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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
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Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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PLATINUM technology International, inc.
(Name of Subject Company)
PLATINUM technology International, inc.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $.001 Per Share
(Including the Associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
72764T101
(CUSIP Number of Class of Securities)
ANDREW J. FILIPOWSKI
President and Chief Executive Officer
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
(630) 620-5000
(Name, Address and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
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With a copy to:
ARTHUR W. HAHN
MATTHEW S. BROWN
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661-3693
(312) 902-5200
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Item 1. Security and Subject Company.
The name of the subject company is PLATINUM technology International, inc.,
a Delaware corporation (the "Company"), and the address of the principal
executive offices of the Company is 1815 South Meyers Road, Oakbrook Terrace,
Illinois 60181-5241. The title of the class of equity securities to which this
statement relates is the Company's common stock, par value $.001 per share
(the "Common Stock"). Unless the context otherwise requires, as used herein,
the term "Shares" shall mean shares of the Common Stock and the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of December 21, 1995 (the "Rights Agreement"), between the
Company and Harris Trust and Savings Bank, as Rights Agent.
Item 2. Tender Offer of the Bidder.
This statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1 dated April 2, 1999 (as amended or
supplemented, the "Schedule 14D-1"), filed by HardMetal, Inc., a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of Computer
Associates International, Inc., a Delaware corporation ("Computer
Associates"), with the Securities and Exchange Commission (the "Commission").
The Schedule 14D-1 relates to an offer by the Purchaser to purchase all the
issued and outstanding Shares at a price of $29.25 per Share, net to the
seller in cash, without interest (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
April 2, 1999, as amended or supplemented, and the related Letter of
Transmittal (which together constitute the "Offer Documents"). The Offer
Documents indicate that the principal executive offices of the Purchaser and
Computer Associates are located at One Computer Associates Plaza, Islandia,
New York 11788-7000.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of March 29, 1999 (the "Merger Agreement"), among the Company, Computer
Associates and the Purchaser. A copy of the Merger Agreement is referenced as
Exhibit 1 to this Solicitation/Recommendation Statement on Schedule 14D-9
(this "Schedule 14D-9") and is incorporated herein by reference in its
entirety. Pursuant to the Merger Agreement, following the consummation of the
Offer, upon the satisfaction or waiver of certain conditions, the Purchaser
will be merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation (the "Surviving Corporation"). In the
Merger, each Share outstanding immediately prior to the effective time of the
Merger (other than Shares held in the treasury of the Company, Shares owned by
Computer Associates, the Purchaser or any other subsidiary of Computer
Associates, or Shares held by stockholders who properly exercise their
dissenters' rights under the Delaware General Corporation Law ("Delaware
Law")) will, by virtue of the Merger and without any action by the holder
thereof, be converted into the right to receive $29.25 per Share (or any
higher price paid per Share in the Offer), net to the seller in cash, without
interest thereon (the "Merger Consideration"). Each outstanding share of Class
II Series B Convertible Preferred Stock ("Series B Stock") of the Company will
also be converted into the right to receive the Merger Consideration in the
Merger. The Merger Agreement is summarized in Item 3 of this Schedule 14D-9.
Item 3. Identity and Background.
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above. Unless the context otherwise
requires, references to the Company in this Schedule 14D-9 are to the
"Company" and its direct and indirect subsidiaries, viewed as a single entity.
(b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of its executive officers, directors
or affiliates are described in Annex A attached to this Schedule 14D-9 and
incorporated herein by reference.
Except as described or incorporated by reference herein, to the knowledge
of the Company, as of the date hereof, there exists no material contract,
agreement, arrangement or understanding and no actual or potential conflict of
interest between the Company or its affiliates and (i) the Company's executive
officers, directors or affiliates or (ii) Computer Associates or its executive
officers, directors or affiliates.
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Merger Agreement. The following summary of the Merger Agreement is
qualified in its entirety by reference to the Merger Agreement, a copy of
which is filed as Exhibit 1 to this Schedule 14D-9 and is incorporated herein
by reference. The Merger Agreement should be read in its entirety for a more
complete description of the matters summarized below.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment or pay for Shares is subject
to the satisfaction of the condition that there shall be validly tendered in
accordance with the terms of the Offer prior to the expiration date of the
Offer and not withdrawn a number of Shares which, together with the Shares
then owned by Computer Associates and the Purchaser, represents at least a
majority of the total number of outstanding Shares, assuming the exercise of
all outstanding options, rights and convertible securities (if any) and the
issuance of all Shares that the Company is obligated to issue (such total
number of outstanding Shares being hereinafter referred to as the "Fully
Diluted Shares") (the "Minimum Condition") and certain other conditions that
are described below. Pursuant to the Merger Agreement, Computer Associates and
the Purchaser expressly reserve the right to waive the conditions to the Offer
and to make any change in the terms or conditions of the Offer; provided that,
without the written consent of the Company, no change may be made which
changes the form of consideration to be paid, decreases the price per Share or
the number of Shares being sought in the Offer, imposes conditions to the
Offer in addition to those set forth in the Merger Agreement, changes or
waives the Minimum Condition, extends the Offer (except as set forth in the
Merger Agreement), or makes any other change to any condition to the Offer set
forth in the Merger Agreement which is adverse to the holders of Shares.
In addition, subject to Computer Associates' or the Company's ability to
terminate the Merger Agreement under certain circumstances, if the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), shall not have expired or been terminated as of
the date the Offer would otherwise have expired, the Purchaser has agreed,
pursuant to the Merger Agreement, to extend the Offer from time to time until
the date that such waiting period has expired or been terminated.
Conditions of the Offer. Notwithstanding any other provision of the Offer,
Computer Associates and Purchaser shall not be required to accept for payment
or (subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares after the termination or withdrawal of the Offer))
to pay for any Shares, if by the expiration of the Offer (as it may be
extended in accordance with the requirements of the Merger Agreement), the
Minimum Condition shall not have been satisfied or at any time on or after
March 29, 1999 and prior to the acceptance for payment of Shares pursuant to
the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or proceeding by any
Governmental Entity, (i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
acquisition by Purchaser or any of its affiliates of Shares pursuant to the
Stockholder Option Agreement, the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Computer Associates
or Purchaser or the consummation by Computer Associates or Purchaser of the
Merger, seeking to obtain material damages or otherwise directly or
indirectly relating to the transactions contemplated by the Stockholder
Option Agreement, the Merger Agreement, the Offer or the Merger, (ii)
seeking to restrain or prohibit Computer Associates' or Merger Subsidiary's
ownership or operation (or that of their respective subsidiaries or
affiliates) of all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Computer Associates
and its subsidiaries, taken as a whole, or to compel Computer Associates or
any of its subsidiaries or affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Computer Associates and its
subsidiaries, taken as a whole, (iii) seeking to impose material
limitations on the ability of Computer Associates or any of its
subsidiaries or affiliates effectively to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
acquired or owned by Computer Associates or any of its subsidiaries or
affiliates on all matters properly presented to the Company's stockholders
or (iv) seeking to require divestiture by Computer Associates or any of its
subsidiaries or affiliates of any Shares; or
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(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to the Stockholder Option Agreement, the Merger
Agreement, the Offer or the Merger, by any Governmental Entity or
arbitrator (other than (1) any such matters actually required pursuant to
Section 7.1(e)(iv) or (vi) of the Merger Agreement or (2) the application
of the waiting period provisions of the HSR Act to the Stockholder Option
Agreement, the Merger Agreement, the Offer or the Merger) that, in the
judgment of Computer Associates, is substantially likely, directly or
indirectly, to result in any of the consequences referred to in clauses (i)
through (iv) of paragraph (a) above, subject as aforesaid; or
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, (ii) 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
(d) any Consent (other than the filing of a certificate of merger or
approval by the stockholders of the Company of the Merger (if required by
Delaware Law)) required to be filed, occurred or been obtained by the
Company or any of its subsidiaries in connection with the execution and
delivery of the Merger Agreement, the Offer and the consummation of the
transactions contemplated by shall not have been filed, occurred or been
obtained (other than any such Consents the failure to file, occur or obtain
in the aggregate, could not reasonably be expected to (i) have a Material
Adverse Effect or (ii) prevent or materially delay the consummation of the
Offer or the Merger); or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants, obligations or agreements under the Merger
Agreement, or any of the representations and warranties of the Company set
forth in the Merger Agreement that is qualified as to materiality shall not
be true when made, or any of the representations and warranties set forth
in the Merger Agreement that is not so qualified shall not be true in any
material respect when made; provided that this condition shall not be
deemed to exist unless either (i) such breaches or failures to perform any
covenant, obligation or agreements, and any breach of representation or
warranty without regard to any materiality qualifier or threshold,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or (ii) the breach is of the representations and
warranties in Section 4.1(c), (l), (n), (p)(i)(A) and (D) and (u) of the
Merger Agreement without regard to any materiality qualifier or threshold,
and failure to perform or breach of any obligation, individually or in the
aggregate, could reasonably be expected to result in a loss or damage of
$22,500,000 or more; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) the Board of Directors of the Company (or any special committee
thereof) shall have withdrawn or materially modified in a manner adverse to
Computer Associates or Purchaser its approval or recommendation of the
Offer, the Merger or the Merger Agreement or its approval of the entry by
Computer Associates and Purchaser into the Stockholder Option Agreement; or
(h) 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; or
(i) the applicable waiting period under the HSR Act shall not have
expired or been terminated;
which, in the judgment of Computer Associates in any such case, and regardless
of the circumstances (including any action or omission by Computer Associates
or Merger Subsidiary) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
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The term "Material Adverse Effect" means a material adverse effect on the
financial condition, business, assets 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 subsidiaries' businesses solely as a result
of the announcement of the execution of the Merger Agreement and the
transactions proposed to be consummated by the Merger Agreement shall be
excluded from consideration for purposes of the effect of an action or
inaction on the Company and its subsidiaries taken as a whole.
The foregoing conditions are for the sole benefit of Computer Associates
and the Purchaser and may be asserted by Computer Associates in its discretion
regardless of the circumstances (including any action or omission by Computer
Associates or the Purchaser) giving rise to any such condition or (other than
the Minimum Condition) may be waived by Computer Associates and the Purchaser
in their reasonable discretion in whole at any time or in part from time to
time. The failure by Computer Associates or the Purchaser at any time to
exercise its rights under any of the foregoing conditions shall not be deemed
a waiver of any such right; the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect
to any other facts and circumstances, and each such right shall be deemed an
ongoing right which may be asserted at any time or from time to time. Any
determination by Computer Associates concerning the events described in the
foregoing conditions will be final and binding upon all parties to the Merger
Agreement.
Consideration to be Paid in the Merger. The Merger Agreement provides that,
following the purchase of Shares pursuant to the Offer and upon the terms (but
subject to the conditions) set forth in the Merger Agreement, the Purchaser
will be merged with and into the Company, with the Company continuing as the
Surviving Corporation. In the Merger, each outstanding Share not held by
Computer Associates, the Purchaser or any subsidiary of either of them or by
the Company as treasury stock (and other than Shares as to which appraisal
rights have been exercised pursuant to Section 262 of the Delaware Law) will
be converted into the right to receive $29.25 in cash or any higher price paid
for each Share in the Offer, without interest. Each outstanding share of
Series B Stock will also be converted into the right to receive $29.25 per
share or any higher price per Share paid in the Offer, without interest. Each
share of common stock of the Purchaser issued and outstanding immediately
prior to the time of the Merger will be converted into and become one share of
common stock of the Surviving Corporation, which will thereupon become a
wholly owned subsidiary of Computer Associates. The Merger Agreement provides
that (i) the closing of the Merger shall take place, after consummation of the
Offer, as soon as practicable after the date on which all of the conditions to
the Merger set forth in the Merger Agreement shall be fulfilled or waived, and
(ii) as soon as practicable following the closing of the Merger, the Company
and the Purchaser will file a certificate of merger with the Secretary of
State of the State of Delaware and make all other filings or recordings
required by Delaware Law in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is duly filed with
the Secretary of State of the State of Delaware, or, with the consent of the
Independent Directors referred to below, at such later time as is specified in
the certificate of merger (the "Effective Time").
Board Representation. The Merger Agreement provides that, effective upon
acceptance for payment by the Purchaser of such number of Shares which
satisfies the Minimum Condition, Computer Associates shall be entitled to
designate the number of directors, rounded up to the nearest whole number, on
the Company's Board of Directors that equals the product of (i) the total
number of directors on the Company's Board of Directors and (ii) the
percentage that the number of Shares owned by Computer Associates or the
Purchaser (including Shares accepted for payment) bears to the total number of
Shares outstanding. The Company has agreed that it will take all action
necessary to cause Computer Associates' designees to be elected or appointed
to the Company's Board of Directors, including increasing the number of
directors or seeking and accepting resignations of incumbent directors or
both; provided that, prior to the Effective Time, the Company's Board of
Directors shall always have two members who are neither designees nor
affiliates of Computer Associates or the Purchaser nor employees of the
Company (each an "Independent Director"). No action proposed to be taken by
the Company to amend or terminate the Merger Agreement or waive any action by
Computer Associates or the Purchaser shall be effective without the approval
of the Independent Directors.
The Merger Agreement provides that, from and after the Effective Time, the
directors and officers of the Purchaser at the Effective Time will be the
initial directors and officers of the Surviving Corporation, each to
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hold office until his or her respective successors are duly elected and
qualified. Pursuant to the Merger Agreement, the Certificate of Incorporation
of the Surviving Corporation will be in the form attached to the Merger
Agreement and the By-Laws of the Purchaser, as in effect immediately prior to
the Effective Time, will be the By-Laws of the Surviving Corporation.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law, the Company will call a meeting of its stockholders to be held
as soon as reasonably practicable for the purpose of voting on the approval
and adoption of the Merger Agreement and the Merger. Under the Merger
Agreement, at any such meeting, Computer Associates has agreed to make a
quorum and to vote all Shares acquired in the Offer or otherwise beneficially
owned by it in favor of adoption of the Merger Agreement.
If the Minimum Condition is satisfied pursuant to the Offer, the Purchaser
will hold at least a majority of the outstanding Shares on a Fully Diluted
Basis and will be able to assure that the requisite number of affirmative
votes in favor of approval and adoption of the Merger Agreement will be
received, even if no other Stockholder votes in favor thereof. If the
Purchaser obtains at least 90% of the outstanding Shares, it may effect the
Merger without any notice to and without the authorization of the stockholders
of the Company pursuant to the "short-form" merger provisions of Delaware Law.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties of the Company with respect to corporate
existence and power, corporate authorization, governmental authorization, non-
contravention, capitalization, subsidiaries, Commission filings, financial
statements, absence of certain changes, undisclosed liabilities, litigation,
taxes, employee benefits, brokers, compliance with laws, contracts and debt
instruments, intellectual property and technology and other matters.
Computer Associates and the Purchaser have also made certain
representations and warranties with respect to corporate existence and power,
corporate authorization, governmental authorization, non-contravention,
brokers, availability of funds and other matters.
Conduct of Business Pending the Merger. The Company has agreed that, during
the period from the date of the Merger Agreement to the Effective Time, the
Company will, and will cause its subsidiaries to, carry on their respective
businesses in the ordinary course in substantially the same manner as
theretofore conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. The Company has
further agreed that, during the period from the date of the Merger Agreement
to the Effective Time, the Company will not, and will not permit any of its
subsidiaries to, without the prior written approval of Computer Associates:
(i)(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned subsidiary of the
Company to its parent, (b) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or (c)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities
(other than in connection with the exercise of outstanding company stock
options); (ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance
of Shares upon the exercise or conversion of company stock options and other
convertible securities outstanding on the date of the Merger Agreement in
accordance with their terms on such date); (iii) amend its certificate of
incorporation, by-laws or other comparable charter or organizational documents
(other than immaterial changes to implement an internal restructuring); (iv)
(a) mortgage or otherwise encumber or, subject to any lien any of the
Company's intellectual property or any other material properties or assets,
(b) except in the ordinary course of business consistent with past practice
and pursuant to existing contracts or commitments, sell, lease, transfer or
otherwise dispose of any of the Company's intellectual property
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or any other material properties or assets or acquire or agree to acquire any
business or (c) except in the ordinary course of business consistent with past
practice or pursuant to existing contracts or commitments, license any of the
Company's intellectual property; (v) make or agree to make any new capital
expenditures individually in excess of $500,000; (vi) make any material tax
election (unless required by law) or settle or compromise any material income
tax liability; (vii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice and in accordance with their
terms, of (i) liabilities reflected or reserved against in, or contemplated
by, the most recent consolidated financial statements (or the notes thereto)
of the Company included in the documents filed with the Commission or (ii)
liabilities incurred in the ordinary course of business consistent with past
practice, or, subject to the fiduciary duties of the Board of Directors of the
Company as advised in writing by counsel to the Company, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or
similar agreement to which the Company or any of its subsidiaries is a party;
(viii) commence a lawsuit other than (a) for the routine collection of bills,
(b) to enforce the Merger Agreement or (c) in such cases where the Company in
good faith determines that the failure to commence suit would result in a
material impairment of a valuable aspect of the Company's business, provided
that the Company consults with Computer Associates prior to filing such suit;
(ix) (a) enter into or amend any employment or severance agreement or similar
arrangements, (b) enter into any agreement pursuant to which the Company or
any of it subsidiaries will provide services for a term of more than 30 days
at a fixed or capped price or otherwise pursuant to terms that are not
consistent with agreements entered into by the Company or any of its
subsidiaries in the ordinary course of business, (c) enter into any customer
sale or license agreement with non-standard terms or at discounts from list
prices in excess of 20%, (d) pay commissions to sales employees except on the
basis of executed customer contracts with respect to products actually
delivered to customers, (e) enter into any contracts or series of related
contracts in excess of $250,000, (f) enter into or amend any agreement or
arrangement that provides customers with enhanced rights or refunds of any
nature upon a change of control of the Company or its affiliates, (g) enter
into any customer agreements providing for product replacements, (h) enter
into or amend any contract to provide for "YEAR 2000" remediation services,
(i) make any determination as to amounts payable under any plan, arrangement,
or agreement, providing for discretionary incentive compensation or bonus to
any officer, director, employee or independent contractor of the Company or
any of its subsidiaries or (j) enter into, adopt, or amend any agreement,
arrangement, or benefit plan so as to increase the liability (whether or not
contingent) of the Company or Computer Associates or any of their subsidiaries
in respect of compensation or benefits except as may be required by law; or
The Company has agreed to give Computer Associates and its representatives
access (during normal business hours and upon reasonable notice) to the
offices, properties, books and records, of the Company and its subsidiaries,
and to furnish Computer Associates and its representatives with such other
information concerning its business, properties and personnel as such persons
may reasonably request.
Pursuant to the Merger Agreement, each of Computer Associates and the
Company has agreed to (i) promptly make or cause to be made the filings
required of such party or any of its subsidiaries under the HSR Act with
respect to the transactions contemplated by the Merger Agreement, (ii) comply
at the earliest practicable date with any request under the HSR Act for
additional information, documents, or other material received by such party or
any of its subsidiaries from any Governmental Entity in respect of such
filings or such transactions, and (iii) cooperate with the other party in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental Entity
under any Antitrust Laws (as defined below) with respect to any such filing or
any such transaction. Each of Computer Associates and the Company has agreed,
pursuant to the Merger Agreement, to promptly inform the other of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. The Merger Agreement prohibits both Computer Associates and the
Company from participating in any meeting with any Governmental Entity in
respect of any such filings, investigation, or other inquiry without giving
the other notice of the meeting and, to the extent permitted by such
Governmental Entity, the opportunity to attend and participate.
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Each of Computer Associates and the Company has agreed, pursuant to the
Merger Agreement, to use all reasonable efforts to resolve such objections, if
any, as may be asserted by any Governmental Entity with respect to the
transactions contemplated by the Merger Agreement under the HSR Act, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or restraint
of trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by the Merger Agreement
as violative of any Antitrust Law, and, if by mutual agreement, Computer
Associates and the Company decide that litigation is in their best interests,
each of Computer Associates and the Company have agreed, pursuant to the Merger
Agreement, to cooperate and use all reasonable efforts vigorously to contest
and resist any such action or proceeding and to have vacated, lifted, reversed,
or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents, or restricts consummation of the Merger or any such other
transactions. Pursuant to the Merger Agreement, each of Computer Associates and
the Company have agreed to use all reasonable efforts to take such action as
may be required to cause the expiration of the notice periods under the HSR Act
or other Antitrust Laws with respect to such transactions as promptly as
possible after the execution of the Merger Agreement.
Subject to the fiduciary duties of the Board of Directors of the Company as
advised in writing by counsel to the Company, each of Computer Associates and
the Company has agreed, pursuant to the Merger Agreement, to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger, and the other
transactions contemplated by the Merger Agreement.
Notwithstanding the foregoing but subject to the following paragraph, the
Merger Agreement provides that (i) neither Computer Associates nor any of its
subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, (ii) neither Computer Associates 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 Computer Associates and its subsidiaries taken as a
whole or of Computer Associates combined with the Surviving Corporation after
the Effective Time, (iii) neither the Company nor its subsidiaries shall be
required to divest any of their respective businesses, product lines or assets,
or to take or agree to take any other action or agree to any limitation that
could reasonably be expected to have a Material Adverse Effect, (iv) no party
shall be required to agree to the imposition of, or to comply with, any
condition, obligation or restriction on Computer Associates or any of its
subsidiaries or on the Surviving Corporation or any of its subsidiaries of the
type described in paragraph (a) or (b) under "--Conditions of the Offer" above
and (v) neither Computer Associates nor the Purchaser shall be required to
waive any of the conditions to the Offer or any of the conditions to the
Merger.
The Merger Agreement provides that Computer Associates, Merger Subsidiary
and the Company agrees:
(i) For a period of 90 days following the last to occur of (A)
substantial compliance by Computer Associates and Merger Subsidiary with
any request under the HSR Act for additional information, documents, or
other material received by such party or any of its subsidiaries from the
Federal Trade Commission or the Department of Justice ("FTC/DOJ") and (B)
substantial compliance by the Company with any request under the HSR Act
for additional information, documents, or other material received by such
party or any of its subsidiaries from FTC/DOJ, Computer Associates and
Merger Subsidiary shall attempt to resolve any objections asserted by
FTC/DOJ generally as described above.
(ii) If after the 90 day period set forth above, objections continue to
be asserted by FTC/DOJ which would threaten to prevent completion of the
Merger, (A) first, Computer Associates and the Company shall consult and
mutually determine whether to litigate over the continuing objections, or
(B) if within five days Computer Associates and the Company do not mutually
agree to litigate, the Company shall have the right for a period of 30 days
to meet separately with FTC/DOJ to develop a plan to resolve the continuing
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objections, such resolution to be on a basis reasonably calculated to meet
the objections of the FTC/DOJ. During this period, the Company will
continue to keep Computer Associates and Merger Subsidiary informed of its
discussions and consult with Computer Associates and Merger Subsidiary on
possible resolutions of the continuing objections.
(iii) After the Company and FTC/DOJ have agreed upon a plan, Computer
Associates shall have a period of 90 days after such plan has been provided
to Computer Associates in which to effect the plan, or a similar plan to
which FTC/DOJ consents or otherwise indicates its willingness for Computer
Associates to proceed so as to permit the consummation of the Merger.
Computer Associates shall not be obligated to effect on the plan in any
specific manner and shall not be required to refrain from discussing
changes to the plan with either the Company or FTC/DOJ.
(iv) If Computer Associates has not within the 90 day period completed
effecting the plan as contemplated by Section (iii) above, then, Computer
Associates shall choose one of the following:
(A) within 15 days, fully resolve any continuing objection or enter
into a consent decree on reasonable terms setting forth the terms of
the plan developed by the Company and FTC/DOJ under Section (ii) above,
or
(B) (1) escrow an amount equal to the aggregate purchase price for
the number of Shares representing the Minimum Condition, on terms
outlined in the Merger Agreement, and (2) use all reasonable efforts
vigorously to contest and resist any action or proceeding instituted by
FTC/DOJ.
In the event that Computer Associates chooses to contest or resist any
action or proceeding instituted by FTC/DOJ under Section (iv) above, the
Company shall fully cooperate with and support Computer Associates in such
efforts.
(v) Computer Associates may at any time, in lieu of continuing with the
provisions of Section (i) through (iii) above, elect to immediately follow
the provisions of Section (iv)(B) above.
(vi) In the event Computer Associates has elected, pursuant to Section
(iv)(B) above, to contest or resist any action or proceeding instituted by
FTC/DOJ and a final, nonappealable order by a court of competent
jurisdiction has been issued which prevents the completion of the Merger,
then Computer Associates and the Company will take the following steps:
(A) The Company will increase its Board of Directors from seven to
14 and elect seven members nominated by Computer Associates. The new
Board of Directors will work together to take all steps, including
disposition of assets, to remove any FTC/DOJ objections to completing
the Merger.
(B) In the event that, after 90 days, the new Board of Directors is
unable to agree to a plan to resolve the FTC/DOJ objections, then the
Board will delegate the responsibility to (1) develop a plan to resolve
the FTC/DOJ objections to a three person committee of Sanjay Kumar (or
in his absence, a designee of Computer Associates' Board), Andrew J.
Filipowski (or in his absence, a designee of the Company's Board) and a
senior member of Credit Suisse First Boston Corporation ("CSFB") and
(2) execute such plan.
Agreements with Respect to Employee Matters. Computer Associates has agreed
in the Merger Agreement to honor in accordance with their terms all of the
Company's employee benefit plans (including employment agreements) previously
delivered to Computer Associates and all accrued benefits vested thereunder;
provided that nothing in the Merger Agreement shall prevent Computer
Associates from terminating any such benefit plan in accordance with its
terms.
Pursuant to the Merger Agreement, at or immediately prior to the Effective
Time, each outstanding Company Option (defined below) which is vested or which
pursuant to the terms of the relevant Stock Plan (defined below) becomes
vested by virtue of the Offer or the Merger shall be canceled, and each holder
of any such option shall be paid by the Company promptly after the Effective
Time for each such option an amount determined by multiplying (i) the excess,
if any, of $29.25 per Share over the applicable exercise price of such option
by (ii) the number of Shares such holder could have purchased had such holder
exercised such option in
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full immediately prior to the Effective Time. At the Effective Time, each of
the then outstanding unvested Company Options shall by virtue of the Merger,
and without any further action on the part of any holder thereof, be assumed
by Computer Associates and converted into an option to purchase that number of
shares of common stock, par value $.10 per share ("Computer Associates Common
Stock"), of Computer Associates determined by multiplying the number of Shares
subject to such Company Option at the Effective Time by the quotient obtained
by dividing (x) $29.25 by (y) the average closing price of Computer Associates
Common Stock on the New York Stock Exchange Composite Tape for the 30
consecutive trading days immediately prior to the Effective Time (such
quotient, the "Conversion Number"), at an exercise price per share of Computer
Associates Common Stock equal to the quotient obtained by dividing (x) the
exercise price per Share of such Company Option immediately prior to the
Effective Time by (y) the Conversion Number. If the foregoing calculation
results in an assumed Company Option being exercisable for a fraction of a
share of Computer Associates Common Stock, then the number of shares of
Computer Associates Common Stock subject to such option shall be rounded down
to the nearest whole number of shares. The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder (the "Code"), if applicable, and all other terms and conditions of
unvested Company Options being assumed by Computer Associates will, to the
extent permitted by law and otherwise reasonably practicable, be unchanged.
