final and binding upon all
parties.
-4-
Exhibit 2(ii)
[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."<PAGE>
"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."
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 [Registered Mark] HSM, JETserve [Trademark], InocuLAN
[Trademark], FAXserve [Trademark], and its flagship product
line, the ARCserve [Registered Mark] 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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