"Company Option" means any option granted, whether or not exercisable, and not
exercised or expired, to a current or former employee, director or independent
contractor of the Company or any of its subsidiaries or any predecessor
thereof to purchase Shares pursuant to any stock option, stock bonus, stock
award, or stock purchase plan, program, or arrangement of the Company or any
of its subsidiaries or any predecessor thereof (collectively, the "Stock
Plans") or any other contract or agreement entered into by the Company or any
of its subsidiaries.
Pursuant to the Merger Agreement, Computer Associates has agreed to take
all corporate action necessary to reserve for issuance a sufficient number of
shares of Computer Associates Common Stock for delivery pursuant to the terms
described in the immediately preceding paragraph. Pursuant to the Merger
Agreement, Computer Associates agreed to cause the shares of Computer
Associates Common Stock issuable upon exercise of the assumed Company Options
to be registered, or to be issued pursuant to a then effective registration
statement, no later than 45 days after the Effective Time on Form S-8
promulgated by the Commission, and to use its best efforts to maintain the
effectiveness of such registration statement or registration statements for so
long as such assumed Company Options remain outstanding.
Other Offers. Pursuant to the Merger Agreement, the Company has agreed that
the Company and its subsidiaries will not, and will not authorize or permit
the officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal or (ii) subject to the
fiduciary duties of the Board of Directors under applicable law, as advised in
writing by counsel to the Company, and in response to an unsolicited request
therefore by a person or entity who a majority of the Company's Board of
Directors believes intends to submit a Superior Acquisition Proposal, engage
in negotiations with, or disclose any nonpublic information relating to the
Company or any of its subsidiaries or afford access to the properties, books
or records of the Company or any of its subsidiaries to, any person that has
advised the Company or otherwise publicized the fact that it may be
considering making, or that has made, an Acquisition Proposal; provided,
nothing in the Merger Agreement prohibits the Company's Board of Directors
from taking and disclosing to the Company's stockholders a position with
respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act. The Company has agreed to promptly notify Computer
Associates after receipt of any Acquisition Proposal or any notice that any
person is considering making an Acquisition Proposal or any request for
nonpublic information relating to the Company or any of its subsidiaries or
for access to the properties, books or records of the Company or any of its
subsidiaries by any person that has advised the Company or otherwise
publicized the fact that it may be considering making, or that has made, an
Acquisition Proposal and will keep Computer Associates informed of the status
and details of any such Acquisition Proposal, indication or request.
"Acquisition Proposal" means any offer or proposal for, or any written
indication of interest in, a merger or other business combination involving
the Company or any of its subsidiaries or the acquisition of any significant
equity interest in, or a
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significant portion of the assets of, the Company or any of its subsidiaries,
other than the transactions contemplated by the Merger Agreement; and
"Superior Acquisition Proposal" means an Acquisition Proposal which a majority
of the disinterested directors determines in its good faith judgment (based on
advice of the Company's independent financial advisor) to be more favorable to
the Company's stockholders than the Offer or the Merger, and for which
financing, to the extent required, is then committed.
Rights Agreement. In connection with the execution of the Merger Agreement,
the Company amended the Rights Agreement to make it and the Rights
inapplicable to the Offer and the Merger. The Merger Agreement provides that,
except with respect to amending the Rights Agreement to make it and the Rights
inapplicable to the Offer and the Merger, the Company shall not redeem the
Rights or amend or terminate the Rights Agreement prior to the Effective Time
unless required to do so by a court of competent jurisdiction. See "Item 8.
Additional Information to be Furnished--Rights Agreement Amendment."
Agreement with Respect to Director and Officer Indemnification and
Insurance. Pursuant to the Merger Agreement, Computer Associates has agreed,
subject to any limitation imposed from time to time under applicable law,
that, for a period of six years after the Effective Time, it will indemnify
and hold harmless the present and former officers, directors, employees and
agents of the Company in respect of acts or omissions occurring on or prior to
the Effective Time to the extent provided under the Company's certificate of
incorporation and by-laws in effect on the date of the Merger Agreement.
Computer Associates has further agreed that, for two years after the Effective
Time, it will cause the Surviving Corporation to provide officers' and
directors' liability insurance in respect of acts or omissions occurring on or
prior to the Effective Time covering each such person currently covered by the
Company's officers' and directors' liability insurance policy on terms
substantially similar to those of such policy in effect on the date of the
Merger Agreement, provided that in satisfying such obligation, Computer
Associates is not obligated to cause the Surviving Corporation to pay premiums
in excess of 105% of the amount per annum the Company paid in its last full
fiscal year, and if the Surviving Corporation is unable to obtain such
insurance, it shall obtain as much comparable insurance as possible for an
annual premium equal to such maximum amount. Computer Associates has also
agreed that, in the event any such indemnified person is or becomes involved
in any capacity in any action, proceeding or investigation in connection with
any matter relating to the Merger, the Offer or the Merger Agreement occurring
on or prior to the Effective Time, it will pay as incurred such indemnified
person's reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
Interim Financing. Pursuant to the Merger Agreement, in the event that at
any time the Company is subject to a material lack of cash liquidity and as a
result the Board of Directors of the Company declares a cash emergency, upon
notice thereof by the Company to Computer Associates, Computer Associates
shall, if requested by the Company, work with the Company to help the Company
secure necessary financing. Computer Associates shall not be required to loan,
guarantee or provide other economic support to the Company or any other
person. If financing is not obtained and the cash emergency continues
notwithstanding the efforts made by Company and Computer Associates as
described above, Computer Associates shall purchase receivables of the Company
upon such terms as the Company and Computer Associates shall mutually agree.
Other Agreements. Computer Associates has agreed that it will take all
action necessary to cause the Purchaser to perform its obligations under the
Merger Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in the Merger Agreement. Computer Associates also agreed,
pursuant to the Merger Agreement, to hold in confidence all confidential
information concerning the Company and its subsidiaries in accordance with the
terms of the Confidentiality Agreement, dated March 24, 1999, between Computer
Associates and the Company, a copy of which is filed as an exhibit to this
Schedule 14D-9 and is incorporated herein by reference.
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of each party to consummate the Merger are subject to the
satisfaction or waiver, where permissible, at or before the Effective Time of
the following conditions: (i) Computer Associates or the Purchaser shall have
purchased Shares in an amount equal to at least the Minimum Condition pursuant
to the Offer, (ii) the adoption and approval of the
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Merger Agreement by the affirmative vote of the stockholders by requisite vote
in accordance with Delaware Law, if such vote is required by Delaware Law,
(iii) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger,
(iv) any applicable waiting period under the HSR Act relating to the Merger
shall have expired, and (v) other than filing the certificate of merger in
accordance with Delaware Law, all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with or
exemptions by (collectively, "Consents") any Federal, state or local
government or any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign (a "Governmental
Entity") required to consummate the Merger shall have been filed, occurred or
been obtained (other than any such Consents the failure to occur, obtain or
file, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time (notwithstanding any approval of the Merger Agreement by
the stockholders) (i) by mutual written consent of the Company and Computer
Associates, (ii) by the Company, at any time after the 60th day following the
later of (i) the date the HSR Act waiting period expires and (ii) the first
date the offer conditions cease to exist, (iii) by either the Company or
Computer Associates, if there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Computer Associates or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable, (iv) by the Company if Computer
Associates shall have failed to commence the Offer within five business days
following the date of the Merger Agreement, (v) by either the Company or
Computer Associates if the Offer shall have been terminated without Computer
Associates or the Purchaser having purchased any Shares pursuant to the Offer,
(vi) by Computer Associates, upon the occurrence of any Trigger Event (as
defined below), or (vii) by the Company, if prior to the purchase of any
Shares under the Offer the Company shall have received any Acquisition
Proposal which the Board of Directors of the Company has determined is more
favorable to the Company's shareholders than the transactions contemplated by
the Merger Agreement.
Fees and Expenses. Each party to the Merger Agreement has agreed to pay its
own fees and expenses and there are no provisions for payment by the Company
of the fees and expenses of Computer Associates or the Purchaser or vice
versa, if the Merger Agreement is terminated, except as stated below. The
Company has agreed to pay Computer Associates a fee of $180,000,000 in
immediately available funds, promptly, but in no event later than one business
day, after the termination of the Merger Agreement as a result of the
occurrence of any of the following events (a "Trigger Event"): (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) any representation or warranty made by the Company
in, or pursuant to, the Merger Agreement that is qualified as to materiality
shall not have been true and correct when made, or any representation or
warranty made by the Company in, or pursuant to, the Merger Agreement that is
not so qualified shall not have been true and correct in all material respects
when made, or the Company shall have failed to observe or perform in any
material respect any of its obligations under the Merger Agreement; provided
that it shall not be a Trigger Event unless either (A) the breaches of the
representations and warranties without regard to any materiality qualifier or
threshold, and failure to perform or breach of any obligation, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect or (B) the breaches of the representations and warranties regarding
capital structure, taxes, brokers fees and expenses, material contracts and
the Rights Agreement without regard to any materiality qualifier or threshold,
and failure to perform or breach of any obligation, individually or in the
aggregate, could reasonably be expected to result in a loss or damage of
$22,500,000 or more; (iii) the Board of Directors of the Company (or any
special committee thereof) shall have withdrawn or materially modified its
approval or recommendation of the Offer, the Merger or the Merger Agreement;
or (iv) prior to the purchase of any Shares under the Offer, the Company shall
have received any Acquisition Proposal which the Board of Directors of the
Company has determined is more favorable to the Company's shareholders than
the transactions contemplated by the Merger Agreement.
The Company has also agreed that, if the Merger Agreement is terminated as
a result of the occurrence of a Trigger Event, it shall assume and pay, or
reimburse Computer Associates for, all fees payable and expenses
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incurred by Computer Associates (including the fees and expenses of its
counsel) in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement, up to a maximum of $10,000,000.
In consideration of Computer Associates entering into the Merger Agreement,
the Company has agreed to pay to Computer Associates a nonrefundable fee (or
provided a direct draw Letter of Credit in the amount) of $20,000,000.
Timing. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by the Purchaser pursuant to the Offer. Although Computer Associates
has agreed to cause the Merger to be consummated on the terms set forth above,
there can be no assurance as to the timing of the Merger.
Appraisal Rights. Stockholders do not have dissenters' rights as a result
of the Offer. However, if the Merger is consummated, stockholders of the
Company at the time of the Merger who do not vote in favor of or consent in
writing to the Merger will have the right under Delaware Law to dissent and
demand appraisal of their Shares in accordance with Section 262 of the
Delaware Law. Under Delaware Law, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of the
Shares could be based upon considerations other than or in addition to the
price paid in the Offer (or the Merger) and the market value of the Shares.
Stockholders should recognize that the value so determined could be higher or
lower than the price per Share paid pursuant to the Offer or the Merger.
Moreover, Computer Associates or the Purchaser may argue in an appraisal
proceeding that, for purposes of such a proceeding, the fair value of the
Shares is less than the price paid in the Offer (or the Merger). THE FOREGOING
SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO
EXERCISE THEIR DISSENTERS' RIGHTS.
Stockholder Option Agreement. The following description of the Stockholder
Option Agreement (the "Stockholder Option Agreement") dated as of March 29,
1999 among Merger Subsidiary and the Stockholders named therein (each a
"Principal Stockholder") is qualified in its entirety by reference to the text
of such agreement, a copy of which is filed as an exhibit to this Schedule
14D-9.
Under the Stockholder Option Agreement, each Principal Stockholder has
granted Merger Subsidiary the option (the "Stock Option") to purchase, subject
to the terms and conditions set forth in the Stockholder Option Agreement, for
a price of $29.25 per Share in cash, or to cause to be tendered pursuant to
the Offer, such Principal Stockholder's Shares. In addition, if the price to
be paid by Merger Subsidiary pursuant to the Offer is increased, the purchase
price payable upon exercise of the Stock Option shall similarly be increased.
The Stockholder Option Agreement also provides that the number and kind of
Shares subject to the Stock Option and the purchase price therefor shall be
appropriately and equitably adjusted in the event of changes in the Company's
capital stock.
Subject to the terms of the Stockholder Option Agreement, Merger Subsidiary
has the right to exercise the Stock Option, in whole or in part, at any time
up to 30 business days after the termination of the Merger Agreement.
Each Principal Stockholder has agreed, in the Stockholder Option Agreement,
upon receipt of instructions from Merger Subsidiary, to deliver to the
Depositary (i) a Letter of Transmittal with respect to such Principal
Stockholder's Shares complying with the terms of the Offer together with
instructions directing the Depositary to make payment for such Shares directly
to the Principal Stockholder (but if such Shares are not accepted for payment
or are withdrawn and are to be returned pursuant to the Offer, to return such
Shares to such Principal Stockholder whereupon they shall continue to be held
by such Principal Stockholder subject to the terms and
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conditions of the Stockholder Option Agreement), (ii) the certificates
evidencing such Principal Stockholder's Shares and (iii) all other documents
or instruments required to be delivered pursuant to the terms of the Offer.
The Principal Stockholders' obligations to sell their Shares (other than by
tendering pursuant to the Offer) under the Stockholder Option Agreement are
subject to the satisfaction of the following conditions: (i) the
representations and warranties of Merger Subsidiary set forth in the
Stockholder Option Agreement shall be true and correct in all material
respects on the date of sale, (ii) the applicable waiting period under the HSR
Act to the exercise of the Stock Option shall have expired or been terminated,
(iii) there shall be no preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining such exercise of the Stock
Option, and (iv) Merger Subsidiary shall have commenced the Offer.
Each Principal Stockholder has further agreed to not, directly or
indirectly, solicit, initiate or encourage (or authorize any person to
solicit) any inquiry, proposal or offer from any person to acquire the
business, property or capital stock of the Company, or any direct or indirect
subsidiary thereof, or any acquisition of a substantial equity interest in, or
a substantial amount of assets of, the Company or any direct or indirect
subsidiary thereof, whether by merger, purchase of assets, tender offer or
other transaction (a "Business Combination Proposal") or, subject to a
Principal Stockholder's fiduciary duty as a director of the Company, if
applicable, as further provided in the Merger Agreement participate in any
discussion or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or
participate in, facilitate or encourage any effort or attempt by any other
person to make or seek any Business Combination Proposal. Each Principal
Stockholder agreed to promptly advise Merger Subsidiary of the terms of any
communication it may receive relating to a Business Combination Proposal.
In entering into the Stockholder Option Agreement, each Principal
Stockholder granted Merger Subsidiary a proxy to vote or consent (i) in favor
of the adoption of the Merger Agreement and the Stockholder Option Agreement
and approval of the Merger and the other transactions contemplated by the
Merger Agreement and Stockholder Option Agreement, (ii) against any proposal
for any recapitalization, merger, sale of assets or other business combination
between the Company and any person or entity (other than the Merger) or any
other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement not being fulfilled, and (iii) in favor of any
other matter relating to consummation of the transactions contemplated by the
Merger Agreement and the Stockholder Option Agreement. Each Principal
Stockholder also agreed to cause such Principal Stockholder's Shares that are
outstanding and owned by it beneficially to be voted in accordance with the
foregoing. The proxy will be automatically revoked upon termination of the
Stock Option's exercise period in accordance with the terms of the Stockholder
Option Agreement other than for Shares which are the subject of a closing
under the Stockholder Option Agreement.
Stockholders holding an aggregate of up to 10,273,680 Shares are parties to
the Stockholder Option Agreement. Assuming that the Shares that are subject to
the Stockholder Option Agreement are validly tendered and not withdrawn
pursuant to a directive from Merger Subsidiary, approximately 60,593,458
additional Shares would be required to be tendered under the Offer in order to
satisfy the Minimum Condition (assuming the number of Fully Diluted Shares set
forth in the Introduction hereto).
The number of Shares set forth above includes 547,994 Shares held by a
limited partnership (Platinum Ventures) of which one of the Principal
Stockholders, Mr. Filipowski, is a limited partner and over which Mr.
Filipowski has voting control (the "LP Shares"). The LP Shares will be
tendered in the Offer if requested by the Merger Subsidiary, and are subject
to the proxy granted in Stockholder Option Agreement, but are not subject to
the Option unless they are withdrawn from the limited partnership. In
addition, Mr. Filipowski has represented to the Merger Subsidiary that the
Options and Shares owned by Mr. Filipowski are (i) deposited in a brokerage
account pursuant to which they have been pledged to secure margin loans upon
standard terms and (ii) are subject to a "put/call collar" arrangement with
the brokerage (or its affiliate) in which such shares are so deposited. The
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Merger Subsidiary's rights under the Stockholder Option Agreement are subject
to such arrangements so long as they remain in effect, it being understood
that, to the extent of rights or other benefits of ownership retained by Mr.
Filipowski in such options (or the Shares issuable upon the exercise thereof)
and the other Shares owned by him, the Stockholder Option Agreement is not
subject to such arrangements.
Merger Subsidiary reserves the right to transfer or assign, in whole or
from time to time in part, to any of its affiliates its rights under the
Stockholder Option Agreement. References in this description of the
Stockholder Option Agreement to Shares include any Shares issuable to any
Principal Stockholder upon the exercise of any options held by such Principal
Stockholder.
Consulting and Non-Compete Agreement. The following description of the
Consulting and Non-Compete Agreement is qualified in its entirety by reference
to the text of such agreement, a copy of which is attached as an exhibit to
the Schedule 14D-9 and is incorporated herein by reference.
The Company and each of Andrew J. Filipowski, Michael P. Cullinane and Paul
L. Humenansky (each, the "Consultant") have entered into Consulting and Non-
Compete Agreements (each, a "Consulting Agreement" and together the
"Consulting Agreements") pursuant to which each Consultant has agreed to
provide consulting services to the Company for a two year period commencing on
the consummation of the Merger (the "Consulting Period"). As compensation for
the Consultant's services, the Company has agreed to pay consulting fees to
Mr. Filipowski at the rate of $1,000,000 per annum and to each of Mr.
Cullinane and Mr. Humenansky at the rate of $500,000 per annum. The Consulting
Agreements only becomes effective upon consummation of the Merger. If the
Merger Agreement terminates, each Consulting Agreement also terminates.
Each of the Consulting Agreements provides that if the Company terminates
the Consulting Period without Cause (as defined below) or the Consultant dies
or becomes Disabled (as such term is defined in the Consulting Agreement), the
Consultant shall be entitled to the continued payment of all consulting fees.
If either (i) the Company terminates the Consulting Period for Cause or (ii)
the Consultant terminates the Consulting Period, the Consultant shall be
entitled to receive consulting fees paid through date of termination. "Cause"
is defined in the Consulting Agreements to mean (i) the Consultant's material
breach of any material term of the Consulting Agreement, subject to the
Consultant's right to cure any breach that is curable within a reasonable
period following notice by the Company, (ii) the Consultant's conviction of a
felony, or (iii) any willful misconduct by the Consultant resulting in
substantial loss to the Company, substantial damage to the Company's
reputation or judicially determined theft or misappropriation from the
Company.
In their respective Consulting Agreements, Mr. Cullinane and Mr. Humenansky
have each agreed, at the request of the Company, that for a period (the
"Transition Employment Period") of up to six months from the Effective Date
but in no event later than September 30, 1999, to remain as an employee to
provide transition services in a capacity substantially similar to each
Consultant's current employment with the Company and with continuation of
compensation on the same basis as current compensation.
The Consulting Agreements also contain non-competition provisions which
prohibit for a period beginning on the Effective Date and ending, in the case
of Mr. Filipowski, on the eighth anniversary of the Effective Date and, in the
case of each of Mr. Cullinane and Mr. Humenansky, on the fifth anniversary of
the later of the Effective Date and the end of the Transition Employment
Period, from participating or engaging in any activities or business
developing, manufacturing, marketing or distributing any products or services
offered by the Company on the date of the Consulting Agreement, or any
products or services offered by the Company in the future and in which the
Consultant actively participated. The Consulting Agreements also prohibit each
Consultant from soliciting, recruiting or hiring any employees of the Company
(or any of its affiliates) or persons who have worked for the Company (or any
of its affiliates) at any time since January 1, 1998 and soliciting or
encouraging any employee of the Company (or any of its affiliates) to leave
the employment of the Company except each Consultant may hire (but not solicit
or recruit) (i) any terminated employee of the Company and (ii) employees of
the Company in connection with a business that is not a Competitive Activity
(as such term is defined in the Consulting Agreement). As compensation for
each Consultant entering into a non-compete
14
<PAGE>
agreement, the Company has agreed to pay to Mr. Filipowski, Mr. Cullinane and
Mr. Humenansky a non-compete payment of $22,000,000, $10,600,000 and
$10,600,000, respectively ("Non-compete Payments"). Each Consultant is
permitted (i) to remain a director at those companies for which Consultant is
a director as of the Effective Date, (i) to engage in venture capital
activities so long as the Consultant does not invest in any company whose
primary business is a Competitive Activity, (iii) to engage in Competitive
Activities after the third anniversary of the Effective Date with the written
permission of the Company (which shall not be unreasonable withheld) so long
as the Consultant's activities would not have an adverse impact (other than an
immaterial impact) on any of the Company's lines of business and (iv) to
engage in activities that Parent confirms are not inconsistent with the
provisions of the Consulting Agreement.
In addition, the Consulting Agreement provides (i) that each Consultant
shall not disclose to any other person or use any confidential information
relating to or used by the Company or any of its affiliates, whether in
written, oral or other form, except in connection with the performance of the
Consultant's duties under the Consulting Agreement and (ii) that if a
Consultant breaches any non-competition provision or confidentiality
provision, at any time, the Consultant shall repay, as liquidated damages, the
full amount of the non-compete payments to the Consultant, provided that, in
the case of a breach of any confidentiality provision, the obligation to repay
arises only if such breach results in material damage or injury to the Company
or any its affiliates.
The Consultants have also agreed to be liable for any loss or damage in
excess of $1,500,000 resulting from the Company's failure to observe the
conduct of business covenants set forth in Section 5.1 of the Merger
Agreement. Mr. Filipowski, Mr. Cullinane and Mr. Humenansky shall be liable
for 49%, 22% and 22%, respectively, of such loss or damage and their aggregate
liability for such loss or damage is the sum of the total payments under their
respective Consulting Agreement and the value of the options to purchase
Shares issued to each Consultant in 1999, in the amount of 675,000 options,
350,000 options and 400,000 options, respectively.
The Consulting Agreements also provide for amendments to the 1999 option
grants to Mr. Filipowski, Mr. Cullinane and Mr. Humenansky, which amendments
(i) provide that the options are not exercisable until the closing of the
Offer, and (ii) provide for forfeiture of certain options based on the length
of time required to resolve all anti-trust issues with FTC/DOJ.
Item 4. The Solicitation or Recommendation.
(a) Recommendation of the Board of Directors.
The Company's Board of Directors has unanimously approved the Merger
Agreement and determined that the Offer and the Merger are fair to and in the
best interests of the stockholders of the Company (other than Computer
Associates and its subsidiaries) and recommends that all stockholders of the
Company accept the Offer and tender all their Shares pursuant to the Offer.
This recommendation is based in part upon an opinion received by the Company
from CSFB that the Offer Price to be received by the holders of Common Stock
in the Offer and in the Merger is fair to such stockholders (other than
Computer Associates and its affiliates) from a financial point of view. The
full text of the fairness opinion received by the Company from CSFB is filed
as an exhibit to this Schedule 14D-9 and as Annex B hereto. Stockholders are
urged to read such opinion in its entirety.
As set forth in the Offer Documents, the Purchaser will purchase Shares
tendered prior to the close of the Offer if the Minimum Condition has been
satisfied by that time and if all other conditions to the Offer have been
satisfied (or waived). Stockholders should be aware that if as a consequence
of their failure to tender the Minimum Condition is not satisfied, or any of
the other conditions to the Offer are not satisfied, the Purchaser is not
obligated to purchase any Shares, and subject to the limitations under the
Merger Agreement, including the obligation to extend the Offer pending
satisfaction of anti-trust issues, can terminate the Offer and the Merger
Agreement and not proceed with the Merger. Under Delaware Law, the approval of
the Board and the affirmative vote of the holders of a majority of the
outstanding Shares are required to approve the Merger. Accordingly, if the
Minimum Condition is satisfied, the Purchaser will have sufficient voting
power to cause the approval of the Merger without the vote of any other
stockholder.
15
<PAGE>
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
April 29, 1999, unless the Purchaser, as required under the Merger Agreement
as described above or otherwise in its discretion, elects to extend the period
of time for which the Offer is open. A copy of the press release issued
jointly by the Company and the Purchaser on March 29, 1999 announcing the
Merger and the Offer is filed as an exhibit to this Schedule 14D-9 and is
incorporated herein by reference in its entirety.
(b) Background of the Offer; Reasons for the Recommendation.
In reaching its conclusions described in paragraph (a) above, the Board of
Directors of the Company considered a number of factors, including, without
limitation, the following:
(i) the financial and other terms and conditions of the Offer and the
Merger Agreement;
(ii) the Company's business, financial condition, results of operations,
assets, liabilities, business strategy and prospects, as well as various
uncertainties associated with those prospects;
(iii) that the $29.25 per Share price to be received by the Company's
stockholders in both the Offer and the Merger represents a 196% premium
over the closing market price of $9.875 per Share on March 26, 1999, the
last full trading day prior to the announcement of the execution of the
Merger Agreement, and premiums of 186% and 142% over the average closing
prices for the 10-day period and the 30-day period, respectively, preceding
March 26, 1999; and that such price would be payable in cash, thus
eliminating any uncertainties in valuing the consideration to be received
by the Company's stockholders;
(iv) that the Offer and the Merger would not be subject to any financing
condition, that Computer Associates has represented that the funds
necessary to consummate the Offer and the Merger will be provided and has
agreed to cause the Purchaser to fully perform all of the Purchaser's
obligations under the Merger Agreement;
(v) the oral opinion of CSFB, confirmed in writing (the "CSFB Opinion"),
that the Offer Price to be received by the holders of Common Stock in the
Offer and the Merger is fair to such stockholders (other than Computer
Associates and its affiliates) from a financial point of view; a copy of
the CSFB opinion is attached to this Schedule 14D-9 as Annex B and is
incorporated herein by reference. Such opinion should be read in its
entirety for a description of the procedures followed, assumptions and
qualifications made, matters considered and limitations of the review
undertaken by CSFB;
(vi) the presentation of CSFB to the Board of Directors at its meetings
on March 23, 1999 and March 28, 1999, as to various financial and other
matters deemed relevant to the Board of Director's consideration,
including, among other things, (a) a review of the Company's historical and
projected financial performance, (b) a review of financial forecasts and
other data provided to CSFB relating to the Company's business, (c) a
review of the historical stock prices and trading volumes of the Shares,
(d) a review of the trading and operating performance of certain publicly
traded software companies, (e) a review of certain transactions in the
software industry, (f) a review of premiums paid in certain other
transactions, (g) a terminal value analysis of the Company, (h) a
discounted cash flow valuation of the Company, and (i) an analysis of the
Offer Price as a multiple of various measures of the Company's operating
performance;
(vii) that under the terms of the Merger Agreement, unless the Company
breaches its obligations under the Merger Agreement, Computer Associates
must either extend the tender offer until all United States anti-trust
issues are resolved or escrow the purchase price for the aggregate number
of Shares representing the Minimum Condition pending a resolution of such
issues; that Computer Associates cannot terminate the Offer if there is a
material adverse change in the Company's business after the date of the
Merger Agreement; and that the break-up fee and the $20,000,000 commitment
fee paid to Computer Associates at execution of the Merger Agreement were
required by Computer Associates as a condition to Computer Associates'
limited contractual rights to terminate the Merger Agreement and the
unusually high premium represented by the offer price; and
(viii) the fact that, to the extent required by the fiduciary
obligations of the Board of Directors of the Company to the stockholders
under Delaware Law, the Company may terminate the Merger Agreement in order
to approve a tender offer or exchange offer for the Shares or other
proposed business combination by a third party on terms more favorable to
the Company's stockholders than the Offer and the Merger taken
16
<PAGE>
together, upon the payment of a $180,000,000 termination fee and up to
$10,000,000 of Computer Associates' expenses associated with the Offer and
the Merger.
The foregoing is not intended to be exhaustive, but is intended to include
many of the material factors considered by the Company's Board. In view of the
complexity and variety of the issues, the Board did not attempt to quantify or
otherwise attempt to assign any relative or specific weights to the specific
factors considered, and individual directors may have given differing weights
to different factors.
Background. During January and February 1999, Sanjay Kumar, President and
Chief Operating Officer of Computer Associates, placed several telephone calls
to Andrew J. Filipowski, President and Chief Executive Officer of the Company.
Mr. Filipowski did not speak to Mr. Kumar. On February 1, 1999, the Company
engaged CSFB to act as its financial advisor.
During March 1999, Mr. Kumar, through a representative of CSFB, asked CSFB
to arrange a meeting between Mr. Kumar and Mr. Filipowski for the purpose of
discussing a possible business combination between the Company and Computer
Associates. On March 17, 1999, the Company's Board of Directors authorized Mr.
Filipowski to arrange a meeting with Mr. Kumar.
Mr. Kumar and Mr. Filipowski met on the evening of March 22, 1999. During
this meeting, Mr. Kumar indicated that Computer Associates was prepared to
offer an all-cash transaction at a substantial premium to the Company's
current stock price to acquire the Company. Mr. Filipowski indicated that he
would discuss such proposal with the Board of Directors.
The Company's Board of Directors met in the afternoon on March 23, 1999 to
review the substance of the meeting between Mr. Kumar and Mr. Filipowski,
received a financial presentation from CSFB and authorized management to
pursue negotiations with Computer Associates.
On March 24, 1999, the Company and Computer Associates entered into a
confidentiality agreement. Later that evening, the Company began providing
detailed legal and operating data to Computer Associates. From March 25, 1999
through March 29, 1999, members of the Company's management met with members
of management of Computer Associates to discuss the Company's business, and
representatives of Computer Associates and the Company participated in
negotiations concerning a potential transaction.
The Board of Directors met each evening from March 24 through March 27,
1999 to review the status of negotiations.
On March 27 and 28, 1999, the parties met with their legal counsel and, in
the case of the Company, financial advisors, in an effort to resolve the
remaining transaction issues, including price, and to finalize the merger
agreement. During the negotiations the price of $29.25 was agreed upon.
On March 28, 1999, the Board of Directors of the Company met and discussed
the status of the negotiations. At the meeting, CSFB made a financial
presentation and delivered the CSFB Opinion. After discussing this analysis
and certain other aspects of the transaction, the Board of Directors
instructed its negotiating team to continue to negotiate remaining issues,
including the break-up and other transaction fees.
The Board of Directors reconvened early in the morning on March 29, 1999.
After a discussion, the Board of Directors unanimously approved the Merger
Agreement and the transactions contemplated thereby.
The Merger Agreement was then executed and publicly announced on March 29,
1999. The Stockholder Option Agreement and the Consulting Agreements were also
executed on March 29, 1999. On April 2, 1999, the Purchaser commenced the
Offer.
17
<PAGE>
Item 5. Persons Retained, Employed or to be Compensated.
The Company retained CSFB as its financial advisor in connection with a
possible transaction involving the Company. Pursuant to its agreement with the
Company, CSFB (i) became entitled to receive $2,500,000 upon delivery of the
CSFB Opinion, and (ii) will be entitled to receive, at or prior to the
consummation of the Offer, a fee of approximately $18,500,000 based on the
Offer Price. In addition, whether or not the Offer and the Merger is
completed, the Company has agreed to reimburse CSFB for its out-of-pocket
expenses, including the fees and disbursements of its counsel, and to
indemnify CSFB and its partners, employees, agents, affiliates or controlling
persons against certain liabilities relating to or arising out of its
engagement, including liabilities under Federal securities laws.
The Company and the Board of Directors understand that CSFB and its
affiliates may provide financing to Computer Associates and its affiliates in
connection with the transaction for which CSFB may receive customary fees. See
"Item 9. Source and Amount of Funds" of Computer Associates' Offer to Purchase
for details regarding the financing arrangements for the Offer.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on
its behalf with respect to the Offer and the Merger.
Item 6. Recent Transactions and Intent with Respect to Securities.
(a) During the past sixty days, no transactions in the Shares have been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate, or subsidiary of the Company, except
as follows:
In the past 60 days, non-qualified options were issued to Messrs.
Filipowski, Humenansky, Cullinane, Slowey and Tatro. On February 9, 1999,
Andrew J. Filipowski was issued options to purchase 125,000 options at an
exercise price of $13.00 and on March 26, 1999, he was issued options to
purchase 675,000 at an exercise price of 9.875. On February 9, 1999, Paul L.
Humenansky was issued options to purchase 75,000 at an exercise price of
$13.00 and on March 26, 1999, he was issued options to purchase 400,000 at an
exercise price of $9.875. On February 9, 1999, Michael P. Cullinane was issued
options to purchase 62,500 at an exercise price of $13.00 and on March 26,
1999, he was issued options to purchase 350,000 at an exercise price of
$9.875. On February 9, 1999, Thomas A. Slowey was issued options to purchase
31,250 at an exercise price of $13.00 and on March 26, 1999, he was issued
options to purchase options to purchase 220,000 at an exercise price of
$9.875. On February 9, 1999, Paul A. Tatro was issued options to purchase
options to purchase 25,000 at an exercise price of $13.00 and on March 26,
1999, he was issued options to purchase options to purchase 220,000 at an
exercise price of $9.875.
(b) Subject to Computer Associates' rights under the Stock Option
Agreement, to the best knowledge of the Company, all of its executive officers
and directors currently intend to tender pursuant to the Offer all Shares held
of record or beneficially owned by them (other than Shares issuable upon
exercise of Company Options and Shares, if any, which if tendered could cause
such persons to incur liability under the provisions of Section 16(b) of the
Exchange Act).
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary thereof; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or
any subsidiary thereof; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
18
<PAGE>
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that
relates to or would result in one or more of the events referred to in Item
7(a) above.
Item 8. Additional Information to be Furnished.
Section 203
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware Law. Section 203 would prevent an "Interested
Shareholder" (generally defined as a person beneficially owning 15% or more of
a corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Shareholder unless: (i) before such
person became an Interested Shareholder, the board of directors of the
corporation approved the transaction in which the Interested Shareholder
became an Interested Shareholder or approved the Business Combination, (ii)
upon consummation of the transaction which resulted in the Interested
Shareholder becoming an Interested Shareholder, the Interested Shareholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding for purposes of determining the
number of shares of outstanding stock held by directors who are also officers
and by employee stock ownership plans that do not allow plan participants to
determine confidentially whether to tender shares), or (iii) following the
transaction in which such person became an Interested Shareholder, the
Business Combination is (x) approved by the board of directors of the
corporation and (y) authorized at a meeting of shareholders by the affirmative
vote of the holders of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Shareholder. In accordance with the
provisions of the Company's Certificate of Incorporation and Section 203, the
Board of Directors of the Company has approved the Merger Agreement and the
Purchaser's acquisition of Shares pursuant to the Offer and the Merger and the
transactions contemplated thereby and, therefore, the restrictions of Section
203 are inapplicable to the Merger and the related transactions.
Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission (the "FTC"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer is
subject to such requirements.
Pursuant to the requirements of the HSR Act, Computer Associates filed the
required Notification and Report Forms (the "Forms") with the Antitrust
Division and the FTC on March 31, 1999, and the Company filed the Forms with
such agencies on April 2, 1999. The statutory waiting period applicable to the
purchase of Shares pursuant to the Offer is to expire at 11:59 P.M., New York
City time, on Thursday, April 15, 1999. However, prior to such date, the
Antitrust Division or the FTC may extend the waiting periods by requesting
additional information or documentary material relevant to the acquisition. If
such a request is made, the waiting period will be extended until 11:59 P.M.,
New York City time, on the tenth day after substantial compliance by the
Purchaser with such request. Thereafter, such waiting periods can be extended
only by court order. A request is being made pursuant to the HSR Act for early
termination of the applicable waiting period. There can be no assurance,
however, that the waiting period will be terminated early. The Merger
Agreement provides that, if by the expiration of the Offer, the applicable
waiting period under the HSR Act shall not have expired or been terminated,
Merger Subsidiary shall, subject to the terms of the Merger Agreement, extend
the Offer from time to time until such waiting period has expired or been
terminated.
The Antitrust Division and the FTC frequently scrutinize the legality of
transactions under U.S. antitrust laws. At any time before or after the
consummation of any such transactions, the Antitrust Division or the FTC
could, notwithstanding termination of the waiting period, take such action
under U.S. antitrust laws as it deems
19
<PAGE>
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking divestiture of the Shares
so acquired or divestiture of substantial assets of the Purchaser or the
Company. Private parties may also bring legal actions under the antitrust
laws. There can be no assurance that a challenge to the Offer on antitrust
grounds will not be made, or if such a challenge is made, what the result will
be.
Rights Agreement Amendment
Prior to the execution of the Merger Agreement, the Board of Directors
authorized, the Company executed, and prior to the commencement of the Offer,
the Rights Agent executed, an amendment to the Rights Agreement (the "Rights
Agreement Amendment"), which renders the Rights Agreement inapplicable to the
Offer and the Merger by providing, among other things, that neither (a) the
announcement, commencement or consummation of the Offer nor (b) the execution,
delivery or performance of the Merger Agreement or the consummation of the
transactions contemplated thereby will (i) cause Computer Associates or any of
its affiliates to become an Acquiring Person, (ii) give rise to a Distribution
Date or a Shares Acquisition Date or (iii) trigger certain other events
specified in the Rights Agreement. The Rights Agreement provides that the
Rights become exercisable upon the occurrence of certain triggering events,
including the acquisition of 15% or more of the outstanding Shares. Should a
triggering event occur, each holder of a Right (other than any holder whose
action triggered the Rights) would generally be entitled to purchase Shares
with a market value aggregating $250 for a price of $125. Except as expressly
provided in the Rights Agreement Amendment, the Rights Agreement remains in
full force in effect.
A copy of the Rights Agreement Amendment has been filed as an exhibit to
this Schedule 14D-9, and is incorporated herein by reference, and the
foregoing summary is qualified in its entirety by reference thereto.
Item 9. Material to be Filed as Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S> <C>
1 Merger Agreement
2 Agreement, dated March 29, 1999, among HardMetal, Inc., Andrew
J. Filipowski, Paul L. Humenansky and Michael Cullinane,
granting certain option and proxy rights.
3 Consulting and Non-Competition Agreement, dated March 29,
1999, between the Company and Andrew J. Filipowski.
4 Consulting and Non-Competition Agreement, dated March 29,
1999, between the Company and Michael Cullinane.
5 Consulting and Non-Competition Agreement, dated March 29,
1999, between the Company and Paul L. Humenansky.
6 Rights Agreement Amendment
7 Opinion of Credit Suisse First Boston Corporation, dated March
28, 1999 (Attached to Schedule 14D-9 mailed to stockholders as
Annex B)
8 Consent of Credit Suisse First Boston Corporation
9 Press Release of the Company and Computer Associates, issued
March 29, 1999
10 Confidentiality Agreement dated March 24, 1999 between
Computer Associates and the Company
11 Letter dated April 5, 1999 from Andrew J. Filipowski to the
stockholders of the Company (Included with Schedule 14D-9
mailed to stockholders)
</TABLE>
20
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 5, 1999 PLATINUM technology International,
inc.
/s/ Andrew J. Filipowski
By: _______________________________
Andrew J. Filipowski
President and Chief Executive
Officer
21
<PAGE>
ANNEX A
Information Statement Pursuant to Section 14(f)
of The Securities Exchange Act of 1934
And Rule 14f-1 Thereunder
General
This Information Statement is being mailed on or about April 5, 1999, with
the Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") of PLATINUM technology International, inc. (the "Company") with
respect to the Offer to Purchase dated April 2, 1999 (as supplemented, the
"Offer to Purchase") of HardMetal, Inc. (the "Purchaser"), a wholly owned
subsidiary of Computer Associates International, Inc. ("Computer Associates").
The Purchaser is offering to purchase all outstanding shares of Common Stock,
par value $.001 per share (the "Common Stock") of the Company, together with
the associated preferred share purchase rights, at a price of $29.25 per
share, net to the seller in cash (the "Offer"). The Offer is being made
pursuant to the Agreement and Plan of Merger, dated as of March 29, 1999 (the
"Merger Agreement"), by and among Computer Associates, the Purchaser and the
Company. You are receiving this Information Statement in connection with the
possible election of persons designated by Computer Associates (the "Computer
Associates Designees") to a majority of the seats on the Board of Directors
(the "Board") of the Company pursuant to the Merger Agreement. The Merger
Agreement is more fully described under Item 3 of the Schedule 14D-9, to which
this Information Statement is attached as Annex A. Capitalized terms used and
not defined herein have the meanings assigned to them in the Schedule 14D-9.
The information with respect to the Computer Associates Designees has been
supplied to the Company by Computer Associates for inclusion or incorporation
by reference herein, and the Company assumes no responsibility for the
accuracy or completeness of such information.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You
are not, however, required to take any action.
The Computer Associates Designees
Pursuant to the Merger Agreement and subject to compliance with applicable
law, upon the Purchaser's acceptance for payment of shares of Common Stock
pursuant to the Offer, Computer Associates will be entitled to designate such
number of directors on the Board as will constitute a majority of such
directors. The foregoing notwithstanding, the Merger Agreement further
provides that at least two directors who were directors of the Company as of
the date of the Merger Agreement and who are not officers of the Company (each
such director, an "Independent Director") shall continue to serve on the Board
until the effectiveness of the Merger. The Company has agreed to take all
action necessary to effect the election of the Computer Associates Designees
to the Board, including, in connection therewith, increasing the size of the
Board or seeking and obtaining the resignation of such number of its current
directors or both to enable Computer Associates Designees to be elected to the
Board as provided above.
Computer Associates has informed the Company that it will choose the
Computer Associates Designees from the directors and executive officers listed
in Schedule I to the Purchaser's Offer to Purchase, a copy of which is being
mailed to the Company's stockholders together with the Schedule 14D-9.
Computer Associates has informed the Company that each of the directors and
executive officers listed in Schedule I to the Offer of Purchase has consented
to act as a director, if so designated. The information on such Schedule I is
incorporated herein by reference. The business address of each such person is
c/o Computer Associates International, Inc., One Computer Associates Plaza,
Islandia, New York 11788-7000.
A-1
<PAGE>
It is expected that the Computer Associates designees may assume office at
any time following the purchase by the Purchaser of the specified minimum
number of shares of Common Stock pursuant to the Offer, which purchase cannot
be earlier than April 30, 1999.
Certain Information Concerning the Company
The shares of Common Stock constitute the only class of voting securities
of the Company. As of the close of business on March 29, 1999, there were
101,282,612 shares of Common Stock outstanding. Each share of Common Stock
entitles its record holder to one vote. Stockholders of the Company do not
have cumulative voting rights. 1,768,421 of the Company's authorized shares of
Class II Series B Preferred Stock, $.01 par value, have been issued.
The Current Members of the Board and Executive Officers of the Company
<TABLE>
<CAPTION>
Served
as
Director
Name Age Position with Company Since
- ---- --- -------------------------------------------------- --------
<S> <C> <C> <C>
Michael P. Cullinane.... 49 Executive Vice President, Chief Financial Officer, 1991
Treasurer and Director
Paul L. Humenansky...... 41 Executive Vice President--Product Development, 1991
Chief Operations Officer and Director
Andrew J. Filipowski.... 48 President, Chief Executive Officer and 1987
Chairman of the Board of Directors
Arthur P. Frigo(1)(2)... 57 Director 1997
Gian Fulgoni(1)......... 51 Director 1991
James E. Cowie(1)(2).... 44 Director 1989
Steven D. Devick(1)(2).. 47 Director 1989
Thomas A. Slowey........ 38 Executive Vice President--Sales
Paul A. Tatro........... 42 Executive Vice President--International
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
Mr. Cullinane joined the Company in March 1988 as Senior Vice President and
Chief Financial Officer, and was named Executive Vice President in March 1995.
He has also served as the Company's Treasurer since April 1989 and served as
its Secretary from April 1989 until October 1995. Mr. Cullinane is also a
director of Vasco Data Security International, Inc., Made2Manage Systems, Inc.
and Platinum Entertainment, Inc.
Mr. Humenansky, a founder of the Company, was appointed Chief Operations
Officer of the Company effective January 1993. Mr. Humenansky also serves as
Executive Vice President--Product Development, a position he has held since
the Company's formation in April 1987. Mr. Humenansky is also a director of
Platinum Entertainment, Inc.
Mr. Filipowski, a founder of the Company, has been President, Chief
Executive Officer and Chairman of the Board of Directors since the Company's
formation in April 1987. Mr. Filipowski is also a director of System Software
Associates, Inc., Blue Rhino Corporation and Platinum Entertainment, Inc., a
publicly held integrated music recording and publishing company.
Mr. Frigo is a private investor and was the owner and Chairman of M.B.
Walton, a consumer products company, until its sale in January 1998. He is
currently the Chairman and Chief Executive Officer of Igoplx Inc., a Chicago-
based consumer venture company, and also serves on the Board of Directors of
The Levy Organization, Maxrad, Precision Extrusions, LaRabida Children's
Hospital and the Landmark Preservation Council of Illinois.
A-2
<PAGE>
Mr. Fulgoni is a consultant to various companies, including Information
Resources, Inc. ("IRI"), which provides a variety of information services
(primarily to consumer packaged goods companies) and computer decision support
services. He served as Chief Executive Officer of IRI from 1991 through 1998.
From 1991 to April 1995, Mr. Fulgoni also served as Chairman of IRI, from 1989
to 1991 he served as its Vice Chairman, and from 1981 to 1989 he was its
President. Mr. Fulgoni is currently a director of IRI.
Mr. Cowie has been a General Partner of Frontenac Company, a Chicago-based
venture capital firm, since February 1989. Mr. Cowie is also a director of
3Com Corporation.
Mr. Devick is currently the President, Chief Executive Officer and Chairman
of the Board of Directors of Platinum Entertainment, Inc., which he co-founded
in 1992. He is also a Director of Blue Rhino Corporation and several private
companies.
Mr. Slowey has served as Executive Vice President--Sales since joining the
Company in March 1988.
Mr. Tatro joined the Company in October 1987 as Director of Education and
was appointed Senior Vice President--Field Support and Affiliates in January
1990, a position he held until March 1995, when he was named Executive Vice
President--International Operations.
Director Compensation
All non-employee directors of the Company are paid an annual fee of $10,000
and approximately 7,500 shares of Common Stock. In addition, each non-employee
director participates in the Amended and Restated PLATINUM technology, inc.
1993 Directors' Stock Option Plan (the "Directors' Plan"). Pursuant to the
Directors' Plan, each non-employee director is granted, on the date of each
annual meeting after which such director continues to serve on the Board of
Directors, an option to purchase 10,000 shares of Common Stock at the fair
market value of the Common Stock on such date. The Company provides no
retirement benefits to non-employee directors. Directors who are also
employees of the Company receive no additional compensation from the Company
for services rendered in their capacity as directors.
Meetings
During the year ended December 31, 1998, the Board of Directors held eight
formal meetings. Each of the Company's current directors attended at least 75%
of the aggregate of the total number of meetings held during 1998 by the Board
and the total number of meetings held during 1998 by Committees on which he
served.
Committees of the Board of Directors
The Board of Directors has established an Audit Committee and a
Compensation Committee. Both the Audit Committee and the Compensation
Committee are currently composed entirely of directors who are not officers or
employees of the Company. The Company does not have a standing nominating
committee.
The Audit Committee generally has responsibility for recommending
independent auditors to the Board of Directors for selection, reviewing the
plan and scope of the annual audit, reviewing the Company's audit and control
functions and reporting to the full Board of Directors regarding all of the
foregoing. The Audit Committee held two formal meetings in 1998.
The Compensation Committee generally has responsibility for recommending to
the Board guidelines and standards relating to the determination of executive
compensation, reviewing the Company's executive compensation policies and
reporting to the Board of Directors regarding the foregoing. The Compensation
Committee also has responsibility for administering the Company's incentive
compensation plans, which includes establishing performance goals and related
cash incentive award opportunities and determining the number (if any) of
options to be granted to the Company's executive officers pursuant to such
plans, and reporting to the Board of Directors regarding the foregoing. The
Compensation Committee conferred by telephone on a number of occasions and
held two formal meetings in 1998.
A-3
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934, as amended (the "Act"),
requires the Company's officers (as defined under Section 16) and directors
and persons who own greater than 10% of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with
the Securities and Exchange Commission (the "Commission"). Based solely on a
review of the forms it has received and on written representations from
certain reporting persons that no such forms were required for them, the
Company believes that, except as discussed below, during 1998 all Section 16
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with by such persons.
Mr. Humenansky inadvertently failed to file timely a Form 4 for a
transaction occurring in July 1998. The Form 4 was filed in December 1998.
Mr. Slowey inadvertently failed to file timely a Form 4 for a transaction
occurring in July 1998. The Form 4 was filed in December 1998.
Mr. Devick inadvertently failed to file timely a Form 4 for a transaction
occurring in May 1998. The transaction was reported on Mr. Devick's 1998 Form
5.
SUMMARY COMPENSATION
The following table provides information concerning the annual and long-
term compensation for services in all capacities to the Company for the years
ended December 31, 1998, 1997 and 1996 of those persons who were at December
31, 1998 (i) the Chief Executive Officer and (ii) the four other executive
officers of the Company (collectively, with the Chief Executive Officer, the
"Named Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------------- Awards
Other Securities
Name and Principal Annual Underlying All Other
Position Year Salary ($) Bonus ($) Compensation Options (#) Compensation ($)
------------------ ---- ---------- --------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Filipowski, 1998 $888,000 $666,000 $62,911(1) 800,000 $299,294(2)
President, Chief 1997 772,000 772,000 -- 500,000 264,590(3)
Executive
Officer and Chairman of 1996 702,000 -- -- -- 222,010
the Board
Paul L. Humenansky, 1998 584,000 350,400 -- 491,250 100,123(3)
Chief Operations 1997 508,000 406,400 -- 300,000 108,001
Officer and Executive 1996 462,000 -- -- -- 90,904
Vice President--Product
Development
Michael P. Cullinane, 1998 564,000 338,400 -- 418,750 85,192(4)
Executive Vice 1997 490,000 392,000 -- 250,000 97,150
President, Chief 1996 445,500 -- -- -- 83,036
Financial Officer and
Treasurer
Thomas A. Slowey, 1998 345,000 129,375 -- 218,750 28,460(5)
Executive Vice 1997 300,000 150,000 -- 125,000 22,313
President--Sales 1996 273,000 -- -- -- 22,171
Paul A. Tatro, 1998 345,000 129,375 -- 182,500 24,904
Executive Vice 1997 300,000 150,000 -- 100,000 21,192(6)
President
--International 1996 273,000 -- -- -- 21,923
Operations
</TABLE>
A-4
<PAGE>
- --------
(1) Represents perquisites received by the Named Officer, including $50,600 in
personal use of the Company's corporate jet.
(2) Includes $4,800 in company matching contributions pursuant to the
Company's 401(k) Savings Plan (the "Savings Plan"), $167,959 in premiums
paid by the Company for term life and disability insurance, $17,662 in
premiums paid by the Company for the term portion of split-dollar life
insurance, and $108,873 representing the dollar value of the benefit to
the Named Officer of the remainder of the premiums paid by the Company for
the split-dollar life insurance.
(3) Includes $4,800 in Company matching contributions pursuant to the Savings
Plan, $7,592 in Company matching contributions pursuant to the Company's
Deferred Compensation Plan, $14, 719 in premiums paid by the Company for
term life and disability insurance, $4,612 in premiums paid by the Company
for the term portion of split-dollar life insurance, and $68,400
representing the dollar value of the benefit to Named Officer of the
remainder of the premiums paid by the Company for the split-dollar life
insurance.
(4) Includes $4,800 in Company matching contributions pursuant to the Savings
Plan, $20,315 in premiums paid by the Company for term life and disability
insurance, $5,793 in premiums paid by the Company for the term portion of
split-dollar life insurance, and $54,284 representing the dollar value of
the benefit to the Named Officer of the remainder of the premiums paid by
the Company for the split-dollar life insurance.
(5) Includes $4,800 in Company matching contributions pursuant to the Savings
Plan, $4,485 in Company matching contributions pursuant to the Company's
Deferred Compensation Plan, $1,042 in premiums paid by the Company for the
term portion of split-dollar life insurance, and $18,133 representing the
dollar value of the benefit to the Named Officer of the remainder of the
premiums paid by the Company for the split-dollar life insurance.
(6) Includes $4,800 in Company matching contributions pursuant to the Savings
Plan, $2,185 in Company matching contributions pursuant to the Company's
Deferred Compensation Plan, $1,204 in premiums paid by the Company for the
term portion of split-dollar life insurance, and $16,715 representing the
dollar value of the benefit to the Named Officer of the remainder of the
premiums paid by the Company for the split-dollar life insurance.
A-5
<PAGE>
Option Grants in 1998. The following table provides information on grants
of stock options during fiscal 1998 to the Named Officers. No stock
appreciation rights were granted to the Named Officers during fiscal 1998.
Option Grants In 1998
<TABLE>
<CAPTION>
Potential Realizable
Individual Value at Assumed
Number of Grants Annual Rates of Stock
Securities Percent of Total Exercise Price Appreciation for
Underlying Options Granted or Base Option Term(1)
Options to Employees in Price Expiration ----------------------
Name Granted (#)(2) Fiscal Year(3) ($/Sh) Date 5% ($) 10% ($)
- ---- -------------- ---------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Filipowski.... 600,000 6.4% $23.6875 06/18/08 $8,938,165 $22,651,065
75,000 0.8% 13.9375 10/19/08 657,391 1,665,959
125,000 1.3% 21.1875 12/09/08 1,665,588 4,220,927
Paul L. Humenansky...... 360,000 3.8% 23.6875 06/18/08 5,362,899 13,590,639
56,250 0.6% 13.9375 10/19/08 493,044 1,249,469
75,000 0.8% 21.1875 12/09/08 999,353 2,532,556
Michael P. Cullinane.... 300,000 3.2% 23.6875 06/18/08 4,469,082 11,325,532
56,250 0.6% 13.9375 10/19/08 493,044 1,249,469
62,500 0.7% 21.1875 12/09/08 832,794 2,110,464
Thomas A. Slowey........ 150,000 1.6% 23.6875 06/18/08 2,234,541 5,662,766
37,500 0.4% 13.9375 10/19/08 328,696 832,979
31,250 0.3% 21.1875 12/09/08 416,397 1,055,232
Paul A. Tatro........... 120,000 1.3% 23.6875 06/18/08 1,787,633 4,530,213
37,500 0.4% 13.9375 10/19/08 328,696 832,979
25,000 0.3% 21.1875 12/09/08 333,118 844,185
</TABLE>
- --------
(1) Potential realizable value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains will be dependent on the future performance of the Common Stock and
the option holder's continued employment throughout the vesting period.
The amounts reflected in the table may not necessarily be achieved.
(2) Options granted are both non-qualified and incentive stock options.
Subject to certain restrictions, these options become exercisable in four
equal annual installments, beginning on the first anniversary of the date
of grant.
(3) The percentages shown do not reflect options granted in 1998 by companies
acquired by the Company.
Aggregated Option Exercises in 1998 and Year-End 1998 Option Values. The
following table provides information on the Named Officers' option exercises
in 1998 and unexercised options at December 31, 1998.
Aggregated Option Exercises in 1998 and Year-End 1998 Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying
Shares Unexercised Value of Unexercised
Acquired Options at In-The-Money Options at
on Exercise Value Year-End 1998 (#) Year-End 1998 ($)(1)
(#) Realized ------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew J. Filipowski.... 385,000 $8,355,605 2,057,502 1,131,250 $13,452,176 $1,754,297
Paul L. Humenansky...... 179,625 3,452,289 731,937 689,688 3,080,650 1,098,538
Michael P. Cullinane.... 0 0 769,062 567,188 5,190,384 939,163
Thomas A. Slowey........ 15,000 443,712 337,875 296,875 2,172,302 541,602
Paul A. Tatro........... 0 0 279,657 241,875 1,451,468 437,305
</TABLE>
- --------
(1) The value per option is calculated by subtracting the exercise price from
the closing price of the Common Stock on the Nasdaq National Market on
December 31, 1998, which was $19.125.
A-6
<PAGE>
Employment Agreements. Effective March 1, 1991, the Company entered into
employment agreements with Messrs. Filipowski, Humenansky and Cullinane. These
agreements were amended and restated as of March 1, 1999. Mr. Filipowski's
employment agreement provides for an initial base salary of $972,000 plus
bonus compensation. Mr. Humenansky's employment agreement provides for an
initial base salary of $642,000 plus bonus compensation. Mr. Cullinane's
employment agreement provides for an initial base salary of $620,000 plus
bonus compensation. Each of the employment agreements provides that the base
salary is subject to review and cannot be reduced without the consent of the
executive. The agreements provide that all bonus arrangements for Messrs.
Filipowski, Humenansky and Cullinane are established by the Compensation
Committee of the Board of Directors. All of the employment agreements also
provide for continuation of salary, bonuses and fringe benefits during the
"Payout Period" (as defined below) following the executive's termination of
employment with the Company for any reason other than "Good Cause," as defined
in such agreement, or if the termination occurs within a certain time period
before or after a "Change in Control" (as defined below) of the Company, and
for continued medical, dental, disability and life insurance coverage until
age 65 following the executive's termination of employment with the Company
for any reason. In the case of medical and dental coverage, the coverage is
extended to each executive's spouse and to the time such individuals become
entitled to coverage under Medicare. The Payout Period under each of the
employment agreements is three years from the date of termination (18 months
in the case of a voluntary termination by the executive), unless the
termination is the result of a "Change in Control," in which case, the Payout
Period is five years. Under these agreements, a "Change in Control" of the
Company includes (a) certain reorganizations, consolidations or mergers of the
Company, (b) certain transfers of all or substantially all of the assets of
the Company, (c) the approval by the Company's stockholders of a plan of
liquidation or dissolution, (d) a change in the Company's Board of Directors
such that a majority of the members of the Company Board are not "continuing"
directors, and (e) a person's acquiring 20% or more of (i) the outstanding
shares of Common Stock or (ii) the combined voting power of the Company's then
outstanding securities, with certain exceptions.
Compensation Committee Interlocks and Insider Participation
Messrs. Cowie, Devick and Frigo were the members of the Company's
Compensation Committee during 1998. Mr. Filipowski is an executive officer of
Platinum Venture Partners, Inc. ("PVP"), and is the sole director of, and
makes compensation decisions for, PVP. Mr. Devick is an executive officer of
Platinum Entertainment, Inc. ("PEI"), and Messrs. Filipowski, Humenansky and
Cullinane, all of whom are executive officers of the Company, are directors of
PEI. Messrs. Filipowski and Cullinane are also members of the Compensation
Committee of PEI.
The Company acquired Mastering, Inc. ("Mastering") pursuant to an Agreement
and Plan of Merger dated as of February 18, 1998 (the "Merger Agreement"). Mr.
Filipowski, the President, Chief Executive Officer and Chairman of the Board
of the Company, and Mr. Cowie, a director of the Company, were both also
directors of Mastering, Mr. Filipowski held options to purchase 34,800 shares
of common stock of Mastering (which were granted to him in his capacity as a
director of Mastering) and, through Platinum Venture Partners I L.P. and
Platinum Venture Partners II L.P. (together referred to as the "Platinum
Ventures"), indirectly held approximately 22,000 shares of common stock of
Mastering. Mr. Cowie held options to purchase 34,800 shares of common stock of
Mastering (granted to him in his capacity as a director of Mastering). Neither
Mr. Filipowski nor Mr. Cowie participated in the original deliberations or
vote of the Board of Directors or the board of directors of Mastering with
respect to the Merger Agreement. The Platinum Ventures owned a total of
approximately 335,000 shares of common stock of Mastering. Mr. Filipowski is
the President, Chief Executive Officer and a stockholder of PVP, the general
partner of each of the Platinum Ventures, and is a limited partner of each of
the Platinum Ventures. Additionally, each of the other executive officers and
directors of the Company indirectly owned shares of common stock of Mastering
(collectively totalling more than 20,000 shares).
A-7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 23, 1999, unless otherwise
indicated below, certain information with respect to the beneficial ownership
of the Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of the Common Stock, (ii)
each director of the Company, (iii) each of the Named Officers and (iv) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Beneficial of
Name and Address Ownership(1) Class
- ---------------- ------------ -------
<S> <C> <C>
Andrew J. Filipowski (2).................................. 5,232,617 5.8%
T. Rowe Price Associates, Inc. (3)........................ 5,508,073 6.3
The Prudential Insurance Company of America (4)........... 6,305,764 7.2
Jennison Associates LLC (5)............................... 6,147,510 7.0
Putnam Investments, Inc. (6).............................. 6,449,344 7.0
J & W Seligman (7)........................................ 4,297,966 5.0
Michael P. Cullinane (8).................................. 861,304 *
Paul L. Humenansky (9).................................... 740,978 *
Steven D. Devick (10)..................................... 107,651 *
Thomas A. Slowey (11)..................................... 348,490 *
Paul A. Tatro (12)........................................ 361,657 *
Gian Fulgoni (13)......................................... 32,600 *
James E. Cowie (14)....................................... 42,185 *
Arthur P. Frigo (15)...................................... 13,200 *
All Executive Officers and Directors as a Group (9
persons) (16)............................................ 7,740,682 8.4
</TABLE>
- --------
* Less than one percent
(1) Unless otherwise indicated below, the persons in the above table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) Includes (a) 2,057,502 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Filipowski within 60 days of March
23, 1999, (b) 189,000 shares held by a foundation established by Mr.
Filipowski and (c) an aggregate of 547,994 shares held by the Platinum
Ventures Partners I, L.P. and Platinum Venture Partners II, L.P. Mr.
Filipowski disclaims beneficial ownership of the shares held by the
foundation. Mr. Filipowski disclaims beneficial ownership of the shares
held by the Platinum Ventures, except to the extent of his pecuniary
interest. The shares owned by Mr. Filipowski are subject to a "put/call
collar" arrangement with a brokerage firm. The address of Mr. Filipowski
is c/o PLATINUM technology, inc., 1815 South Meyers Road, Oakbrook
Terrace, Illinois 60181.
(3) As reported on a Schedule 13G/A filed with the Securities and Exchange
Commission (the "Commission") on February 12, 1999 (the "Price 13G") by
T. Rowe Price Associates, Inc. ("Price Associates"). According to the
Price 13G, Price Associates has sole voting power with respect to 378,300
shares and sole dispositive power with respect to all 5,508,073 shares.
The address of Price Associates and Price Fund is 100 E. Pratt Street,
Baltimore, Maryland 21202.
A-8
<PAGE>
(4) As reported on a Schedule 13G/A filed with the Commission on January 29,
1999 (the "Prudential 13G") by the Prudential Insurance Company of
America ("Prudential"). According to the Prudential 13G, Prudential has
sole voting power and sole dispositive power with respect to 12,400
shares, shared voting power with respect to 5,790,164 shares and shared
dispositive power with respect to 6,293,364 shares. The address of
Prudential is 751 Broad Street, Newark, New Jersey 07102-3777.
(5) As reported on a Schedule 13G/A filed with the Commission on February 11,
1999 (the "Jennison 13G") by Jennison Associates LLC ("Jennison").
According to the Jennison 13G, Jennison has sole voting power with
respect to 2,229,147 shares, shared voting power with respect to
3,415,163 shares and shared dispositive power with respect to all
6,147,510 shares. The address of Jennison is 466 Lexington Ave., New
York, New York 10017.
(6) As reported on a Schedule 13G/A filed with the Commission on February 11,
1999 (the "Putnam 13G") jointly by Marsh & McLennan Companies, Inc.
("Marsh"), Putnam Investments, Inc. ("Putnam Investments"), Putnam
Investment Management, Inc. ("Putnam Management") and the Putnam Advisory
Company, Inc. ("Putnam Advisory"). According to the Putnam 13G Putnam
Investments has shared voting power with respect to 453,101 shares and
shared dispositive power with respect to 4,297,966 shares, Putnam
Management has shared dispositive power with respect to 3,278,921 shares,
Putnam Advisory has shared voting power with respect to 453,101 shares
and shared dispositive power with respect to 1,019,045 shares. The
address of Putnam Management, Putnam Investment and Putnam Advisory is
One Post Office Square, Boston, Massachusetts 02109.
(7) As reported on Schedule 13G filed with the Commission on February 9, 1999
(the "Morris 13G") jointly by J&W Seligman Co. Incorporated ("Seligman")
and William C. Morris ("Morris"). According to the Morris 13G, Seligman
and Morris each have shared voting power with respect to 5,981,800 shares
and shared dispositive power with respect to 6,449,344.
(8) Includes (a) 769,062 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Cullinane within 60 days of March
23, 1999 and (b) 6,211 shares allocated to his account under the
Company's Stock Purchase Plan.
(9) Includes (a) 731,937 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Humenansky within 60 days of March
23, 1999 and (b) 5,364 shares allocated to his account under the
Company's Stock Purchase Plan.
(10) Includes 15,267 shares which may be acquired pursuant to the exercise of
stock options held by Mr. Devick within 60 days of March 23, 1999.
(11) Includes (a) 344,125 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Slowey within 60 days of March 23,
1999 and (b) 3,167 shares allocated to his account under the Company's
Stock Purchase Plan.
(12) Includes (a) 279,657 shares which may be acquired pursuant to the
exercise of stock options held by Mr. Tatro within 60 days of March 23,
1999, and (b) 41,000 shares held as co-trustee, with his wife, of trusts
for their benefit.
(13) Represents shares which may be acquired pursuant to the exercise of stock
options held by Mr. Fulgoni within 60 days of March 23, 1999.
(14) Represents shares which may be acquired pursuant to exercise of stock
options held by Mr. Cowie within 60 days of March 23, 1999.
(15) Represents shares which may be acquired pursuant to the exercise of stock
options held by Mr. Frigo exercisable within 60 days of March 23, 1999.
16) Includes 4,285,535 shares which may be acquired pursuant to the exercise
of stock options within 60 days of March 23, 1999.
A-9
<PAGE>
ANNEX B
March 28, 1999
Board of Directors
PLATINUM technology International, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Dear Sirs:
You have asked us to advise you with respect to the fairness from a
financial point of view of the Per Share Price (as defined below) to be
received by the holders of common stock, par value $0.001 per share, of
PLATINUM technology International, inc. (the "Company") (the "Company Common
Stock"), other than Computer Associates International, Inc. and its affiliates
(the "Acquiror"), pursuant to the terms of the Agreement and Plan of Merger,
dated as of March 29, 1999 (the "Agreement"), among the Company, the Acquiror
and the "Merger Subsidiary" (as defined in the Agreement). The Agreement
provides, among other things, that the Merger Subsidiary will commence an offer
(the "Offer") to purchase all of the outstanding shares of Company Common Stock
at a price of $29.25 per share (the "Per Share Price") of Company Common Stock
net to the seller in cash. It is our understanding that following consummation
of the Offer, the Merger Subsidiary will be merged with and into the Company
and the Company will become a wholly owned subsidiary of the Acquiror (the
"Merger" and together with the Offer the "Acquisition") and each remaining
outstanding share of Company Common Stock and each outstanding share of Series
B preferred stock, par value $0.01 per share, of the Company, other than
dissenting shares, will be converted into the right to receive the Per Share
Price.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company, as well as the
Agreement. We have also reviewed certain other information, including financial
forecasts, provided to us by the Company and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the
Company, and we have compared that data with similar data for other publicly
held companies in businesses that we deemed to be similar to the Company and we
have considered the financial terms of certain other business combinations and
other transactions which have recently been effected and that we deemed to be
relevant. We also considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
such information being complete and accurate in all material respects. With
respect to the financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the Company's management as to the future financial
performance of the Company. In addition, we have not been requested to make,
and have not made, an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company, nor have we been
furnished with any such evaluations or appraisals. Our opinion is necessarily
based upon financial, economic, market and other conditions as they exist and
can be evaluated on the date hereof. We were not requested to, and did not,
solicit third party indications of interest in acquiring all or any part of the
Company.
B-1
<PAGE>
We have acted as financial advisor to the Board of Directors in connection
with the Acquisition and will receive a fee for our services, a significant
portion of which is contingent upon the consummation of the Offer. We will
also receive a fee for rendering this opinion. In addition, as you know, we
and our affiliates may provide financing for the Acquiror in connection with
the Acquisition for which we may receive customary fees. In the past, we have
performed certain investment banking services for the Company and the Acquiror
and have received customary fees for such services.
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and the Acquiror for
our and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Acquisition and is not
to be quoted or referred to, in whole or in part, in any registration
statement, prospectus or proxy statement, or in any other document used in
connection with the offering or sale of securities, nor shall this letter be
used for any other purposes, without our prior written consent. In addition,
this letter does not constitute a recommendation to any stockholder as to
whether or not such stockholder should tender shares pursuant to the Offer or
how such stockholder should vote on the proposed Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Per Share Price to be received by the holders of Company
Common Stock in the Offer and the Merger is fair to such stockholders, other
than the Acquiror, from a financial point of view.
Very truly yours,
Credit Suisse First Boston
Corporation
/s/ Joseph T. Josephson
By: _________________________________
Joseph T. Josephson
Managing Director
B-2
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
Dated as of March 29, 1999
among
Computer Associates International, inc.,
HardMetal, Inc.
and
PLATINUM Technology International, Inc.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
THE OFFER
<S>
<C>
Page
SECTION 1.1. The Offer....................................................1
SECTION 1.2. Company Action...............................................2
SECTION 1.3. Directors....................................................3
ARTICLE II
THE MERGER
SECTION 2.1. The Merger...................................................3
SECTION 2.2. Conversion of Shares.........................................4
SECTION 2.3. Surrender and Payment........................................4
SECTION 2.4. Dissenting Shares............................................5
SECTION 2.5. Stock Options................................................6
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation.................................7
SECTION 3.2. Bylaws.......................................................7
SECTION 3.3. Directors and Officers.......................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company................7
(a) Organization, Standing and Corporate Power..........................7
(b) Subsidiaries........................................................8
(c) Capital Structure...................................................8
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(d) Authority; Noncontravention...................................... 9
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities..................................................... 10
(f) Disclosure Documents............................................. 11
(g) Absence of Certain Changes or Events............................. 11
(h) Litigation....................................................... 12
(i) Absence of Changes in Stock and Benefit Plans; Severance
Benefits........................................................ 13
(j) Participation and Coverage in Benefit Plan....................... 13
(k) ERISA Compliance................................................. 13
(l) Taxes............................................................ 14
(m) State Takeover Statutes.......................................... 15
(n) Brokers; Schedule of Fees and Expenses........................... 16
(o) Permits; Compliance with Laws; Environmental Matters............. 16
(p) Contracts; Debt Instruments...................................... 17
(q) Opinion of Financial Advisor..................................... 18
(r) Interests of Officers and Directors.............................. 18
(s) Technology....................................................... 19
(t) Change of Control................................................ 19
(u) Rights Agreement................................................. 20
(v) 1999 Options..................................................... 20
(w) Year 2000 Compliance............................................. 20
SECTION 4.2. Representations and Warranties of Parent and Merger
Subsidiary............................................................. 20
(a) Organization, Standing and Corporate Power....................... 20
(b) Authority; Noncontravention...................................... 20
(c) Disclosure Documents............................................. 21
(d) Financing........................................................ 22
(e) Delaware Law..................................................... 22
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business....................................... 22
SECTION 5.2. Stockholder Meeting; Proxy Material....................... 24
SECTION 5.3. Access to Information..................................... 24
SECTION 5.4. Other Offers.............................................. 24
SECTION 5.5. State Takeover Statutes................................... 25
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ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
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SECTION 6.1. Obligations of Merger Subsidiary......................... 25
SECTION 6.2. Voting of Shares......................................... 25
SECTION 6.3. Indemnification.......................................... 26
SECTION 6.4. Employees................................................ 26
SECTION 6.5. Interim Financing........................................ 26
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification........ 27
SECTION 7.2. Public Announcements..................................... 30
SECTION 7.3. Rights Agreement......................................... 30
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each Party.............. 30
ARTICLE IX
TERMINATION
SECTION 9.1. Termination.............................................. 31
SECTION 9.2. Effect of Termination.................................... 31
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and Warranties............ 32
SECTION 10.2. Notices.................................................. 32
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SECTION 10.3. Amendments; No Waivers.................................. 33
SECTION 10.4. Fees and Expenses....................................... 33
SECTION 10.5. Successors and Assigns.................................. 34
SECTION 10.6. Governing Law........................................... 34
SECTION 10.7. Counterparts; Effectiveness; Interpretation............. 34
SECTION 10.8. Enforcement............................................. 35
SECTION 10.9. Severability............................................ 35
SECTION 10.10 Entire Agreement; No Third Party Beneficiaries.......... 35
SECTION 10.11. Materiality; Knowledge.................................. 35
ANNEXES
I Conditions to the Offer
II Form of Amended and Restated Charter of the Surviving Corporation
III Escrow Terms
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AGREEMENT AND PLAN OF MERGER dated as of March 29, 1999 among
Computer Associates International, Inc., a Delaware
corporation ("PARENT"), HardMetal, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("MERGER
SUBSIDIARY"), and PLATINUM TECHNOLOGY International, INC., a
Delaware corporation (the "COMPANY").
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER. (a) Merger Subsidiary shall, as promptly as
practicable after the date hereof, but in no event later than five business days
following the public announcement of the terms of this Agreement, commence an
offer (the "OFFER") to purchase all of the outstanding shares of common stock,
par value $.001 per share (the "SHARES"), including the associated Rights
(defined in Section 4.1(c)), of the Company at a price of $29.25 per Share
(including the associated Right), 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 and
to make any change in the terms or conditions of the Offer; PROVIDED that,
without the written consent of the Company, no change may be made which changes
the form of consideration to be paid, decreases the price per Share or the
number of Shares sought in the Offer, imposes conditions to the Offer in
addition to those set forth in Annex I, changes or waives the Minimum Condition,
extends the Offer (except as set forth in the following sentence), or makes any
other change to any condition to the Offer set forth in Annex I which is adverse
to the holders of Shares. Subject to the terms of the Offer in this Agreement
and the satisfaction (or waiver to the extent permitted by this Agreement) of
the conditions to the Offer, Merger Subsidiary shall accept for payment all
Shares validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after the applicable expiration date of the Offer and shall pay for
all such Shares promptly after acceptance; PROVIDED that Merger Subsidiary may
(or, if the conditions set forth in clauses (a), (b), (c), (d) and (i) of Annex
I exist, shall) extend the Offer if, at the scheduled expiration date of the
Offer or any extension thereof any of the conditions to the Offer shall not have
been satisfied, until such time as such conditions are satisfied or waived, and
Merger Subsidiary may extend the Offer for a further period of time of not more
than 20 business days to meet the objective (which is not a condition to the
Offer) that there be validly tendered, in accordance with the terms of the
Offer, prior to the expiration date of the Offer (as so extended) and not
withdrawn a number of Shares, which together with Shares then owned by Parent
and Merger Subsidiary, represents at least 90% of the Fully Diluted Shares.
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(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall (i) file with the SEC (defined below in
Section 4.1(a)) a Tender Offer Statement on Schedule 14D-l with respect to the
Offer which will contain the offer to purchase and form of the related letter of
transmittal (together with any supplements or amendments thereto, collectively
the "OFFER DOCUMENTS") and (ii) cause the Offer Documents to be disseminated to
holders of Shares. Parent, Merger Subsidiary and the Company each agree promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect. Parent and Merger Subsidiary agree to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-l prior to its
being filed with the SEC.
SECTION 1.2. COMPANY ACTION. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has unanimously (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (defined below in
Section 2.1), and the Stockholder Option Agreement, dated as of March 29, 1999
(the "STOCKHOLDER OPTION AGREEMENT"), among the stockholders of the Company that
are named therein ("STOCKHOLDERS") and Merger Subsidiary and the transactions
contemplated thereby, are advisable and are fair to and in the best interest of
the Company's stockholders, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and the Stockholder
Option Agreement and the transactions contemplated thereby, which approval
constitutes approval under Section 203 of the General Corporation Law of the
State of Delaware (the "DELAWARE LAW") such that the Offer, the Merger, the
Stockholder Option Agreement and the other transactions contemplated hereby and
thereby are not and shall not be subject to any restriction of Section 203 of
Delaware Law, and (iii) 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 Credit Suisse First Boston Corporation ("CSFB")
has delivered to the Company's Board of Directors its opinion that the
consideration to be paid in the Offer and the Merger is fair to the holders of
Company Shares (as defined below in Section 2.2(c)) from a financial point of
view. The Company has been advised that all of its directors and executive
officers presently intend either to tender their Shares pursuant to the Offer or
to vote in favor of the Merger. The Company will promptly furnish Parent and
Merger Subsidiary with a list of its stockholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case as of the most recent practicable date, and
will provide to Parent and Merger Subsidiary such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent or Merger
Subsidiary may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced the
Company will file with the SEC and disseminate to holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9")
which shall reflect the recommendations of the Company's Board of Directors
referred to above, subject to the fiduciary duties of the Board of Directors of
the Company as advised in writing by Katten Muchin & Zavis, counsel to the
Company. The Company, Parent and Merger Subsidiary each agree promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of Shares, in each case as and to the extent
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required by applicable federal securities laws. Parent and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-9 prior
to its being filed with the SEC.
SECTION 1.3. DIRECTORS. (a) Effective upon the acceptance for payment by
Merger Subsidiary of a majority of the Shares pursuant to the Offer, Parent
shall be entitled to designate the number of directors, rounded up to the next
whole number, on the Company's Board of Directors that equals the product of (i)
the total number of directors on the Company's Board of Directors (giving effect
to the election of any additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by Parent or Merger Subsidiary
(including Shares accepted for payment) bears to the total number of Shares
outstanding, and the Company shall take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors,
including, without limitation, increasing the number of directors, or seeking
and accepting resignations of 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 two members who are neither designees nor affiliates
of Parent or Merger Subsidiary nor employees of the Company (each, an
"INDEPENDENT DIRECTOR"). If the number of Independent Directors is reduced below
two for any reason prior to the Effective Time, the remaining and departing
Independent Directors shall be entitled to designate a person to fill the
vacancy. No action proposed to be taken by the Company to amend or terminate
this Agreement or waive any action by Parent or Merger Subsidiary shall be
effective without the approval of both Independent Directors. At such times, the
Company will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Company's
Board of Directors of (x) each committee of the Board, (y) each board of
directors of each subsidiary (defined below in Section 4.1(a)) and (z) each
committee of each such board.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act
(defined below in Section 4.1(d)) and Rule 14f-l promulgated thereunder. The
Company shall promptly take all actions required pursuant to Section 14(f) and
Rule 14f-l 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-l to
fulfill its obligations under this Section 1.3. Parent will supply to the
Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING
CORPORATION").
(b) As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger, the Company
(and, if required, Merger Subsidiary) will file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by Delaware Law in connection with the Merger. The Merger
shall become
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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 Directors, at such later time as is specified in the certificate of
merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
SECTION 2.2. CONVERSION OF SHARES. At the Effective Time, automatically
and without any further action being required:
(a) each Share held by the Company as treasury stock or owned by Parent,
Merger Subsidiary or any subsidiary of either of them immediately prior to
the Effective Time (together, in each case, with the associated Right) shall
be canceled, and no payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation; and
(c) each (i) Share outstanding immediately prior to the Effective Time
together with the associated Right and (ii) each share of Series B Preferred
(as defined herein) (the shares of the Series B Preferred and the Shares are
referred to herein collectively as the "COMPANY SHARES") shall, except as
otherwise provided in Section 2.2(a) or as provided in Section 2.4 with
respect to Company Shares as to which appraisal rights have been exercised,
be converted into the right to receive $29.25 in cash or any higher price
paid for each Share in the Offer, without interest (the "MERGER
CONSIDERATION").
SECTION 2.3. SURRENDER AND PAYMENT. (a) Prior to the Effective Time,
Parent shall appoint a bank or trust company (the "EXCHANGE AGENT") for the
purpose of exchanging certificates representing Company 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 Company Shares (the "EXCHANGE
FUND"). For purposes of determining the Merger Consideration to be made
available, Parent shall assume that no holder of Company Shares will perfect his
right to appraisal of his Company Shares. Promptly after the Effective Time,
Parent will send, or will cause the Exchange Agent to send, to each holder of
Company 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 Company Shares to the Exchange Agent). The Exchange Agent shall,
pursuant to irrevocable instructions, make the payments provided in this Section
2.3. The Exchange Fund shall not be used for any other purpose, except as
provided in this Agreement.
(b) Each holder of Company Shares that have been converted into a right
to receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Company Shares, together with a
properly completed letter of transmittal covering such Company Shares and such
other documents as may be reasonably requested, will be entitled to
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receive the Merger Consideration payable in respect of such Company 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 Company Shares represented
by the certificate or certificates surrendered in exchange therefor, it shall be
a condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such Company Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "PERSON" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of Company Shares. If, after the Effective Time, certificates
representing Company 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
Company Shares six months after the Effective Time shall be returned to Parent,
upon demand, and any such holder who has not exchanged his Company 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 Company Shares. Notwithstanding the foregoing, Parent shall not
be liable to any holder of Company Shares for any amount paid to a public
official pursuant to applicable abandoned property laws. Any amounts remaining
unclaimed by holders of Company 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 Company Shares for which
appraisal rights have been perfected shall be returned to Parent, upon demand.
SECTION 2.4. DISSENTING SHARES. Notwithstanding Section 2.2, Company
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Company Shares in accordance with Delaware Law
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses his right to appraisal, such Company 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 Company Shares, and Parent shall have
the right to participate in all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
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SECTION 2.5. STOCK OPTIONS. (a) At or immediately prior to the Effective
Time, each outstanding Company Option (defined below) which is vested or which
pursuant to the terms of the relevant Stock Plan (defined below) become vested
by virtue of the Offer or the Merger shall be canceled, and each holder of any
such option shall be paid by the Company promptly after the Effective Time for
each such option an amount determined by multiplying (i) the excess, if any, of
$29.25 per Share over the applicable exercise price of such option by (ii) the
number of Shares such holder could have purchased had such holder exercised such
option in full immediately prior to the Effective Time (as if such Company
Option was exercisable in full); subject to the limitations set forth in an
amendment to certain option agreements (true and complete copies of which have
been provided to Parent) with respect to the Company Options issued in 1999. The
Company shall take such action or, if required, shall amend each of the
Company's Stock Plans that do not provide for the vesting of unvested Company
Options by virtue of the Offer or the Merger so that, at the Effective Time,
each of the then outstanding unvested Company Options shall by virtue of the
Merger, and without any further action on the part of any holder thereof, be
assumed by Parent and converted into an option to purchase that number of shares
of common stock, par value $.10 per share ("PARENT COMMON STOCK"), of Parent
determined by multiplying the number of Shares subject to such Company Option at
the Effective Time by the quotient obtained by dividing (x) $29.25 by (y) the
average closing price of Parent Common Stock on the New York Stock Exchange
Composite Tape for the 30 consecutive trading days immediately prior to the
Effective Time (such quotient, the "CONVERSION NUMBER"), at an exercise price
per share of Parent Common Stock equal to the quotient obtained by dividing (x)
the exercise price per Share of such Company Option immediately prior to the
Effective Time by (y) the Conversion Number. If the foregoing calculation
results in an assumed Company Option being exercisable for a fraction of a share
of Parent Common Stock, then the number of shares of Parent Common Stock subject
to such option shall be rounded down to the nearest whole number of shares. The
term, exercisability, vesting schedule, status as an "INCENTIVE STOCK option"
under Section 422 of the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder (the "CODE"), if applicable, and all other
terms and conditions of unvested Company Options being assumed by Parent will,
to the extent permitted by law and otherwise reasonably practicable, be
unchanged. Continuous employment with the Company or any of its subsidiaries
shall be credited to the optionee for purposes of determining the vesting of the
number of shares of Parent Common Stock subject to exercise under the optionee's
assumed Company Option after the Effective Time. "COMPANY OPTION" means any
option granted, whether or not exercisable, and not exercised or expired, to a
current or former employee, director or independent contractor of the Company or
any of its subsidiaries or any predecessor thereof to purchase Shares pursuant
to any stock option, stock bonus, stock award, or stock purchase plan, program,
or arrangement of the Company or any of its subsidiaries or any predecessor
thereof (collectively, the "STOCK PLANS") or any other contract or agreement
entered into by the Company or any of its subsidiaries. Notwithstanding any
other provision of this Section 2.5, payment may be withheld in respect of any
Company Option until necessary consents are obtained.
(b) Prior to the Effective Time, the Company shall use its
best efforts to (i) obtain any consents from holders of Company Options and (ii)
make any amendments to the terms of such stock option or compensation plans or
arrangements that, in the case of either clauses (i) or (ii), are necessary to
give effect to the transactions contemplated by Section 2.5(a).
(c) Prior to the Effective Time, the Company shall terminate
the Company's 1996 Stock Purchase Plan and any other of the Company's employee
stock purchase plans as soon as possible without violating the terms of the
plan. The Company shall not grant any option or right to acquire stock under the
Company's 1996 Stock Purchase Plan or any other such stock purchase plan on or
after the date of this
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Agreement.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
pursuant to the terms set forth in this Section 2.5. Parent shall cause the
shares of Parent Common Stock issuable upon exercise of the assumed Company
Options to be registered, or to be issued pursuant to a then effective
registration statement, no later than 45 days after the Effective Time on Form
S-8 (or any successor form thereto) 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.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Surviving Corporation at the Effective Time shall be
amended and restated to be in the form attached hereto as Annex II (including
the certificate of designations of the Class II Series B Preferred Stock) until
amended in accordance with applicable law.
SECTION 3.2. BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation, and (ii) the officers of
the Merger Subsidiary at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Merger Subsidiary as follows. The
representations and warranties of the Company are made only on and as of the
date hereof.
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company and
each of its Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company and each of its Significant
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
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or licensed (individually or in the aggregate) could not reasonably be expected
to have a material adverse effect on the financial condition, business, assets
or results of operations of the Company and its subsidiaries taken as a whole
except that occurrences due solely to a disruption of the Company's or its
subsidiary's businesses solely as a result of the announcement of the execution
of this Agreement and the transactions proposed to be consummated by this
Agreement shall be excluded from consideration for purposes of the effect of an
action or inaction on the Company and its subsidiaries taken as a whole (a
"MATERIAL ADVERSE EFFECT"). The Company has delivered to Parent complete and
correct copies of its Articles of Incorporation and By-Laws and the certificates
of incorporation and by-laws of its Significant Subsidiaries, in each case as
amended to the date of this Agreement. For purposes of this Agreement, a
"SUBSIDIARY" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person;
and a "SIGNIFICANT SUBSIDIARY" means any subsidiary of a person that constitutes
a significant subsidiary of such person within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the "SEC").
(b) SUBSIDIARIES. Section 4.1(b) of the disclosure schedule delivered by
the Company to Parent and Merger Subsidiary prior to the execution of this
Agreement (the "DISCLOSURE SCHEDULE") lists each subsidiary of the Company and
its respective jurisdiction of incorporation and indicates whether such
subsidiary is a Significant Subsidiary. Except as set forth in Section 4.1(b) of
the Disclosure Schedule, all the outstanding shares of capital stock of each
such domestic subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company, by another subsidiary of the Company
or by the Company and another such subsidiary, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "LIENS") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock). Except for the capital stock of its subsidiaries
or as listed in Section 4.1(b) of the Disclosure Schedule, the Company does not
own, directly or indirectly, any capital stock or other ownership interest in
any person.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 180,000,000 shares of Common Stock and 10,000,000 shares of Class II
Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"). At the time
of execution of this Agreement, (i) 101,282,612 shares of Common Stock were
issued and outstanding (which includes 13,750,523 shares issued in connection
with the acquisition of Memco Software Ltd. ("Memco"), (ii) no shares of Common
Stock were held by the Company in its treasury or by any of the Company's
subsidiaries, (iii) 28,442,209 shares of Common Stock were reserved for issuance
pursuant to options outstanding under the Stock Plans (which includes 3,328,113
shares reserved for issuance pursuant to Stock Plans received through the
acquisition of Memco), and (iv) 1,768,421 shares of Common Stock were reserved
for issuance upon conversion of the outstanding shares of Class II Series B
Preferred Stock (the "Series B Stock"), (v) 12,401,032 shares of Common Stock
were reserved for issuance upon conversion of the Company's 6 3/4% Convertible
Subordinated Notes due 2001 and 6.25% Convertible Subordinated Notes due 2002
(the "Convertible Notes") and (vi) 1,800,000 shares of Class II Series A Junior
Participating Preferred Stock (the "PARTICIPATING PREFERRED STOCK") were
reserved for issuance in connection with the rights (the "RIGHTS") to purchase
shares of Participating Preferred Stock issued pursuant to the Rights Agreement
dated as of December 21, 1995 (as amended from time to time, the "RIGHTS
AGREEMENT"), between the Company and Harris Trust and Savings Bank, as Rights
Agent (the "RIGHTS AGENT"). Except as set forth above, at the time of execution
of this Agreement, no shares of
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capital stock or other voting securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Stock Plans will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except as set forth in Section 4.1(c) of the
Disclosure Schedule, there are not any bonds, debentures, notes or other
indebtedness or securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of the Company may vote. Except as set forth
above and in Section 4.1(c) of the Disclosure Schedule, there are not any
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or of any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding rights, commitments, agreements, arrangements or
undertakings of any kind obligating the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or other
voting securities of the Company or any of its subsidiaries or any securities of
the type described in the two immediately preceding sentences. 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 the Consulting and Non-
Compete Agreements (the "Consulting Agreements" and, together with this
Agreement, the "Agreements") being entered into by the Company with the chief
executive officer, chief operating officer and chief financial officer of the
Company (true and complete copies of which have been provided to Parent),
simultaneously with entering into this Agreement. Except for any required
approval by the Company's stockholders in connection with the consummation of
the Merger, the Company has the requisite corporate power and authority to
consummate the transactions contemplated by this Agreement. The execution and
delivery of the Agreements by the Company and the consummation by the Company of
the transactions contemplated by the Agreements have been duly authorized by all
necessary corporate action on the part of the Company, except for any required
approval by the Company's stockholders in connection with the consummation of
the Merger. This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding agreement of Parent
and Merger Subsidiary, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
Consulting Agreements have been duly executed and delivered by the Company and,
assuming each Consulting Agreement constitutes a valid and binding agreement of
the executive party thereto, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
execution and delivery of the Agreements does not, and the consummation of the
transactions contemplated by the Agreements and compliance with the provisions
of the Agreements will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any of its subsidiaries under, (i)
the Certificate of Incorporation or By-Laws of the Company or the comparable
charter or organizational documents of any of its Significant Subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or
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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) above, any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate could not reasonably be expected to
(A)(1) with respect to the matters disclosed in Section 4(p)(i) of the
Disclosure Schedule, result in any required repurchase by the Company of the
Convertible Notes, result in payments in excess of $150,000,000 in the aggregate
under all "C.A. clause" contracts, result in severance payments in excess of
$100,000,000 in the aggregate or result in payments to Folding Space L.L.C. in
excess of $23,500,000 in the aggregate or (2) in any other manner have a
Material Adverse Effect, (B) impair the ability of the Company to perform its
obligations in all material respects under this Agreement or (C) prevent or
materially delay consummation of any of the transactions contemplated by this
Agreement and other than, in the case of clause (iii) above, any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
could not reasonably be expected to (A) have a Material Adverse Effect, (B)
impair the ability of the Company to perform its obligations in all material
respects under this Agreement or (C) prevent or materially delay consummation of
any of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with or
exemption by (collectively, "CONSENTS") any federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "GOVERNMENTAL ENTITY"),
is required by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of the Agreements by the Company or
the consummation by the Company of the transactions contemplated by the
Agreements, except, in the case of this Agreement, for (i) the filing of a
premerger notification and report form by the Company under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR ACT"), (ii) compliance with any applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "EXCHANGE ACT"), (iii) the filing of a
certificate of merger in accordance with Delaware Law and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (iv) European antitrust notification and (v) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as to which the failure to obtain or make could not reasonably be
expected to (x) have a Material Adverse Effect or (y) prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. The
Company has filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1998 and has provided to Parent a true
and complete copy of the Company's Annual Report on Form 10-K which will be
filed no later than March 31, 1999 (the "COMPANY'S 1999 10-K" and together with
such other filed documents referred to in this sentence, the "SEC DOCUMENTS").
As of their respective filing dates (or in the case of the Company's 1999 10-K,
March 28, 1999), the SEC Documents complied in all material respects with the
then applicable 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, as of such filing dates
(or in the case of the Company's 1999 10-K, the date of this Agreement) (or if
amended or superseded by a filing prior to the date of this Agreement, as of the
date of such filing) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC
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Documents (the "FINANCIAL STATEMENTS") complied as to form in all material
respects with then applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Company Filed SEC
Documents (defined below in Section 4.1(g)) or in Section 4.1(e) or (g) of the
Disclosure Schedule, 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, in each case 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
incurred in connection with this Agreement or which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(f) DISCLOSURE DOCUMENTS. (i) Each document required to be filed by the
Company with the SEC in connection with the transactions contemplated by this
Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including, without limitation,
the Schedule 14D-9, the proxy or information statement of the Company (the
"COMPANY PROXY STATEMENT"), if any, to be filed with the SEC in connection with
the Merger, and any amendments or supplements thereto will, when filed, comply
as to form in all material respects with the applicable requirements of the
Exchange Act.
(ii) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement and at the
time of any distribution thereof, such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.1(f)(ii) will not apply to statements
or omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger Subsidiary specifically
for use therein.
(iii) The information with respect to the Company or any subsidiary that
the Company furnishes to Parent or Merger Subsidiary in writing specifically for
use in the Offer Documents will not, at the time of the filing thereof, at the
time of any distribution thereof and at the time of the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the SEC
Documents filed and publicly available prior to the date of this Agreement and
the 1999 Form 10-K (the "COMPANY FILED SEC DOCUMENTS") or in Section 4.1(g) of
the Disclosure Schedule, since
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December 31, 1998, the Company has conducted its business only in the ordinary
course consistent with past practice, and there has not been (i) except for the
restructuring announced by the Company in 1999 and described in Section 4.1(g)
of the Disclosure Schedule, any event, occurrence or development of a state of
circumstances which has had or could reasonably be expected to have a Material
Adverse Effect, (ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to any
of the Company's capital stock or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any outstanding shares
of capital stock or other securities of the Company or any of its subsidiaries,
(iii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, (iv)
(A) any granting by the Company or any of its subsidiaries to any current or
former director, officer or employee of the Company or any of its subsidiaries
of any increase in compensation or benefits or severance or termination pay or
benefits, except in the ordinary course of business consistent with past
practice or as was required under employment, severance or termination
agreements or plans in effect as of December 31, 1998, or (B) any entry by the
Company or any of its subsidiaries into any employment, deferred compensation,
severance or termination agreement with any such current or former director,
officer or employee, except in the ordinary course of business consistent with
past practice, (v) any damage, destruction or loss, whether or not covered by
insurance, that has had or could reasonably be expected to have a Material
Adverse Effect, (vi) any change in accounting methods, principles or practices
by the Company or any of its subsidiaries, (vii) any amendment of any material
term of any outstanding security of the Company or any of its subsidiaries,
(viii) any incurrence, assumption or guarantee by the Company or any of its
subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business consistent with past practice, but in no event in the amount
of more than $1,000,000 in the aggregate, (ix) any creation or assumption by the
Company or any of its subsidiaries of any Lien on any asset other than in the
ordinary course of business consistent with past practice, but in no event in
the amount of more than $1,000,000 for any one transaction or $5,000,000 in the
aggregate, (x) any making of any loan, advance or capital contributions to or
investment in any person other than to a subsidiary that is wholly owned (other
than director qualifying shares) or other than in the ordinary course of
business consistent with past practice, but in no event in the amount of more
than $1,000,000 for any one transaction or $5,000,000 in the aggregate and other
than investments in cash equivalents made in the ordinary course of business
consistent with past practice, (xi) any transaction or commitment made, or any
contract or agreement entered into, by the Company or any of its subsidiaries
relating to its assets or business (including the acquisition or disposition of
any assets or the merger or consolidation with any person) or any relinquishment
by the Company or any of its subsidiaries of any contract or other right, in
either case material to the Company and its subsidiaries taken as a whole,
representing commitments on behalf of the Company or any of its subsidiaries of
more than $1,000,000 for any transaction or $5,000,000 for any series of related
transactions, or otherwise in the ordinary course of business consistent with
past practice and those contemplated by this Agreement, (xii) any material labor
dispute, other than routine individual grievances, or any activity or proceeding
by a labor union or representative thereof to organize any employees of the
Company or any of its subsidiaries, which employees were not subject to a
collective bargaining agreement at December 31, 1998, or any material lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees or (xiii) any agreement, commitment, arrangement or undertaking by the
Company or any of its subsidiaries to perform any action described in clauses
(i) through (xii).
(h) LITIGATION. Except as disclosed in the Company Filed SEC
Documents or in Section 4.1(h) of the Disclosure Schedule, there is no suit,
action or proceeding pending or, to the
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knowledge of the Company, threatened against or affecting the Company or any of
its subsidiaries that, individually or in the aggregate, could reasonably be
expected to (i) have a Material Adverse Effect, (ii) impair the ability of the
Company to perform its obligations under this Agreement or (iii) prevent or
materially delay the consummation of the Offer, the Merger or any of the other
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries having, or which, insofar as
reasonably can be foreseen, in the future would have, any such effect. Section
4.1(h) of the Disclosure Schedule sets forth, 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 $2,000,000, the
forum, the parties thereto, the subject matter thereof and the amount of damages
claimed.
(i) ABSENCE OF CHANGES IN STOCK AND BENEFIT PLANS; SEVERANCE
BENEFITS. Except as disclosed in Section 4.1(i) and (g) of the Disclosure
Schedule, there has not been (i) any acceleration, amendment or change of the
period of exercisability or vesting of any Company Options or restricted stock,
stock bonus or other awards under the Stock Plans or any other options to
purchase Shares or stock of any subsidiary of the Company (including any
discretionary acceleration of the exercise periods or vesting by the Company's
Board of Directors or any committee thereof or any other persons administering a
Stock Plan) or authorization of cash payments in exchange for any Company
Options, restricted stock, stock bonus or other awards granted under any of such
Stock Plans or any other options to purchase Shares or stock of any subsidiary
of the Company; or (ii) any adoption or amendment by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, stock appreciation right,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical, workers' compensation, supplementary unemployment benefits or other
plan, arrangement or understanding providing benefits to any current or former
employee, officer or director of the Company or any of its subsidiaries or any
beneficiary thereof entered into, maintained or contributed to, as the case may
be, by the Company or any of its subsidiaries (collectively, "BENEFIT PLANS").
Section 4.1(i) of the Disclosure Schedule sets forth for each of the five most
highly compensated employees of the Company the aggregate maximum amount of all
termination, severance or other similar benefits (but the Company's best
estimate of tax gross up amounts) to which such employee is entitled in
connection with the Merger and the other transactions contemplated by this
Agreement; provided that the gross up shall be based on these numbers.
(j) PARTICIPATION AND COVERAGE IN BENEFIT PLAN. Except with
respect to (A) changes required by applicable law or (B) amendments and other
actions disclosed in the Company Filed SEC Documents or Section 4.1(i), (g) or
(j) of the Disclosure Schedule, there has been no written interpretation or
announcement (whether or not written) by the Company or any of its subsidiaries
relating to, or change in employee participation or coverage under, any Benefit
Plan which would materially increase the expense of maintaining such Benefit
Plan above the level of the expense incurred in respect thereof for the fiscal
year ended on December 31, 1997.
(k) ERISA COMPLIANCE. (i) Section 4.1(k)(i) of the Disclosure
Schedule contains a list and brief description of (A) all "EMPLOYEE PENSION
BENEFIT PLANS" (defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), "EMPLOYEE WELFARE BENEFIT PLANS"
(defined in Section 3(l) of ERISA) and all other Benefit Plans maintained, or
contributed to, by the Company or any of its subsidiaries or ERISA affiliates
(defined below) for the benefit of any current or former employees, officers or
directors of the Company or any of its subsidiaries or ERISA affiliates or under
which the Company or any of its subsidiaries or ERISA
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affiliates has any liability other than Benefit Plans exempt from Title I of
ERISA pursuant to Section 4(b)(4) of ERISA and (B) all material Benefit Plans
maintained outside of the United States primarily for the benefit of persons
substantially all of whom are non-resident aliens with respect to the United
States. For purposes of this Agreement, "ERISA AFFILIATE" of the Company means
any person which, together with the Company or any of its subsidiaries, would be
treated as a single employer under Section 414 of the Code. The only Benefit
Plans described in clause (A) of the preceding sentence which individually or
collectively would 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. The Company has provided to Parent a true and
complete copy of each Pension Plan.
(ii) Each Benefit Plan has been maintained and administered in
compliance in all material respects with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations,
and is, to the extent required by applicable law or contract, fully funded
without having any material deficit or material unfunded actuarial liability.
Each Benefit Plan intended to be qualified under Section 401(a) of the Code is
and has been at all times (giving effect to any applicable retroactive remedial
amendment period) so qualified.
(iii) No Benefit Plan is covered by Title IV of ERISA and no
contributions to any Benefit Plan are required under Section 412 of the Code.
Neither the Company nor any of its subsidiaries has incurred or expects to incur
any liability under Title IV of ERISA or any liability or penalty under Section
4975 or 4980B of the Code or Section 502(i) of ERISA.
(iv) Except as disclosed in Section 4.1(k)(iv) of the
Disclosure Schedule, there are no pending or anticipated material claims against
or otherwise involving any of the Benefit Plans and no material 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).
(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.
(vi) Except as required by law or as disclosed in Section
4.1(k)(vi) of the Disclosure Schedule, neither the Company nor any of its
subsidiaries has any obligations for post-retirement or post-termination health
and life benefits under any Benefit Plan.
(l) TAXES. As used in this Agreement, "TAX" or "TAXES" shall
include all Federal, state, local and foreign income, property, sales, excise
withholding and other taxes, tariffs or governmental charges or assessments of
any nature whatsoever as well as any interest, penalties and additions thereto.
Except as set forth 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 (other than a failure in an
immaterial manner). All such tax returns are correct and complete in all
respects. All taxes owed by the Company and any of its subsidiaries (whether or
not shown on any tax return) have been paid. There are no 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.
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(ii) The Company and each of its subsidiaries has withheld and
timely paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party (other than a failure in an immaterial
manner).
(iii) Neither the Company nor any of its subsidiaries expects
any authority to assess any additional taxes against the Company or any of its
subsidiaries for any period for which tax returns have been filed. No dispute or
claim concerning any tax liability of the Company or any of its subsidiaries has
been proposed or claimed in writing by any authority.
(iv) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of taxes or agreed to any extension
of time with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has filed
a consent pursuant to Section 341(f) of the Code concerning collapsible
corporations. Neither the Company nor any of its subsidiaries is a party to any
tax allocation or sharing agreement other than any such agreement with any
member of its U.S. consolidated group. Neither the Company nor any of its
subsidiaries has any 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. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.
(vi) As of the date of the most recent financial statements
included in the Company Filed SEC Documents, the unpaid taxes of the Company and
its subsidiaries did not exceed the liability for taxes (rather than any reserve
for deferred taxes established to reflect timing differences between book and
tax income) set forth on the face of such financial statements.
(vii) Neither the Company nor any of its subsidiaries is
required to include in income any material adjustment pursuant to Section 481(a)
of the Code (or similar provisions of other law or regulations) in its current
or in any future taxable period by reason of a change in accounting method; nor
does the Company or any of its subsidiaries have any knowledge that the Internal
Revenue Service (or other taxing authority) has proposed or is considering
proposing, any such change in accounting method.
(viii) Neither the Company nor any of its subsidiaries is a
party to any agreement, contract, or arrangement that, individually or
collectively, could give rise to the payment of any amount (whether in cash or
property, including Shares) that would not be deductible pursuant to the terms
of Sections 162(a)(1), 162(m), 162(n) or 280G of the Code.
(m) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved this Agreement, the Stockholder Option Agreement and the
transactions contemplated hereby and thereby including, without limitation, the
Offer and the Merger, and such approval is sufficient to render inapplicable to
this Agreement, the Stockholder Option Agreement and the transactions
contemplated hereby and thereby including, without limitation, the Offer and the
Merger, the restrictions and limitations 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
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statute or similar statute or regulation, applies or purports to apply to the
Offer, the Merger, this Agreement or any of the other transactions contemplated
hereby or thereby.
(n) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than CSFB, the fees
and expenses of which will be paid by the Company (and a copy of whose
engagement letters and a calculation of the fees that would be due thereunder
has been provided to Parent), is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its subsidiaries. Assuming consummation of the Offer and
the Merger, no such engagement letter obligates the Company to continue to use
their services or pay fees or expenses in connection with any future
transaction.
(o) PERMITS; COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i)
Each of the Company and its subsidiaries has in effect all federal, state, local
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("PERMITS") necessary for it
to own, lease or operate its 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 respects with all applicable statutes, laws or
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 respect
any applicable statutes, laws or ordinances, regulations, rules, judgments,
decrees or orders, except such failures to comply or violations as would not
reasonably be expected to have a Material Adverse Effect.
(ii) Neither the Company nor any of its subsidiaries has (i)
placed, held, located, released, transported or disposed of any Hazardous
Substance (as defined below) on, under, from or at any of the Company's or any
of its subsidiaries' properties or any other properties, other than in a manner
that could not, in all such cases taken individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect, (ii) any
knowledge of the presence of any Hazardous Substances that have been released
into the environment on, under or at any of the Company's or any of its
subsidiaries' properties other than that which could not reasonably be expected
to have or result in a Material Adverse Effect, or (iii) received any written
notice (A) of any violation of any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment or environmental
regulation or control or regarding Hazardous Substances (collectively,
"Environmental Laws") that has not been resolved or settled with the relevant
Governmental Entity, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation, (C) requiring the response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of its subsidiaries' properties or any other properties, (D) alleging
non-compliance by the Company or any of its subsidiaries with the terms of any
permit required under any Environmental Law in any manner reasonably likely to
require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of its subsidiaries' properties or any
other properties. For purposes of this Agreement, the term "Hazardous Substance"
shall mean any material defined as toxic or hazardous, including any petroleum
and petroleum products, under any applicable Environmental Law.
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(p) CONTRACTS; DEBT INSTRUMENTS. (i) Except as otherwise
disclosed in Section 4.1(p)(i) of the Disclosure Schedule or filed with the SEC
as an exhibit to any Filed SEC Document, neither the Company nor any of its
subsidiaries is a party to or subject to:
(A) any union contract, or any employment, consulting, severance,
termination, or indemnification agreement, contract or arrangement providing
for future payments, written or oral, with any current or former officer,
consultant, director or employee which (1) exceeds $300,000 per annum or (2)
requires aggregate annual payments or total payments over the life of such
agreement, contract or arrangement to such current or former officer,
consultant, director or employee in excess of $300,000 or $600,000,
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 (a true and complete copy of a severance agreement entered
into by the Company has been provided to Parent and all severance or
termination agreements entered into by the Company with its or its
subsidiaries' employees are substantially identical to the severance
agreement so provided to Parent other than the date of such agreement, the
employee covered thereby and the amounts payable thereunder upon severance);
(B) any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of revenues of
$2,000,000 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
$2,000,000;
(D) any material agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment which has not been terminated or
performed in its entirety and not renewed which may be, by its terms,
terminated or under which the Company's rights or benefits may be impaired
or adversely affected, in either case by reason of the execution of this
Agreement, the closing of the Offer or the Merger, or the consummation of
the other transactions contemplated hereby;
(E) any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment that limits in any material respect
the freedom of the Company or any subsidiary of the Company to compete in
any line of business or with any person or in any geographic area or which
would so limit in any material respect the freedom of the Company or any
subsidiary of the Company after the Effective Time; or
(F) any other agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment not made in the ordinary course of
business which is material to the Company and its subsidiaries taken as a
whole;
excluding in any case any agreement, arrangement or instrument under which no
party has any continuing rights or obligations.
(ii) Neither the Company nor any subsidiary of the Company is
in default in any material respect under the terms of any exclusive license or
distribution agreement or arrangement that, by its terms, provides for payments
to the Company or any of its subsidiaries of $1,000,000 or more
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per annum, true and complete copies or descriptions of all of which have been
delivered to Parent, or any other material license or distribution agreement or
arrangement. To the knowledge of the Company, none of the parties to any of the
contracts identified in Section 4.1(p)(i) of the Disclosure Schedule or
otherwise disclosed 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 subsidiaries in the future.
(iii) Set forth in Section 4.1(p)(iii) of the Disclosure Schedule are
(A) a list of (I) 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 $2,500,000 is outstanding or may be incurred and (II) the
respective principal amounts currently outstanding thereunder and (B) a schedule
of (I) each contract, agreement or arrangements which, because of the Company's
entering into this Agreement, either require the Company or Parent to make a
payment or reduce a charge under such agreement and (II) the Company's best
estimate of the amount of such payment. For purposes of this Section
4.1(p)(iii), "INDEBTEDNESS" shall mean, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (B) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations of such person upon which interest charges are customarily paid,
(D) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (E) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (F) all capitalized lease obligations of such person,
(G) all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (H) all obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof), (I) all letters of
credit issued for the account of such person (excluding letters of credit issued
for the benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such person to
purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(K) all guarantees and arrangements having the economic effect of a guarantee of
such person of any indebtedness of any other person.
(q) OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of CSFB, dated the date hereof, a copy of which has been or, within two 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. Except as set forth in Section
4.1(r) of the Disclosure Schedule, to the Company's knowledge, none of the
Company's or any of its subsidiaries' officers or directors has any direct or
indirect interest in any property, real or personal, tangible or intangible,
including inventions, patents, copyrights, trademarks, trade names, trade
secrets or know-how, used in or pertaining to the business of the Company or
that of its subsidiaries, or any supplier, distributor or customer of the
Company or any of its subsidiaries, except for the normal rights of a
stockholder and rights under existing employee benefit plans and except for any
such interest which would not be required to be disclosed under the Exchange
Act.
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(s) TECHNOLOGY. (i) The Company exclusively owns, without restrictions,
or is 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 in the
business of the Company and any of its subsidiaries as currently conducted (the
"COMPANY INTELLECTUAL PROPERTY RIGHTS"). Section 4.1(s)(i) of the Disclosure
Schedule lists: (A) all patents, trademarks, trade names, service marks,
registered and unregistered copyrights, and any applications therefor included
in the Company Intellectual Property Rights, together with a list of all of 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) all licenses and other
agreements to which the Company or any of its subsidiaries is a party and
pursuant to which the Company or any of its subsidiaries is authorized to use
any Company Intellectual Property Right, that is material to the licensing by
the Company or any subsidiary of its software products to end users and includes
the identities of the parties thereto, a description of the nature and subject
matter thereof, the applicable royalty and the term thereof. Neither the Company
nor any of its subsidiaries is, or as a result of the execution, delivery or
performance of the Company's obligations hereunder will be, in violation of, or
lose any rights pursuant to, any license or agreement described in Section
4.1(s)(i) of the Disclosure Schedule.
(ii) 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 (A) to the effect that the manufacture, sale or
use of any product or process as now used or offered or proposed for use or sale
by the Company or any subsidiary of the Company infringes on any copyright,
trade secret, patent or other intellectual property right of any person, (B)
against the use by the Company or any subsidiary of the Company of any Company
Intellectual Property Rights, or (C) challenging the ownership, validity or
effectiveness of any of the Company Intellectual Property Rights. All granted
and issued patents and all registered trademarks and service marks listed in
Section 4.1(s)(i) of the Disclosure Schedule and all copyrights held by the
Company or any of its subsidiaries are valid, enforceable and subsisting. To the
Company's knowledge, there has not been and there is not any material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, employee or former employee.
(iii) Except as set forth in Section 4.1(s)(i) of the Disclosure
Schedule, no owned Company Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
material 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 for the Company's end-user licenses, 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. The Company and its subsidiaries have the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Company Intellectual Property Rights that are owned by the Company or any of its
subsidiaries.
(t) CHANGE OF CONTROL. Except as set forth in Section 4.1(i),
4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions
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contemplated hereby will not (i) result in or increase the amount of any
payment or benefit (including a payment or benefit contingent on the
occurrence of one or more events including, without limitation, termination
of employment) becoming due to any current or former employee, director or
independent contractor of the Company or any of its subsidiaries, from the
Company or any of its subsidiaries under the terms of any Stock Plan, Benefit
Plan, agreement or otherwise, or (ii) result in the acceleration of the time
of payment, exercise or vesting of any such payment or benefits.
(u) RIGHTS AGREEMENT. The Company has delivered to Parent a complete
copy of the Rights Agreement, including all amendments and exhibits thereto. The
Company has taken, and as soon as possible after the date hereof (but in no
event later than two business days after the date hereof), the Rights Agent will
take, all actions necessary or appropriate to amend the Rights Agreement to
ensure that the execution of this Agreement and the Stockholder Option
Agreement, the announcement or making of the Offer, the acquisition of Shares
pursuant to the Offer, the Merger and the Stockholder Option Agreement and the
other transactions contemplated in this Agreement and the Stockholder Option
Agreement will not cause (i) Parent or any of its affiliates to be considered an
Acquiring Person (as defined in the Rights Agreement), (ii) the occurrence of
the Distribution Date or Shares Acquisition Date (each as defined in the Rights
Agreement) or (iii) the separation of the Rights from the underlying Shares, and
will not give the holders thereof the right to acquire securities of any party
thereto.
(v) 1999 OPTIONS. The Company Options issued in 1999 pursuant to the
Stock Plans have been issued to employees on a compensation basis and for the
purposes consistent with prior issuances by the Company and were not issued in
contemplation of the transactions contemplated by this Agreement.
(w) YEAR 2000 COMPLIANCE. The Company's web site
(http://www.platinum.com/year2klt.htm), accurately sets forth the Y2K
compliance status of the Company's products in all material respects. The
Company's disclosure in the Company's 1999 10-K under the caption "Year 2000
Considerations" accurately sets forth in all material respects the Company's
Year 2000 compliance status regarding its internal systems, including IT and
non-IT systems, and technical infrastructure.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBSIDIARY. Parent and Merger Subsidiary represent and warrant to the Company as
follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent and
Merger Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to carry on its business as now being
conducted.
(b) AUTHORITY; NONCONTRAVENTION. Parent and Merger Subsidiary have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Merger Subsidiary. This Agreement has been duly executed
and delivered by Parent and Merger Subsidiary and, assuming this Agreement
constitutes a valid and binding agreement of the Company, constitutes a valid
and binding obligation of such party, enforceable against such party in
accordance with its terms. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated by this Agreement and
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compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Parent or
any of its subsidiaries under, (i) the certificate of incorporation or by-laws
of Parent or Merger Subsidiary or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or Merger Subsidiary or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent,
Merger Subsidiary or any other subsidiary of Parent or their respective
properties or assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (A) have a material adverse effect on Parent and its
subsidiaries taken as a whole, (B) impair the ability of Parent and Merger
Subsidiary to perform their respective obligations under this Agreement or (C)
prevent the consummation of any of the transactions contemplated by this
Agreement. No Consent is required by or with respect to Parent, Merger
Subsidiary or any other subsidiary of Parent in connection with the execution
and delivery of this Agreement or the consummation by Parent or Merger
Subsidiary, as the case may be, of any of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger notification and report form
under the HSR Act, (ii) compliance with any applicable requirements of the
Exchange Act, (iii) the filing of a certificate of merger in accordance with
Delaware Law and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business and (iv) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as (A) may be required under the laws of any foreign country in which
the Company or any of its subsidiaries conducts any business or owns any
property or assets or (B) as to which the failure to obtain or make could not
reasonably be expected to (x) have a material adverse effect on Parent and its
subsidiaries taken as a whole or (y) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
(c) DISCLOSURE DOCUMENTS. (i) The information with respect to
Parent and its subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain, any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (A) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (B) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of the filing thereof and at the time of any distribution thereof.
(ii) The Offer Documents, when filed, will comply as to form
in all material respects with the applicable requirements of the Exchange Act
and will not at the time of the filing thereof, at the time of any distribution
thereof or at the time of consummation of the Offer, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, PROVIDED, that this representation and warranty
will not apply to statements or omissions in the Offer Documents based upon
information furnished to Parent or Merger Subsidiary in writing by the Company
specifically for use therein.
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(d) 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 the terms of this Agreement.
(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.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. CONDUCT OF BUSINESS. During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior written
approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by any direct or indirect wholly owned subsidiary of the Company
to its parent, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities (other than in connection with
the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (i) 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 (ii) conversion of Convertible
Subordinated Notes into Shares, (iii) conversion of Series B Stock, (iv)
issuances under the Stock Purchase Plan and (v) in the event that, for
ministerial reasons, the delivery of the certificates of the 13,750,523 Shares
and options for 3,328,113 Shares pursuant to the Memco acquisition (which are
included in the outstanding shares under Section 2.1(c)) has not been completed
by the time this Agreement is entered into, the completion of the issuance of
such Shares and option for such Shares in such amounts);
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(c) amend its articles or certificate of incorporation, by-laws or other
comparable charter or organizational documents (other than immaterial changes,
such as mergers of subsidiaries of the Company with other subsidiaries to
implement the Company's internal restructuring);
(d) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any business, including
through the acquisition of any interest in any corporation, partnership, joint
venture, association or other business organization or division thereof;
(e) (i) mortgage or otherwise encumber or subject to any Lien, any of
the Company Intellectual Property Rights or any other material properties or
assets, (ii) except in the ordinary course of business consistent with past
practice and pursuant to existing contracts or commitments, sell, lease,
transfer or otherwise dispose of any of the Company Intellectual Property Rights
or any other material properties or assets, or (iii) except in the ordinary
course of business consistent with past practice or pursuant to existing
contracts or commitments, license any of the Company Intellectual Property
Rights;
(f) make or agree to make any new capital expenditures in excess of
$500,000;
(g) make any material tax election (unless required by law) or settle or
compromise any material income tax liability;
(h) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice and in accordance with their terms, of (i)
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or (ii) liabilities incurred in the
ordinary course of business consistent with past practice, or, subject to the
fiduciary duties of the Board of Directors of the Company as advised in writing
by Katten Muchin & Zavis, counsel to the Company, waive the benefits of, or
agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(i) commence a lawsuit other than (i) for the routine collection of
bills or (ii) to enforce this Agreement or (iii) in such cases where the Company
in good faith determines that the failure to commence suit would result in a
material impairment of a valuable aspect of the Company's business, provided
that the Company consults with Parent prior to filing such suit;
(j) (i) enter into or amend any employment or severance agreement or
similar arrangements, (ii) enter into any agreement pursuant to which the
Company or any of it subsidiaries will provide services for a term of more than
30 days at a fixed or capped price or otherwise pursuant to terms that are not
consistent with agreements entered into by the Company or any of its
subsidiaries in the ordinary course of business, (iii) enter into any customer
sale or license agreement with non-standard terms or at discounts from list
prices in excess of 20%, (iv) pay commissions to sales employees except on the
basis of executed customer contracts with respect to products actually delivered
to customers, (v) enter into any contracts or series of related contracts in
excess of $250,000, (vi) enter into or amend any agreement or arrangement that
provides customers with enhanced rights or refunds of any nature upon a change
of control of the Company or its affiliates, (vii) enter into any customer
agreements providing for product replacements, (viii) enter into or amend any
contract to
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provide for "YEAR 2000" remediation services, (ix) make any determination as to
amounts payable under any plan, arrangement, or agreement, providing for
discretionary incentive compensation or bonus to any officer, director, employee
or independent contractor of the Company or any of its subsidiaries or (x) enter
into, adopt, or amend any agreement, arrangement, or Benefit Plan so as to
increase the liability (whether or not contingent) of the Company or the Parent
or any of their subsidiaries in respect of compensation or benefits except as
may be required by law; or
(k) authorize any of, or commit or agree to take any of, the foregoing
actions.
Parent acknowledges and agrees that the terms of this Section 5.1 do not
prevent (i) payment of reasonable professional fees and expenses as a result of
or in connection with the Company's negotiation or execution of this Agreement
or the performance of the Company's obligations hereunder, (ii) the Company from
implementing April 1, 1999 salary increases that have already been announced to
employees and provided they are not in excess of 6% in the aggregate, (iii)
paying employee, sales and other bonuses that accrued prior to the date hereof
and (iv) the creation of a "Rabbi" severance trust and the funding of the
severance payments for the top three executives in the amounts described in
Section 4.1(g) of the Disclosure Schedule.
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
Katten Muchin & Zavis, 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 its best 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 Katten Muchin &
Zavis, counsel to the Company, will use its best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
SECTION 5.3. ACCESS TO INFORMATION. From the date hereof until the
Effective Time and except as prohibited by any applicable statute, rule or
regulation of any Governmental Entity, the Company will give Parent, its
counsel, financial advisors, auditors and other authorized representatives
access (during normal business hours and upon reasonable notice) to the offices,
properties, books and records of the Company and the subsidiaries, will furnish
to Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent in its investigation of
the business of the Company and the subsidiaries; PROVIDED that no investigation
pursuant to this Section 5.3 shall affect any representation or warranty given
by the Company to Parent hereunder.
SECTION 5.4. OTHER OFFERS. Until the termination of this Agreement, the
Company and its subsidiaries will not, and will not authorize or permit the
officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal (defined below) or (ii) subject
to the fiduciary duties of the
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Board of Directors of the Company under applicable law, as advised in writing by
Katten Muchin & Zavis, counsel to the Company, and in response to an unsolicited
request therefor by a person who a majority of the Company's Board of Directors
believes intends to submit a Superior Acquisition Proposal (defined below),
engage in negotiations with, or disclose any nonpublic information relating to
the Company or any of its subsidiaries or afford access to the properties, books
or records of the Company or any of its subsidiaries to, any person that has
advised the Company or otherwise publicized the fact that such person may be
considering making, or that has made, an Acquisition Proposal; PROVIDED, nothing
herein shall prohibit the Company's Board of Directors from taking and
disclosing to the Company's stockholders a position with respect to a tender
offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. The
Company will promptly notify Parent after receipt of any Acquisition Proposal or
any notice that any person is considering making an Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
subsidiaries or for access to the properties, books or records of the Company or
any of its subsidiaries by any person that has advised the Company or otherwise
publicized the fact that such person may be considering making, or that has
made, an Acquisition Proposal and will keep Parent fully informed of the status
and details of any such Acquisition Proposal, indication or request. For
purposes of this Agreement, "ACQUISITION PROPOSAL" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any of its subsidiaries or the acquisition of any
significant equity interest in, or a significant portion of the assets of, the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement; and "SUPERIOR ACQUISITION PROPOSAL" means an Acquisition
Proposal which a majority of the disinterested directors determines in its good
faith judgment (based on advice of the Company's independent financial advisor)
to be more favorable to the Company's stockholders than the Offer or the Merger,
and for which financing, to the extent required, is then committed.
SECTION 5.5. STATE TAKEOVER STATUTES. If any "FAIR PRICE", "CONTROL
SHARE ACQUISITION", "MORATORIUM" or other anti-takeover statute, or similar
statute or regulation shall become applicable to this Agreement, the Stockholder
Option Agreement or any of the transactions contemplated hereby or thereby,
including, without limitation, the Offer or the Merger, 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 and thereby, may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger and the other transactions contemplated hereby or thereby.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. OBLIGATIONS OF MERGER SUBSIDIARY. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in this Agreement.
SECTION 6.2. VOTING OF SHARES. Parent and Merger Subsidiary agrees to
make a quorum and vote all Shares acquired in the Offer or otherwise
beneficially owned by them in favor of adoption of this Agreement at the Company
Stockholder Meeting.
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SECTION 6.3. INDEMNIFICATION. For six years after the Effective Time,
Parent and the Surviving Corporation will indemnify and hold harmless the
present and former officers, directors, employees and agents of the Company (the
"INDEMNIFIED PARTIES") in respect of acts or omissions occurring on or prior to
the Effective Time to the extent provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. Parent will cause to be maintained for a period of not
less than two years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O INSURANCE")
for all persons who are directors and officers of the Company on the date of
this Agreement, so long as the annual premium therefor would not be 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. If the existing D&O Insurance cannot
be maintained, expires or is terminated or canceled during such two-year period,
Parent will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not 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, on terms and
conditions substantially similar to the existing D&O Insurance. Without
limitation of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter relating to the Merger, the Offer or this Agreement
occurring on or prior to the Effective Time, Parent shall pay as incurred such
Indemnified Party's reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith.
SECTION 6.4. EMPLOYEES. Except as otherwise provided in Section 2.5,
Parent agrees to honor (or to cause the Surviving Corporation 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 shall prevent
Parent or the Surviving Corporation from terminating any such Benefit Plan in
accordance with its terms. For purposes of this Section 6.4, any Benefit Plan
that is a Company Filed SEC Document shall be deemed to have been delivered to
Parent.
SECTION 6.5. INTERIM FINANCING. In the event that at any time the
Company is subject to a material lack of cash liquidity and as a result the
Board of Directors of the Company declares a cash emergency, upon notice thereof
by the Company to Parent, Parent shall, if requested by the Company, work with
the Company during such time to help the Company secure necessary financing
through such efforts as Parent shall reasonably determine to be appropriate. The
foregoing shall not require any loan, guarantee or other economic support by
Parent or any payments by Parent to the Company or any other person. In the
event that such financing is not obtained by the Company and the cash emergency
is continuing notwithstanding the efforts made by Company and Parent as
described above, Parent shall, as a last resort, purchase such receivables of
the Company upon such terms as the Company and Parent shall mutually agree.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR ACT FILINGS; REASONABLE EFFORTS; NOTIFICATION. (a) Each
of Parent and the Company shall (i) promptly make or cause to be made the
filings required of such party or any of its subsidiaries under the HSR Act with
respect to the transactions contemplated by this Agreement, (ii) comply at the
earliest practicable date with any request under the HSR Act for additional
information, documents, or other material received by such party or any of its
subsidiaries from the Federal Trade Commission or the Department of Justice or
any other Governmental Entity in respect of such filings or such transactions,
and (iii) cooperate with the other party in connection with any such filing and
in connection with resolving any investigation or other inquiry of any such
agency or other Governmental Entity under any Antitrust Laws (defined below)
with respect to any such filing or any such transaction. Each party shall
promptly inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings or any such transaction. Subject to the provisions of Section
7.1(e), neither party shall participate in any meeting with any Governmental
Entity in respect of any such filings, investigation, or other inquiry without
giving the other party notice of the meeting and, to the extent permitted by
such Governmental Entity, the opportunity to attend and participate.
(b) Each of Parent and the Company shall use all reasonable efforts to
resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under the HSR
Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "ANTITRUST LAWS"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging any transaction contemplated by this Agreement as
violative of any Antitrust Law, and, if by mutual agreement, Parent and the
Company decide that litigation is in their best interests, each of Parent and
the Company shall cooperate and use all reasonable efforts vigorously to contest
and resist any such action or proceeding and to have vacated, lifted, reversed,
or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each an "ORDER"), that is in effect and
that prohibits, prevents, or restricts consummation of any such transaction.
Each of Parent and the Company shall use all reasonable efforts to take such
action as may be required to cause the expiration of the notice periods under
the HSR Act or other Antitrust Laws with respect to such transactions as
promptly as possible after the execution of this Agreement.
(c) Subject to the fiduciary duties of the Board of Directors of the
Company as advised in writing by Katten Muchin & Zavis, counsel to the Company,
each of the parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Offer, the Merger and the other transactions contemplated by this Agreement,
including (i) the obtaining of all other necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
other necessary registrations and filings (including other filings with
Governmental Entities, if any), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the preparation of the Company
Disclosure Documents and the Offer Documents, and (iv) the execution and
delivery of any
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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 Section 7.1(a), (b) or
(c), but subject to the provisions of Section 7.1(e), (i) neither Parent nor any
of its subsidiaries shall be required to divest any of their respective
businesses, product lines or assets, (ii) neither Parent nor any of its
subsidiaries shall be required to take or agree to take any other action or
agree to any limitation that could reasonably be expected to have an adverse
effect on the business, assets, condition (financial or otherwise), results of
operations or prospects of Parent and its subsidiaries taken as a whole or of
Parent combined with the Surviving Corporation after the Effective Time, (iii)
neither the Company nor its subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be
expected to have a Material Adverse Effect, and (iv) no party shall be required
to agree to the imposition of or to comply with, any condition, obligation or
restriction on Parent or any of its subsidiaries or on the Surviving Corporation
or any of its subsidiaries of the type referred to in clause (a) or (b) of Annex
I and (v) neither Parent nor Merger Subsidiary shall be required to waive any of
the conditions to the Offer set forth in Annex I or any of the conditions to the
Merger set forth in Article VIII.
(e) Notwithstanding anything to the contrary in Section 7.1(a), (b), (c)
or (d), the parties agree as follows:
(i) For a period of 90 days following the last to occur of (A)
substantial compliance by Parent and Merger Subsidiary with any request under
the HSR Act for additional information, documents, or other material received by
such party or any of its subsidiaries from the Federal Trade Commission or the
Department of Justice ("FTC/DOJ") and (B) substantial compliance by the Company
with any request under the HSR Act for additional information, documents, or
other material received by such party or any of its subsidiaries from FTC/DOJ,
Parent and Merger Subsidiary shall attempt to resolve any objections asserted by
FTC/DOJ generally as described in Section 7.1(b), (c) and (d).
(ii) If after the 90 day period set forth in Section 7.1(e)(i),
objections continue to be asserted by FTC/DOJ which would threaten to prevent
completion of the Merger, (A) first, Parent and the Company shall consult and
mutually determine whether to litigate over the continuing objections, or (B) if
within five days Parent and the Company do not mutually agree to litigate, the
Company shall have the right for a period of 30 days to meet separately with
FTC/DOJ to develop a plan to resolve the continuing objections, such resolution
to be on a basis reasonably calculated to meet the objections of the FTC/DOJ.
During this period, the Company will continue to keep Parent and Merger
Subsidiary informed of its discussions and consult with Parent and Merger
Subsidiary on possible resolutions of the continuing objections.
(iii) After the Company and FTC/DOJ have agreed upon a plan, Parent
shall have a period of 90 days after such plan has been provided to Parent in
which to effect the plan, or a similar plan to which FTC/DOJ consents or
otherwise indicates its willingness for Parent to proceed so as to permit the
consummation of the Merger. Parent shall not be obligated to effect on the plan
in any specific manner and shall not be required to refrain from discussing
changes to the plan with either the Company or FTC/DOJ.
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(iv) If Parent has not within the 90 day period completed effecting the
plan as contemplated by Section 7.1(e)(iii), then, Parent shall choose one of
the following:
(A) within 15 days, fully resolve any continuing objection or enter into
a consent decree on reasonable terms setting forth the terms of the plan
developed by the Company and FTC/DOJ under Section 7.1(e)(ii), or
(B) (1) escrow an amount equal to the aggregate purchase price for the
number of Shares representing the Minimum Condition, on terms outlined in
Annex III to this Agreement, and (2) use all reasonable efforts vigorously
to contest and resist any action or proceeding instituted by FTC/DOJ.
In the event that Parent chooses to contest or resist any action or proceeding
instituted by FTC/DOJ under Section 7.1(e)(iv), the Company shall fully
cooperate with and support Parent in such efforts.
(v) Parent may at any time, in lieu of continuing with the provisions of
Section 7.1(e)(i) through (iii), elect to immediately follow the provisions of
Section 7(e)(iv)(B).
(vi) In the event Parent has elected, pursuant to Section 7.1(e)(iv)(B),
to contest or resist any action or proceeding instituted by FTC/DOJ and a final,
nonappealable order by a court of competent jurisdiction has been issued which
prevents the completion of the Merger, then Parent and the Company will take the
following steps:
(A) The Company will increase its Board of Directors from seven to 14
and elect seven members nominated by Parent. The new Board of Directors will
work together to take all steps, including disposition of assets, to remove
any FTC/DOJ objections to completing the Merger.
(B) In the event that, after 90 days, the new Board of Directors is
unable to agree to a plan to resolve the FTC/DOJ objections, then the Board
will delegate the responsibility to (1) develop a plan to resolve the
FTC/DOJ objections to a three person committee of Sanjay Kumar (or in his
absence, a designee of Parent's Board), Andrew J. Filipowski (or in his
absence, a designee of the Company's Board) and a senior member of Credit
Suisse First Boston and (2) execute such plan.
(f) 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 was untrue or inaccurate in any respect as of the date hereof 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, 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.
(g) The Company shall give prompt notice to Parent, and Parent or Merger
Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated by this Agreement;
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(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting it or any of its subsidiaries (x) which, in the
case of the Company, if pending on the date of this Agreement would have been
required to have been disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i),
4.1(k), 4.1(l), 4.1(o) or (y) in the case of any party, which relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 7.2. PUBLIC ANNOUNCEMENTS. Parent and Merger Subsidiary, on the
one hand, and the Company, on the other hand, will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Offer and the Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement will be
in a form agreed to by the parties. Parent acknowledges that the Company will
file (i) a Form 8-K disclosing this Agreement and attaching this Agreement as an
exhibit, and (ii) a Form 8-A/A relating to the Amendment to the Rights
Agreement.
SECTION 7.3. RIGHTS AGREEMENT. The Board of Directors of the Company
shall take all further action (in addition to that referred to in Section
4.1(u)) requested in writing by Parent (including redeeming the Rights
immediately prior to the Effective Time of the Merger or amending the Rights
Agreement) in order to render the Rights inapplicable to the Offer, the Merger
and the other transactions contemplated by this Agreement and the Stockholder
Option Agreement. Except as expressly provided in this Agreement or as requested
in writing by Parent, the Board of Directors of the Company shall not (i) amend
the Rights Agreement or (ii) take any action with respect to, or make any
determination under, the Rights Agreement (including a redemption of the
Rights).
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if required by Delaware Law, this Agreement shall have been adopted
by the stockholders of the Company in accordance with such Law;
(ii) any applicable waiting period under the HSR Act relating to the
Merger shall have expired;
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(iii) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(iv) Parent or Merger Subsidiary shall have purchased Shares in an
amount equal to at least the Minimum Condition pursuant to the Offer; and
(v) other than the filing of articles of merger in accordance with
Delaware Law, all Consents required to permit the consummation of the Merger
including those set forth in Sections 4.1(d) and 4.2(b) shall have been filed,
occurred or been obtained, other than those the absence of which would not have
a Material Adverse Effect.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Parent;
(b) subject to Section 7.1(e), by either the Company or Parent, if
there shall be any law or regulation that makes consummation of the Merger
illegal or otherwise prohibited;
(c) by the Company (y) if Parent shall have failed to commence the
Offer within five business days following the date of this Agreement or
(z) if the Offer shall have been terminated without Parent or Merger
Subsidiary having purchased any Shares pursuant to the Offer;
(d) by Parent, (y) upon the occurrence of any Trigger Event described
in clauses (i) through (iv) of Section 10.4(b) or (z) if the Offer shall
have expired or been terminated, in accordance with the terms of this
Agreement without Parent or Merger Subsidiary having purchased any Shares
pursuant to the Offer; or
(e) by the Company, at any time after the 60th day following the
later of (i) the date the HSR Act waiting period expires and (ii) the
first date the conditions set forth in clause (a) and (b) of Annex I cease
to exist.
(f) by the Company, upon the occurrence of any Trigger Event
described in clause (iv) of Section 10.4(b).
SECTION 9.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in Sections 10.4, 10.6 and 10.8
shall survive the termination hereof and except to the extent that such
termination results
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from the material breach by a party of any representations, warranties,
covenants or agreements set forth in this Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 10.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 10.2. NOTICES. All notices, requests and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) or by
telecopy (with copies by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Subsidiary, to
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
President and Chief Operating Officer
Fax: 516-342-3300
with a copy to:
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith
Fax: 212-841-1010
(b) if to the Company, to
PLATINUM TECHNOLOGY International, INC.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Andrew J. Filipowski
Fax: 630-691-0411
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with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Arthur Hahn
Fax: 312-902-1061
SECTION 10.3. AMENDMENTS; NO WAIVERS. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Parent and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; PROVIDED that after the
adoption of this Agreement by the stockholders of the Company, no such amendment
or waiver shall, without the further approval of such stockholders, alter or
change (i) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company, (ii) any term of the certificate of
incorporation of the Surviving Corporation or (iii) any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.4. FEES AND EXPENSES.
(a) Except as otherwise provided in this Section, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately available
funds equal to $180,000,000 promptly, but in no event later than one business
day, after the termination of this Agreement as a result of the occurrence of
any of the events set forth below (a "TRIGGER EVENT"):
(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) any representation or warranty made by the Company in, or pursuant
to, this Agreement that is qualified as to materiality shall not have been
true and correct when made, or any representation or warranty made by the
Company in, or pursuant to, this Agreement that is not so qualified shall
not have been true and correct in all material respects when made, or the
Company shall have failed to observe or perform in any material respect
any of its obligations under this Agreement; provided that it shall not be
a Trigger Event unless either (A) the breaches of the representations and
warranties without regard to any materiality qualifier or threshold, and
failure to perform or breach of any obligation, individually or in the
aggregate, could reasonably be
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expected to have a Material Adverse Effect or (B) the breaches of the
representations and warranties in Section 4.1(c), (l), (n), (p)(i)(A) and
(D) and (u) without regard to any materiality qualifier or threshold, and
failure to perform or breach of any obligation, individually or in the
aggregate, could reasonably be expected to result in a loss or damage of
$22,500,000 or more;
(iii) the Board of Directors of the Company (or any special committee
thereof) shall have withdrawn or materially modified in a manner adverse
to Parent or Merger Subsidiary its approval or recommendation of the
Offer, the Merger or this Agreement or its approval of the entry by Parent
and Merger Subsidiary into the Stockholder Option Agreement, in any such
case whether or not such withdrawal or modification is required by the
fiduciary duties of the Board of Directors (or any special committee
thereof); or
(iv) prior to the purchase of any Shares under the Offer, the Company
shall have received any Acquisition Proposal which the Board or Directors
has determined is more favorable to the Company's shareholders than the
transactions contemplated by this Agreement, whether or not such
determination is required by the fiduciary duties of the Board of
Directors.
(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 promptly assume and pay,
or reimburse Parent for, all fees payable and expenses incurred by Parent
(including the fees and expenses of its counsel) in connection with this
Agreement and the transactions contemplated hereby to a maximum of $10,000,000.
(d) In consideration of Parent entering into this Agreement,
substantially contemporaneously with entering into this Agreement, the Company
has paid to Parent a nonrefundable fee (or provided a direct draw Letter of
Credit in the amount) of $20,000,000.
SECTION 10.5. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of Parent or any of its wholly-owned subsidiaries, the right to purchase
Shares pursuant to the Offer, but any such transfer or assignment will not
relieve Parent of its obligations to cause Merger Subsidiary or another
subsidiary to consummate the Offer or prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
SECTION 10.6. GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the law of the State of New York, except that
the consummation and effectiveness of the Merger shall be governed by, and
construed in accordance with, Delaware Law and the exercise by the Board of
Directors of the Company of its fiduciary duties as referenced herein shall be
governed by, and construed in accordance with, the law of the State of Delaware.
SECTION 10.7. COUNTERPARTS; EFFECTIVENESS; INTERPRETATION.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto.
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When a reference is made in this Agreement to a Section, such reference shall be
to a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "INCLUDE", "INCLUDES" or "INCLUDING" are used in this
Agreement, they shall be deemed to be followed by the words "WITHOUT
LIMITATION".
SECTION 10.8. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
SECTION 10.9. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.10. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement dated as of March 24, 1999, between
the Company and the Parent (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
hereto with respect to the subject matter hereof, and (b) are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder, other than rights to indemnity under Section 6.3.
SECTION 10.11. MATERIALITY; KNOWLEDGE. When used with respect to the
Company in this Agreement, the term "MATERIAL" means material to the Company and
its subsidiaries taken as a whole. Any representation in this Agreement which is
expressed as made to the Company's knowledge means the knowledge, after
reasonable investigation, of the following individuals: Andrew J. Filipowski,
Michael Cullinane, Larry S. Freedman, Paul L. Humenansky and Ken Mueller.
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The parties hereto have caused this Agreement to be signed by their
respective authorized officers as of the date first written above.
Computer Associates International, Inc.
By: /s/ Charles P. McWade
------------------------------------
Name: Charles P. McWade
Title: Senior Vice President
HardMetal, Inc.
By: /s/ Steven M. Woghin
------------------------------------
Name: Steven M. Woghin
Title: Vice President and Secretary
PLATINUM Technology International, inc.
By: /s/ Michael P. Cullinane
------------------------------------
Name: Michael P. Cullinane>
Title: Executive Vice President
and Chief Financial Officer
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<PAGE>
ANNEX I
Notwithstanding any other provision of the Offer, Parent and Merger
Subsidiary shall not be required to accept for payment or (subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Merger Subsidiary's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer)) to pay for
any Shares, if by the expiration of the Offer (as it may be extended in
accordance with the requirements of Section 1.1), the Minimum Condition shall
not have been satisfied or at any time on or after March 29, 1999 and prior to
the acceptance for payment of Shares pursuant to the Offer, any of the following
conditions exist:
(a) there shall be instituted or pending any action or proceeding by any
Governmental Entity, (i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
acquisition by Merger Subsidiary or any of its affiliates of Shares pursuant
to the Stockholder Option Agreement, 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 the Stockholder Option
Agreement, this Agreement, the Offer or the Merger, (ii) seeking to restrain
or prohibit Parent's or Merger Subsidiary's ownership or operation (or that
of their respective subsidiaries or affiliates) of all or any material
portion of the business or assets of the Company and its subsidiaries, taken
as a whole, or of Parent and its subsidiaries, taken as a whole, or to
compel Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Parent and its
subsidiaries, taken as a whole, (iii) seeking to impose material limitations
on the ability of Parent or any of its subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Parent
or any of its subsidiaries or affiliates on all matters properly presented
to the Company's stockholders or (iv) seeking to require divestiture by
Parent or any of its subsidiaries or affiliates of any Shares; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued
or deemed applicable to the Stockholder Option Agreement, this Agreement,
the Offer or the Merger, by any Governmental Entity or arbitrator (other
than (1) any such matters actually required pursuant to Section 7.1(e)(iv)
or (vi) or (2) the application of the waiting period provisions of the HSR
Act to the Stockholder Option Agreement, this Agreement, the Offer or the
Merger) that, in the judgment of Parent, is substantially likely, directly
or indirectly, to result in any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above, subject as aforesaid; or
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-
<PAGE>
the-counter market in the United States, (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
(d) any Consent (other than the filing of a certificate of merger or
approval by the stockholders of the Company of the Merger (if required by
Delaware Law)) required to be filed, occurred or been obtained by the
Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement, the Offer and the consummation of the
transactions contemplated by this Agreement shall not have been filed,
occurred or been obtained (other than any such Consents the failure to file,
occur or obtain in the aggregate, could not reasonably be expected to (i)
have a Material Adverse Effect or (ii) prevent or materially delay the
consummation of the Offer or the Merger); or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants, obligations or agreements under this
Agreement, or any of the representations and warranties of the Company set
forth in this Agreement that is qualified as to materiality shall not be
true when made, or 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; provided that this condition shall not be deemed to exist
unless either (i) such breaches or failures to perform any covenant,
obligation or agreements, and any breach of representation or warranty
without regard to any materiality qualifier or threshold, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect or (ii) the breaches of the representations and warranties in Section
4.1(c), (l), (n), (p)(i)(A) and (D) and (u) without regard to any
materiality qualifier or threshold, and failure to perform or breach of any
obligation, individually or in the aggregate, could reasonably be expected
to result in a loss or damage of $22,500,000 or more; or
(f) this Agreement shall have been terminated in accordance with its
terms; or
(g) the Board of Directors of the Company (or any special committee
thereof) shall have withdrawn or materially modified in a manner adverse to
Parent or Merger Subsidiary its approval or recommendation of the Offer, the
Merger or this Agreement or its approval of the entry by Parent and Merger
Subsidiary into the Stockholder Option Agreement; or
(h) 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; or
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<PAGE>
(i) the applicable waiting period under the HSR Act shall not have
expired or been terminated;
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Merger Subsidiary)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may be asserted by Parent in its discretion regardless of the
circumstances (including any action or omission by Parent or Merger Subsidiary)
giving rise to any such condition or (other than the Minimum Condition) may,
subject to the terms of this Agreement, be waived by Parent and Merger
Subsidiary in their reasonable 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 circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right which
may be asserted at any time or from time to time.
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<PAGE>
EXHIBIT 2
EXECUTION COPY
AGREEMENT, dated as of March 29, 1999, among HardMetal, Inc., a Delaware
corporation ("Buyer"), and the holders (the "Stockholders") of the shares
of common stock, $0.001 par value (the "Shares") of PLATINUM TECHNOLOGY
International, INC., a Delaware corporation (the "Company"), listed on the
signature PAGES HEREOF.
In order to induce Buyer and certain of its affiliates to enter into an
agreement and plan of merger (the "Merger Agreement") with the Company, Buyer
has requested the Stockholders, and the Stockholders have agreed, to enter into
this Agreement.
The parties hereto agree as follows:
ARTICLE I
STOCK OPTION
SECTION 1.1. GRANT OF STOCK OPTION. Each of the Stockholders hereby grants
to Buyer an irrevocable option (the "Option") to purchase the number of Shares
(including the associated Rights, as defined in the Merger Agreement) opposite
such Stockholder's name on the signature pages hereto and any additional Shares
(including such associated Rights) acquired by such Stockholder in any capacity
(whether by exercise of options, warrants or rights, the conversion or exchange
of convertible or exchangeable securities or by means of a purchase, dividend,
distribution or otherwise) (such "Stockholder's Shares" and, collectively, the
"Stockholder Shares") at a purchase price of $29.25 per Stockholder Share
(including such associated Rights) (as adjusted pursuant to Section 1.6, the
"Purchase Price").
SECTION 1.2. EXERCISE OF OPTION. (a) Subject to the conditions set forth in
Section 1.5 hereof, the Option may be exercised by Buyer, in whole or in part,
at any time or from time to time after the date hereof and prior to the 30th
business day after the termination of the Merger Agreement in accordance with
the terms thereof. In the event Buyer wishes to exercise the Option for all or
some of the Stockholder Shares other than pursuant to the Offer (as defined in
the Merger Agreement), Buyer shall send a written notice (the "Exercise Notice")
to the Stockholders specifying the total number of Stockholder Shares it wishes
to purchase pursuant to such exercise (and the corresponding number of each such
Stockholder's Shares) and the place, the date (not less than one nor more than
20 business days from the date of the Exercise Notice) and the time for the
closing of such purchase, provided that such date and time may be earlier than
one day after the Exercise Notice if reasonably practicable. Each closing of a
purchase of Stockholder Shares pursuant to this Section 1.2(a) (a "Closing")
shall take place at the place, on the date and at the time designated by Buyer
in its Exercise Notice, provided that if, at the date of the Closing herein
provided for, the conditions set forth in Section 1.5 shall not have been
satisfied (or waived), Buyer may postpone the Closing until a date within five
business days after such conditions are satisfied.
(b) Except to the extent otherwise provided in Section 1.2(c) below, Buyer
shall not be under any obligation to deliver any Exercise Notice and may allow
the Option to terminate without purchasing any Stockholder Shares hereunder;
provided however that once Buyer has
<PAGE>
delivered to the Stockholders an Exercise Notice, subject to the terms and
conditions of this Agreement, Buyer shall be bound to effect the purchase as
described in such Exercise Notice.
(c) Buyer agrees that, if Buyer shall have accepted Shares for payment and
purchased Shares pursuant to the Offer, Buyer shall, within ten business days of
such purchase, exercise the Option in its entirety (or any remaining portion of
the Option).
SECTION 1.3. CLOSING. At the Closing, (a) each Stockholder shall deliver to
Buyer (in accordance with Buyer's instructions) a certificate or certificates
(the "Certificates") representing all of such Stockholder's Shares, duly
endorsed or accompanied by stock powers duly executed in blank and (b) Buyer
shall deliver to such Stockholder by wire transfer an amount equal to (i) the
number of such Stockholder's Shares being purchased at such Closing multiplied
by (ii) the Purchase Price (the "Purchase Amount").
SECTION 1.4. AGREEMENT TO TENDER. Subject to the footnote at the end of
this Agreement, each of the Stockholders may tender and hereby agrees to validly
tender (or cause the record owner of such shares to validly tender) upon the
request of Buyer such Stockholder Shares. Upon receipt of instructions from the
Buyer, each Stockholder shall deliver to the depositary (the "Depositary")
designated in the Offer (i) a letter of transmittal with respect to such
Stockholder's Shares complying with the terms of the Offer together with
instructions directing the Depositary to make payment for such Shares directly
to the Stockholder (but if such Shares are not accepted for payment or are
withdrawn and are to be returned pursuant to the Offer, to return such Shares to
such Stockholder whereupon they shall continue to be held by such Stockholder
subject to the terms and conditions of this Agreement), (ii) the Certificates
and (iii) all other documents or instruments required to be delivered pursuant
to the terms of the Offer (such documents in clauses (i) through (iii)
collectively being hereinafter referred to as the "Tender Documents"). No tender
pursuant to this Section 1.4 will excuse any of the obligations of the
Stockholders hereunder.
SECTION 1.5. CONDITIONS. The obligation of each Stockholder to sell
Stockholder Shares at any Closing is subject to the following conditions:
(i) The representations and warranties of Buyer contained in Article
IV shall be true and correct in all material respects on the date thereof
as if made on such date;
(ii) All waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") applicable to such exercise of the
Option shall have expired or been terminated;
(iii) There shall be no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining such exercise
of the Option; and
(iv) The Buyer shall have commenced the Offer.
SECTION 1.6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR MERGER. (a) In
the event of (i) any change in the Company's capital stock by reason of stock
dividends, stock splits,
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<PAGE>
mergers, consolidations, recapitalizations, combinations, conversions, exchanges
of shares, extraordinary or liquidating dividends, or (ii) other changes in the
corporate or capital structure of the Company which would have the effect of
diluting or changing the Buyer's rights hereunder and which generally
proportionately affect the stockholders of the Company, then the number and kind
of shares or securities subject to the Option and the purchase price per
Stockholder Share (but not the total purchase price) shall be appropriately and
equitably adjusted so that the Buyer shall receive upon exercise of the Option
the number and class of shares or other securities or property that the Buyer
would have received in respect of the Stockholder Shares purchasable upon
exercise of the Option if the Option had been exercised immediately prior to
such event. Each Stockholder shall take such steps in connection with such
consolidation, merger, liquidation or other such action as may be necessary to
assure that the provisions hereof shall thereafter apply as nearly as possible
to any securities or property thereafter deliverable upon exercise of the
Option.
(b) In the event the consideration per Share to be paid by Buyer pursuant
to the Offer is increased, the Purchase Price shall be similarly increased and
in the event the Closing hereunder shall have occurred, Buyer shall promptly pay
to each Stockholder the product of the amount of such increase in the Purchase
Price multiplied by the number of such Stockholder's Shares as to which the
Option has been exercised.
ARTICLE II
GRANT OF PROXY
SECTION 2.1. PROXY. Each Stockholder hereby revokes any and all previous
proxies granted with respect to such Stockholder's Shares. Each Stockholder, by
this Agreement, with respect to such Stockholder's Shares, does hereby
constitute and appoint Buyer, or any nominee of Buyer, with full power of
substitution, as its true and lawful attorney and proxy, for and in its name,
place and stead, to vote each of such Stockholder's Shares as its proxy, at
every annual, special or adjourned meeting, or solicitation of consents, of the
stockholders of the Company (including the right to sign its name (as
stockholder) to any consent, certificate or other document relating to the
Company that the law of the State of Delaware may permit or require) (i) in
favor of the adoption of the Merger Agreement and this Agreement and approval of
the Merger and the other transactions contemplated hereby and by the Merger
Agreement, (ii) against any proposal for any recapitalization, merger, sale of
assets or other business combination between the Company and any person or
entity (other than the Merger) or any other action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement not being
fulfilled, and (iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Merger Agreement and this Agreement. Each
Stockholder further agrees to cause such Stockholder's Shares that are
outstanding and owned by it beneficially to be voted in accordance with the
foregoing. The proxy granted by each Stockholder pursuant to this Article II is
irrevocable and is granted in consideration of Buyer's entering into this
Agreement and the Merger Agreement; PROVIDED, HOWEVER, that such proxy shall be
revoked upon termination of the Option's exercise period in accordance with its
terms other than for Shares which are the subject of a pending Closing
hereunder.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each of the Stockholders severally represents and warrants to the Buyer
that:
SECTION 3.1. VALID TITLE. Except as set forth in the footnotes at the end
of this Agreement, such Stockholder is the sole, true, lawful and beneficial
owner of such Stockholder's Shares with no restrictions on such Stockholder's
voting rights or rights of disposition pertaining thereto. At any Closing, such
Stockholder will convey good and valid title to such Stockholder's Shares being
purchased free and clear of any and all claims, liens, charges, encumbrances and
security interests. Except as may be the case under the arrangements referenced
in the footnotes at the end of this Agreement, none of such Stockholder's Shares
is subject to any voting trust or other agreement or arrangement with respect to
the voting of such Shares.
SECTION 3.2. NON-CONTRAVENTION. The execution, delivery and performance by
such Stockholder of this Agreement and the consummation of the transactions
contemplated hereby (i) are within such Stockholder's powers, have been duly
authorized by all necessary action (including any consultation, approval or
other action by or with any other person), (ii) require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
(except as required under the HSR Act), and (iii) do not and will not contravene
or constitute a default under, or give rise to a right of termination,
cancellation or acceleration of any right or obligation of such Stockholder or
to a loss of any benefit of such Stockholder under, any provision of applicable
law or regulation or of any agreement, judgment, injunction, order, decree, or
other instrument binding on such Stockholder or result in the imposition of any
lien on any asset of such Stockholder.
SECTION 3.3. BINDING EFFECT. This Agreement has been duly executed and
delivered by such Stockholder and is the valid and binding agreement of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally. If this Agreement is
being executed in a representative or fiduciary capacity, the person signing
this Agreement has full power and authority to enter into and perform such
Agreement.
SECTION 3.4. TOTAL SHARES. Except as may be the case under the arrangements
referenced in the footnotes at the end of this Agreement, each Stockholder is
the record and Beneficial Owner of the number of Shares set forth next to such
Stockholder's name on the signature pages hereto. Such Shares constitute all of
the Shares owned of record or Beneficially Owned by such Stockholder. Except as
set forth on such signature pages, neither such Stockholder nor any beneficial
owner or owners of such Stockholder's Shares own any options to purchase or
rights to subscribe for or otherwise acquire any securities of the Company.
Except as may be the case under the arrangements referenced in the footnotes at
the end of this Agreement, each Stockholder has sole voting power and sole power
to issue instructions with respect to the matters set forth in Article II of
this Agreement, sole power of disposition, sole power of conversion, sole power
to demand appraisal rights and sole power to agree to all of the matters set
forth in this Agreement, in each case with respect to all of the Shares
beneficially owned by such Stockholder with no limitations, qualifications or
restrictions on such rights, subject to
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<PAGE>
applicable securities laws and the terms of this Agreement. The terms
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
SECTION 3.5. FINDER'S FEES. No investment banker, broker or finder is
entitled to a commission or fee from Buyer or the Company in respect of this
Agreement based upon any arrangement or agreement made by or on behalf of such
Stockholder.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
The Buyer represents and warrants to each of the Stockholders:
SECTION 4.1. CORPORATE POWER AND AUTHORITY. Buyer has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by the board of directors of Buyer and no other
corporate action on the part of Buyer is necessary to authorize the execution,
delivery or performance by Buyer of this Agreement and the consummation by Buyer
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Buyer and is a valid and binding agreement of Buyer,
enforceable against it in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights generally.
SECTION 4.2. ACQUISITION FOR BUYER'S ACCOUNT. Any Stockholder Shares to be
acquired upon exercise of the Option will be acquired by Buyer for its own
account and not with a view to the public distribution thereof and will not be
transferred except in compliance with the Securities Act of 1933.
ARTICLE V
COVENANTS OF THE STOCKHOLDERS
Each of the Stockholders hereby covenants and agrees that:
SECTION 5.1. NO PROXIES FOR OR ENCUMBRANCES ON STOCKHOLDER SHARES. Except
pursuant to the terms of this Agreement, such Stockholder shall not, without the
prior written consent of Buyer, directly or indirectly, (i) grant any proxies or
enter into any voting trust or other agreement or arrangement with respect to
the voting of any Shares or (ii) acquire, sell, assign, transfer, encumber or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the direct or indirect acquisition or sale,
assignment, transfer, encumbrance or other disposition of, any Shares during the
term of this Agreement, other than (y) the exercise of Options already owned by
such Stockholder and (z) transfers to family members or grantor trusts for the
benefit of family members where the transferee agrees in writing to be bound by
the terms hereof in an agreement satisfactory in form and substance to Parent.
Except as permitted by clauses (y) and (z) of the preceding sentences,
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<PAGE>
such Stockholder shall not seek or solicit any such acquisition or sale,
assignment, transfer, encumbrance or other disposition or any such contract,
option or other arrangement or assignment or understanding and agrees to notify
Buyer promptly and to provide all details requested by Buyer if such Stockholder
shall be approached or solicited, directly or indirectly, by any person with
respect to any of the foregoing.
SECTION 5.2. NO SHOPPING. Such Stockholder shall not directly or indirectly
(i) solicit, initiate or encourage (or authorize any person to solicit, initiate
or encourage) any inquiry, proposal or offer from any person to acquire the
business, property or capital stock of the Company or any direct or indirect
subsidiary thereof, or any acquisition of a substantial equity interest in, or a
substantial amount of the assets of, the Company or any direct or indirect
subsidiary thereof, whether by merger, purchase of assets, tender offer or other
transaction or (ii) subject to the fiduciary duty under applicable law of such
Stockholder as a director of the Company (if such Stockholder is such a
director) as further provided in the Merger Agreement, participate in any
discussion or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or
participate in, facilitate or encourage any effort or attempt by any other
person to do or seek any of the foregoing. Such Stockholder shall promptly
advise Buyer of the terms of any communications it may receive relating to any
of the foregoing.
SECTION 5.3. CONDUCT OF STOCKHOLDERS. Such Stockholder will not (i) take,
agree or commit to take any action that would make any representation and
warranty of such Stockholder hereunder inaccurate in any respect as of any time
prior to the termination of this Agreement 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 5.4. DISCLOSURE. Each Stockholder hereby permits Buyer to publish
and disclose in the offer documents and, if approval of the Company's
shareholders is required under applicable law, a proxy statement (including all
documents and schedules filed with the SEC) their identity and ownership of the
Shares and the nature of their commitments, arrangements and understandings
under this Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. EXPENSES. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. FURTHER ASSURANCES. In the event the Buyer exercises the
Option, the Buyer and the Stockholders will each execute and deliver or cause to
be executed and delivered all further documents and instruments and use its best
efforts to secure such consents and take all such further action as may be
reasonably necessary in order to consummate the transactions contemplated hereby
or to enable the Buyer and any assignee to exercise and enjoy all benefits and
rights of the Stockholders with respect to the Option and the Stockholder
Shares.
SECTION 6.3. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under
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<PAGE>
applicable laws and regulations and which may be required under any agreements,
contracts, commitments, instruments, understandings, arrangements or
restrictions of any kind to which such party is a party or by which such party
is governed or bound, to consummate and make effective the transactions
contemplated by this Agreement.
SECTION 6.4. SPECIFIC PERFORMANCE. The parties hereto agree that the Buyer
may be irreparably damaged if for any reason any Stockholder failed to sell such
Stockholder's Shares (or other securities deliverable pursuant to Section 1.5)
upon exercise of the Option or to perform any of its other obligations under
this Agreement, and that the Buyer would not have an adequate remedy at law for
money damages in such event. Accordingly, the Buyer shall be entitled to
specific performance and injunctive and other equitable relief to enforce the
performance of this Agreement by each Stockholder. This provision is without
prejudice to any other rights that the Buyer may have against any Stockholder
for any failure to perform its obligations under this Agreement.
SECTION 6.5. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Stockholder Shares.
SECTION 6.7. AMENDMENTS. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
SECTION 6.8. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, PROVIDED that Buyer may assign its rights and
obligations to any affiliate of Buyer and PROVIDED, FURTHER, that no Stockholder
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the Buyer.
SECTION 6.9. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of New York without giving effect to the principles
of conflicts of laws thereof.
SECTION 6.10. JURISDICTION. Each of the parties hereto (a) consents to
submit itself to the exclusive personal jurisdiction of any court of the United
States located in the State of New York or of any New York state court in the
event any dispute arises out of this Agreement or the transactions contemplated
by this Agreement, and (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court.
SECTION 6.11. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HardMetal, Inc.
By: /s/ Steven M. Woghin
---------------------------------------
Name: Steven M. Woghin
Title: Vice President and Secretary
In care of 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
SHARES OPTIONS
2,594,566* 3,998,752 /s/ Andrew J. Filipowski
-----------------------------------------
Andrew J. Filipowski **
508 Stone Gate Lane
Winston-Salem, NC 27104
Telephone: 336-774-1964
Facsimile: 336-774-8721
- --------
* Number of Shares includes 547,994 Shares held by a limited partnership
(Platinum Ventures) of which Mr. Filipowski is a limited partner and over
which Mr. Filipowski has voting control (the "LP Shares"). The LP Shares
will be tendered in the Offer if requested by Buyer, and are subject to the
proxy granted in this Agreement, but are not subject to the Option unless
they are withdrawn from the limited partnership.
** Mr. Filipowski has represented to the Buyer that the Options and Shares
owned by Mr. Filipowski are (i) deposited in a brokerage account pursuant to
which they have been pledged to secure margin loans upon standard terms and
(ii) are subject to a "put/call collar" arrangement with the brokerage (or
its affiliate) in which such shares are so deposited. Buyer's rights under
this Agreement are subject to such arrangements so long as they remain in
effect, it being understood that, to the extent of rights or other benefits
of ownership retained by Mr. Filipowski in such Options (or the Shares
issuable upon the exercise thereof) and the other Shares owned by him, this
Agreement is not subject to such arrangements.
-8-
<PAGE>
SHARES OPTIONS
/s/ Paul L. Humenansky
34,989 1,896,623 ------------------------------------------
Paul L. Humenansky
630 Forest Avenue
Glen Ellyn, IL 60137
Telephone: 630-790-9035
Facsimile: 630-790-9049
SHARES OPTIONS
/s/ Michael Cullinane
none 1,748,750 ------------------------------------------
Michael Cullinane
2233 Edgebrook Drive
Lisle, IL 60532
Telephone: 630-510-9910
Facsimile: 630-510-9927
<PAGE>
EXHIBIT 3
CONSULTING AND NON-COMPETE AGREEMENT, dated as of March 29,
1999 (the "AGREEMENT"), by and between PLATINUM TECHNOLOGY
International, INC., a Delaware corporation (the "COMPANY"),
and Andrew J. Filipowski (the "CONSULTANT").
------------------------------------------------------------
The Company is intending to enter into a Merger Agreement with
Computer Associates International, Inc. (the "MERGER AGREEMENT"), pursuant to
which the Company will become a subsidiary of Computer Associates International,
Inc. The Consultant is a senior executive of the Company, has unique knowledge
of the Company's business and has occupied a position of trust and confidence.
The Company and the Consultant desire that, effective upon the Merger (as
defined in the Merger Agreement), the Consultant will continue as a consultant
to the Company and will agree to refrain from competing with the Company all as
set forth in this Agreement.
In consideration of the mutual agreements, the Consultant and
the Company agree as follows:
1. SERVICES. For the Consulting Period (as defined in Section 2), the
Consultant shall provide from time to time and as requested by the Company the
consulting services set forth in Schedule A (the "SERVICES"). The Consultant
shall report to the President of Computer Associates International, Inc. The
Consultant shall devote such time and energy to the business of the Company as
reasonably required to perform the Services; the parties agree that the
performance of the Services is not intended to require full time effort (and the
Consultant is free to take other full time employment not inconsistent with the
terms of this Agreement). The Company shall not require the Consultant to travel
a greater amount than in connection with his current employment.
2. TERM. The Consultant and the Company agree that the consulting period
(the "CONSULTING PERIOD") begins on the Effective Date (as defined in Section 7)
and ends on the second anniversary of the Effective Date. The Consultant
acknowledges that the Consulting Period may be terminated at any time, with or
without cause or for any or no reason, at the option either of the Company or
the Consultant, on 30 days written notice, as provided in Section 4.
3. CONSULTING FEE. Commencing on the Effective Date, the Company shall
pay the Consultant a consulting fee at the annual rate of $1,000,000, payable
quarterly in arrears. The Company shall reimburse Consultant for all reasonable
costs and expenses incurred in connection with Consultant's performance of the
Services.
4. TERMINATION. (a) TERMINATION WITHOUT CAUSE. If the Company terminates
the Consulting Period without Cause prior to the second anniversary of the
Effective Date, the Consultant shall be entitled to continued payment of all
consulting fees.
(b) TERMINATION FOR CAUSE. If (i) the Company terminates the Consulting
Period at any time for Cause, or (ii) the Consultant terminates the Consulting
Period at any time, the Consultant shall be entitled to receive the consulting
fees paid through the date of
<PAGE>
termination. "CAUSE" shall mean (A) the Consultant's material breach of any
material term of this Agreement, including, but not limited to, the covenants
set forth in Section 5 hereof, subject to the Consultant's right to cure any
breach that is curable within a reasonable period following notice by the
Company, (B) the Consultant's conviction of a felony, or (C) any willful
misconduct by the Consultant resulting in substantial loss to the Company,
substantial damage to the Company's reputation or judicially determined theft or
misappropriation from the Company.
(c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant dies or
becomes Disabled, in which event the Consulting Period shall terminate, the
Consultant (or, in the case of death, his estate), shall be entitled to
continued payment of all consulting fees as death or disability benefits.
"DISABLED" shall mean the Consultant's adjudication as mentally incompetent, or
the occurrence of a mental or physical disability for 120 or more days within
any calendar year. Any question as to the existence of his disability as to
which the Consultant and the Company cannot agree shall be determined in writing
by a qualified independent physician mutually acceptable to the Consultant and
the Company. If the Consultant and the Company cannot agree on a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of disability made in writing to the Consultant and the
Company shall be final and conclusive for all purposes.
(d) GENERAL. Upon the termination of the Consulting Period, for any
reason, (i) the Company shall have no further obligations to the Consultant
hereunder, other than as specifically set forth in this Agreement and (ii) the
Consultant shall continue to be bound (subject to the time periods and
limitations set forth herein) by the terms of this Agreement other than Section
1. Confidential Information shall remain confidential under Section 5(c) for so
long as such information is "CONFIDENTIAL INFORMATION".
5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In consideration for,
and as a condition to, the Company's payment of the non-compete payment and
entering into this Agreement, and in connection with the merger described
herein, until the eighth anniversary of the Effective Date, the Consultant will
not directly or indirectly, on Consultant's own behalf or in the service of or
on behalf of any other individual or entity, either as a proprietor, employee,
agent, independent contractor, consultant, director, officer, partner or
stockholder (other than a stockholder of a corporation listed on a national
securities exchange or whose stock is regularly traded in the over-the-counter
market, provided that the Consultant at no time owns, directly or indirectly, in
excess of 2% of the outstanding stock of any class of any such corporation):
(i) participate or engage in any activities or business developing,
manufacturing, marketing or distributing any products or services offered by
the Company on the date of this Agreement, or any products or services
offered by the Company in the future and in which the Consultant actively
participated, recognizing that the Company offers products and services
globally ("COMPETITIVE ACTIVITIES"), including, without limitation, (A)
selling goods or rendering services of the type (or similar to the type)
sold or rendered by the Company, whether by means of electronic, traditional
or other form of commerce; (B) soliciting any person or entity that is a
current customer, that has been a customer within the past three years or
that is or was a prospective customer prior to or during the Consulting
Period, in each case, of the Company or an
-2-
<PAGE>
affiliate of the Company (provided that it shall not be deemed a breach of
this Agreement if the Consultant solicits such customers for goods or
services unrelated to the Competitive Activities), (C) assisting any person
in any way to do, or attempt to do, anything prohibited by clauses (A) or
(B) above and (D) be employed by any person or entity that has received
services of the type described above from the Consultant or with which the
Consultant otherwise had material contact while employed by the Company or
which received services of the type describe above from any office or
employee of the Company over which Consultant had management responsibility,
in either case to provide or supervise, directly or indirectly, the services
comprising a Competitive Activity; or
(ii) perform any action, activity or course of conduct which is
detrimental in any material respect to the businesses or business reputation
of the Company (or any of its affiliates), including without limitation (A)
soliciting, recruiting or hiring any employees of the Company (or any of its
affiliates) or persons who have worked for the Company (or any of its
affiliates) at any time since January 1, 1998; provided that the Consultant
may hire any employee of the Company (I) that has been terminated by the
Company, (II) in connection with a business that is not a Competitive
Activity (including any VC Business that is not a Competitive Activity), but
Consultant may not solicit or recruit for such purposes, or (III) to work in
a VC Business (as hereinafter defined), but not to work in or for any
company in which any VC Business invests or otherwise acquires an interest,
and (B) soliciting or encouraging any employee of the Company (or any of its
affiliates) to leave the employment of the Company.
(b) Notwithstanding anything to the contrary herein, Consultant may
remain a director at those companies for which Consultant is a director as of
the Effective Date and may engage in any activities or businesses:
(i) involving venture capital activities (a "VC Business"), including,
without limitation, activities undertaken through Platinum Venture Partners or
any similar entities as may be formed in the future, holding directorships, and
through such partnerships exercising veto power over certain decisions in
companies in which venture capital investments have been made; provided that the
Consultant shall not without permission in any such venture invest in any
company whose primary business is a Competitive Activity; or
(ii) for which the Company has given permission in writing, which shall
not be unreasonably withheld (or delayed) after the fifth anniversary of the
Effective Date, provided Consultant's engaging in such activities or business
would not have a material adverse impact on any of the Company's lines of
business; or
(iii) which Computer Associates International, Inc. shall have confirmed
(which confirmation shall not be unreasonably withheld or delayed) in writing to
Consultant are not inconsistent with the prohibitions of Sections 5(a) and 5(b)
hereof.
(c) The Consultant shall not, without the written consent of the
Company, disclose to any other person or use, whether directly or indirectly,
any Confidential Information relating to or used by the Company or any of its
affiliates, whether in written, oral or other form,
-3-
<PAGE>
except in connection with the performance of his duties hereunder. "CONFIDENTIAL
INFORMATION" shall mean information about the Company or any of its affiliates,
and their clients and customers that is not disclosed by the Company or any of
its affiliates for financial reporting purposes and that was learned by the
Consultant in the course of employment by the Company or any of its affiliates
or in the course of performing the services under this Agreement, including
(without limitation) any proprietary knowledge, product and service designs,
trade secrets, manuals, technical information and plans, contracts, systems,
procedures, databases, electronic files, disks and printouts, correspondence,
internal reports, personnel files, information about employees of the Company
and its affiliates relating to their education, experience, skills, abilities,
compensation and benefits, and inter-personal relationships with suppliers to
and customers of the Company and its affiliates, sales and advertising material,
business plans, marketing plans, financial data (including without limitation
the revenues, costs or profits associated with services), customer and industry
lists, customer information, customer lists coupled with product or service
pricing, customer contacts, supplier contacts and other contact information,
pricing policies, supplies, agents, risk analyses, engineering information and
computer reports, computer software, computer systems, computer formats,
computer screen designs and computer input and output specifications, inclusive
of any pertinent documentation, techniques, processes, technical information and
know-how. The Consultant acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company and its
affiliates, and that such information gives the Company and its affiliates a
competitive advantage. The Consultant's obligations under this Section 5(b)
shall survive the termination of the Consulting Period and of this Agreement and
shall be fully enforceable thereafter in accordance with the terms of this
Agreement.
(d) (i) Confidential Information does not include information which (A)
is or becomes part of the public domain other than as a result of the
Consultant's disclosure, or (B) becomes available to the Consultant on a
nonconfidential basis from a source other than the Company, provided that source
is not bound with respect to that information by a confidentiality agreement
with the Company or otherwise prohibited from transmitting that information by a
contractual, legal or other obligation.
(ii) If the Consultant is requested or (in the opinion of his counsel)
required by law or judicial order to disclose any Confidential Information, the
Consultant shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waiver of the Consultant's compliance with the provisions of this Section 5(c).
The Consultant will not oppose any reasonable action by, and will cooperate
with, the Company to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Confidential
Information. If, failing the entry of a protective order or the receipt of a
waiver hereunder, the Consultant is, in the opinion of his counsel, compelled by
law to disclose a portion of the Confidential Information, the Consultant may
disclose to the relevant tribunal without liability hereunder that portion of
the Confidential Information which counsel advises the Consultant he is legally
required to disclose, and each of the parties hereto agrees to exercise such
party's best efforts to obtain assurance that confidential treatment will be
accorded such Confidential Information.
(e) If an award by a court or arbitration panel declares that any term
or provision of this Section 5 is excessive in duration or scope or is
unreasonable or unenforceable,
-4-
<PAGE>
the parties agree that the court or arbitration panel making such determination
shall have the power to reduce the scope, duration or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
(f) In the event of a breach or threatened breach by the Consultant of
the provisions of this Section 5, the Consultant acknowledges that the Company
will suffer irreparable injury and may not have an adequate remedy at law and
therefore may be entitled to a temporary restraining order or a preliminary or
permanent injunction restraining the Consultant from such breach without the
requirement of posting security or proving actual damages as well as an
equitable accounting of all profits or benefits arising out of such violation.
In addition, in the event of a breach (that is not immaterial) at any time by
the Consultant of the provisions of this Section 5, the Consultant agrees as
liquidated damages hereunder to repay the full amount of the non-compete
payments made pursuant to Section 5(g). Nothing contained in this Section 5 or
elsewhere in this Agreement shall be construed as prohibiting the Company from
pursuing any other remedies available at law or equity for such breach or
threatened breach by the Consultant.
(g) In consideration of the Consultant's covenants under this Section 5,
the Company shall pay the Consultant a non-compete payment at the annual rate of
$3,000,000 in the first year, $3,000,000 in the second year, $4,000,000 in the
third year, $4,000,000 in the fourth year, $3,000,000 in the fifth year,
$3,000,000 in the sixth year, $2,000,000 in the seventh year and $1,000,000 in
the eighth year, quarterly in arrears, commencing on the Effective Date.
(h) By executing this Agreement, Consultant assigns and transfers to the
Company all his right, title, and interest in and to all intellectual property
created, developed, conceived, or reduced to practice while employed as a
Consultant by the Company or its predecessor(s) arising in connection with the
Services. While he is employed by the Company and when he ceases to be employed
by the Company, Consultant shall fully and promptly disclose in writing to the
Company, and hold in trust for the sole right and benefit of the Company, all
ideas, plans, designs, methods, techniques, discoveries, inventions,
developments, improvements, trade secrets, computer programs and software, and
other proprietary data, records, and information that Consultant solely or
jointly develops or reduces to practice while employed by, and arising in
connection with the Services to, the Company (collectively "Intellectual
Property"), whether or not patentable or capable of copyright or trademark
registration, and whether or not created, conceived, developed, or reduced to
practice at the request of the Company or during normal working hours. While
employed by the Company and at all times thereafter, Consultant shall do all
things, and execute all documents (including applications for patents,
copyrights, and trademarks, and for renewals extensions, and divisions thereof),
that are requested and reasonably required by the Company to create, enforce, or
evidence the Company's rights to any Intellectual Property.
6. COOPERATION. (a) The Consultant agrees to cooperate with the Company
at all times (including following termination of the Consulting Period for any
reason) by making himself reasonably available to testify on behalf of the
Company or its affiliates, in any action, suit or proceeding, whether civil,
criminal, administrative, or investigative and to assist the Company or any of
its affiliates in any such action, suit, or proceeding by providing information
-5-
<PAGE>
and meeting and consulting with the Company or representatives or counsel to the
Company or its affiliates, as reasonably requested by such representatives or
counsel. The Consultant shall be reimbursed by the Company for any expenses
(including, but not limited to, legal fees) reasonably incurred by the
Consultant in connection with his compliance with the foregoing covenant.
(b) Consultant shall fully cooperate with the Company and Computer
Associates International, Inc. in connection with filings under the Hart-Scott-
Rodino Antitrust Improvements Act of 1978 and in connection with resolving any
investigation or other inquiry of any governmental entity under the antitrust
laws.
(c) In the event the Company fails to observe the requirements of
Section 5.1 of the Merger Agreement, whether or not enforceable or in force
under such agreement, and the aggregate loss or damage is greater than
$1,500,000, then the Consultant shall be liable for 49% of each dollar of
liability under this Section 6 (including, without limitation, forfeitures under
Section 6(d)) for such failure in excess of $1,500,000. The maximum amount of
liability under this Section for the Consultant shall be an amount equal to the
sum of the total payments under this Agreement and the value of the 675,000
options issued to the Consultant in 1999.
(d) The Consultant agrees that, in the event the Department of Justice
or other governmental entity causes a delay in the closing of the Merger, with
his approval, the Company has amended the terms of the grant of 675,000 options
in 1999 to include the following terms:
. none of the options are exercisable until simultaneously with the
closing of the Offer described in the Merger Agreement
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the four months following the substantial
compliance by Computer Associates International, Inc. and the Company
with respect to the Hart-Scott-Rodino Act of 1978 as provided in
Section 7.1(e)(i), all options shall be exercisable
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the period described in Section 7.1(e)(iii) of
the Merger Agreement, 50% of the options shall be exercisable and the
balance shall be forfeited
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the period described in Section 7.1(e)(iv) of
the Merger Agreement, 25% of the options shall be exercisable and the
balance shall be forfeited.
7. CONDITIONS TO EFFECTIVENESS. The Effective Date of this
Agreement (the "EFFECTIVE DATE") shall be the date that the merger of the
Company and a wholly-owned subsidiary of Computer Associates International,
Inc., becomes effective pursuant to the Merger Agreement. In the event the
Merger Agreement terminates, this Agreement shall terminate.
-6-
<PAGE>
8. DUTIES ON TERMINATION. At the Company's request at any time or upon
termination of the Consulting Period for any reason, the Consultant agrees to
deliver promptly to the Company all notebooks, documents, memoranda, reports,
files, samples, books, correspondence, lists, computer tapes or disks, or other
written or graphic records, and the like (and all copies thereof), from the
Company's business, which are or have been in his possession or under his
control.
9. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
10. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be given by first-class mail, certified or
registered with return receipt requested, by reputable overnight carrier or hand
delivery acknowledged in writing by the recipient personally, and shall be
deemed to have been duly given three days after mailing or immediately upon duly
acknowledged hand delivery to the respective persons named below:
If to the Company: PLATINUM TECHNOLOGY International, INC.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Andrew J. Filipowski
with a copy to:
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
President and Chief Operating Officer
If to the Consultant:
Andrew J. Filipowski
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Either party may change such party's address for notices by notice duly given
pursuant hereto.
11. GOVERNING LAW. This agreement and the legal relations thus created
between the parties hereto shall be governed by and construed under and in
accordance with the internal laws of the State of New York without reference to
the principles of conflicts of laws.
12. ENTIRE AGREEMENT. Except as specifically set forth herein, this
Agreement represents the entire agreement between the parties hereto with
respect to the subject matter
-7-
<PAGE>
hereof, and supersedes all prior agreements, representations and understandings.
The Consultant acknowledges and agrees that neither the Company nor anyone
acting on its behalf has made, and is not making, and in executing this
Agreement, the Consultant has not relied upon, any representations, promises or
inducements except to the extent the same is expressly set forth in this
Agreement. No amounts payable under this Agreement shall be considered as
compensation under the Consultant's former employment agreement.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. ASSIGNMENT OF RIGHTS BY THE CONSULTANT. The Consultant may not
assign any rights hereunder without the prior written consent of the Company.
Any such assignment in the absence of such written consent shall be void. The
Company may assign this Agreement to any successor to the Company or a
substantial part of the Company's business or assets provided that upon such
assignment references to the "Company" shall mean Company as it existed prior to
such assignment and further provided that any such assignment shall not expand
Consultant's obligations hereunder.
15. AMENDMENTS; WAIVERS. (a) This Agreement may not be modified,
amended, altered or supplemented except upon the written agreement executed by
the parties hereto.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
16. MUTUAL RELEASE. Upon the Effective Date, the Consultant is hereby
released from and the Company waives, any and all liability, claims, damages,
causes of action, judgments (including any of the foregoing with respect to
costs, penalties, losses and expenses) which the Company has or may have against
the Consultant solely in connection with expenses incurred, or non-monetary
Company resources used, by the Consultant in the performance of his ordinary
course duties as an officer of the Company, provided that Consultant is not
released from any liability pursuant to this Agreement. Upon the Effective Date,
the Company is hereby released from, and the Consultant waives (including any of
the foregoing with respect to costs, penalties, any and all liability, claims,
damages, causes of action, judgments, losses and expenses which the Consultant
may have against the Company solely in connection with expenses the Consultant
incurred, or non-monetary Company resources used, in the performance of his
ordinary course duties as an officer of the Company, provided that the Company
is not released from any liability pursuant to this Agreement, any option
agreements or any other written agreement entered into by the Consultant in
connection with the Merger.
-8-
<PAGE>
The Company has caused this Agreement to be executed and delivered by
its duly authorized officer and the Consultant has executed and delivered this
Agreement as of the date set forth above.
/s/ Andrew J. Filipowski
------------------------------
ANDREW J. FILIPOWSKI
CONSULTANT
PLATINUM TECHNOLOGY INTERNATIONAL, INC.
By: /s/ Paul L. Humenansky
------------------------------
Name: Paul L. Humenansky
Title: Executive Vice President
-9-
<PAGE>
SCHEDULE A
DESCRIPTION OF CONSULTING SERVICES
----------------------------------
Transition Services
Integration Services
Customer Relations and Retention
Employee Relations and Retention
Strategic Planning
<PAGE>
EXHIBIT 4
CONSULTING AND NON-COMPETE AGREEMENT, dated as of March 29,
1999 (the "AGREEMENT"), by and between PLATINUM TECHNOLOGY
International, INC., a Delaware corporation (the "COMPANY"),
and Michael P. Cullinane (the "CONSULTANT").
------------------------------------------------------------
The Company is intending to enter into a Merger Agreement with
Computer Associates International, Inc. (the "MERGER AGREEMENT"), pursuant to
which the Company will become a subsidiary of Computer Associates International,
Inc. The Consultant is a senior executive of the Company, has unique knowledge
of the Company's business and has occupied a position of trust and confidence.
The Company and the Consultant desire that, effective upon the Merger (as
defined in the Merger Agreement), the Consultant will continue as a consultant
to the Company and will agree to refrain from competing with the Company all as
set forth in this Agreement.
In consideration of the mutual agreements, the Consultant and
the Company agree as follows:
1. SERVICES. (a) The Consultant agrees, at the request of the Company,
that for a period of up to six months from the Effective Date (but in no event
later than September 30, 1999), to remain as an employee to provide transition
services in a capacity substantially similar to Consultant's current employment
and with continuation of compensation on the same basis as current compensation.
(b) For the Consulting Period (as defined in Section 2), the Consultant
shall provide from time to time and as requested by the Company the consulting
services set forth in Schedule A (the "SERVICES"). The Consultant shall report
to the President of Computer Associates International, Inc. The Consultant shall
devote such time and energy to the business of the Company as reasonably
required to perform the Services; the parties agree that the performance of the
Services is not intended to require full time effort (and the Consultant is free
to take other full time employment not inconsistent with the terms of this
Agreement). The Company shall not require the Consultant to travel a greater
amount than in connection with his current employment.
2. TERM. The Consultant and the Company agree that the consulting period
(the "CONSULTING PERIOD") begins on the later of the Effective Date (as defined
in Section 7) and the date the transition employment services under Section 1(a)
end and ends on the second anniversary of the Effective Date. The Consultant
acknowledges that the Consulting Period may be terminated at any time, with or
without cause or for any or no reason, at the option either of the Company or
the Consultant, on 30 days written notice, as provided in Section 4.
3. CONSULTING FEE. Commencing on the Effective Date, the Company shall
pay the Consultant a consulting fee at the annual rate of $500,000, payable
quarterly in arrears. The Company shall reimburse Consultant for all reasonable
costs and expenses incurred in connection with Consultant's performance of the
Services.
<PAGE>
4. TERMINATION. (a) TERMINATION WITHOUT CAUSE. If the Company terminates
the Consulting Period without Cause prior to the second anniversary of the
Effective Date, the Consultant shall be entitled to continued payment of all
consulting fees.
(b) TERMINATION FOR CAUSE. If (i) the Company terminates the Consulting
Period at any time for Cause, or (ii) the Consultant terminates the Consulting
Period at any time, the Consultant shall be entitled to receive the consulting
fees paid through the date of termination. "CAUSE" shall mean (A) the
Consultant's material breach of any material term of this Agreement, including,
but not limited to, the covenants set forth in Section 5 hereof, subject to the
Consultant's right to cure any breach that is curable within a reasonable period
following notice by the Company, (B) the Consultant's conviction of a felony, or
(C) any willful misconduct by the Consultant resulting in substantial loss to
the Company, substantial damage to the Company's reputation or judicially
determined theft or misappropriation from the Company.
(c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant dies or
becomes Disabled, in which event the Consulting Period shall terminate, the
Consultant (or, in the case of death, his estate), shall be entitled to
continued payment of all consulting fees as death or disability benefits.
"DISABLED" shall mean the Consultant's adjudication as mentally incompetent, or
the occurrence of a mental or physical disability for 120 or more days within
any calendar year. Any question as to the existence of his disability as to
which the Consultant and the Company cannot agree shall be determined in writing
by a qualified independent physician mutually acceptable to the Consultant and
the Company. If the Consultant and the Company cannot agree on a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of disability made in writing to the Consultant and the
Company shall be final and conclusive for all purposes.
(d) GENERAL. Upon the termination of the Consulting Period, for any
reason, (i) the Company shall have no further obligations to the Consultant
hereunder, other than as specifically set forth in this Agreement and (ii) the
Consultant shall continue to be bound (subject to the time periods and
limitations set forth herein) by the terms of this Agreement other than Section
1. Confidential Information shall remain confidential under Section 5(c) for so
long as such information is "CONFIDENTIAL INFORMATION".
5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In consideration for,
and as a condition to, the Company's payment of the non-compete payment and
entering into this Agreement, and in connection with the merger described
herein, until the fifth anniversary of the later of the Effective Date and the
date the transition employment services under Section 1(a) end, the Consultant
will not directly or indirectly, on Consultant's own behalf or in the service of
or on behalf of any other individual or entity, either as a proprietor,
employee, agent, independent contractor, consultant, director, officer, partner
or stockholder (other than a stockholder of a corporation listed on a national
securities exchange or whose stock is regularly traded in the over-the-counter
market, provided that the Consultant at no time owns, directly or indirectly, in
excess of 2% of the outstanding stock of any class of any such corporation):
(i) participate or engage in any activities or business developing,
manufacturing, marketing or distributing any products or services offered by
the
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Company on the date of this Agreement, or any products or services offered
by the Company in the future and in which the Consultant actively
participated, recognizing that the Company offers products and services
globally ("COMPETITIVE ACTIVITIES"), including, without limitation, (A)
selling goods or rendering services of the type (or similar to the type)
sold or rendered by the Company, whether by means of electronic, traditional
or other form of commerce; (B) soliciting any person or entity that is a
current customer, that has been a customer within the past three years or
that is or was a prospective customer prior to or during the Consulting
Period, in each case, of the Company or an affiliate of the Company
(provided that it shall not be deemed a breach of this Agreement if the
Consultant solicits such customers for goods or services unrelated to the
Competitive Activities), (C) assisting any person in any way to do, or
attempt to do, anything prohibited by clauses (A) or (B) above and (D) be
employed by any person or entity that has received services of the type
described above from the Consultant or with which the Consultant otherwise
had material contact while employed by the Company or which received
services of the type describe above from any office or employee of the
Company over which Consultant had management responsibility, in either case
to provide or supervise, directly or indirectly, the services comprising a
Competitive Activity; or
(ii) perform any action, activity or course of conduct which is
detrimental in any material respect to the businesses or business reputation
of the Company (or any of its affiliates), including without limitation (A)
soliciting, recruiting or hiring any employees of the Company (or any of its
affiliates) or persons who have worked for the Company (or any of its
affiliates) at any time since January 1, 1998; provided that the Consultant
may hire any employee of the Company (I) that has been terminated by the
Company, (II) in connection with a business that is not a Competitive
Activity (including any VC Business that is not a Competitive Activity), but
Consultant may not solicit or recruit for such purposes, or (III) to work in
a VC Business (as hereinafter defined), but not to work in or for any
company in which any VC Business invests or otherwise acquires an interest,
and (B) soliciting or encouraging any employee of the Company (or any of its
affiliates) to leave the employment of the Company.
(b) Notwithstanding anything to the contrary herein, Consultant may
remain a director at those companies for which Consultant is a director as of
the Effective Date and may engage in any activities or businesses:
(i) involving venture capital activities (a "VC Business"), including,
without limitation, activities undertaken through Platinum Venture Partners or
any similar entities as may be formed in the future, holding directorships, and
through such partnerships exercising veto power over certain decisions in
companies which venture capital investments have been made; provided that the
Consultant shall not without permission in any such venture invest in any
company whose primary business is a Competitive Activity; or
(ii) for which the Company has given permission in writing, which shall
not be unreasonably withheld (or delayed) after the third anniversary of the
Effective Date, provided Consultant's engaging in such activities or business
would not have a material adverse impact on any of the Company's lines of
business; or
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(iii) which Computer Associates International, Inc. shall have
confirmed (which confirmation shall not be unreasonably withheld or delayed) in
writing to Consultant are not inconsistent with the prohibitions of Sections
5(a) and 5(b) hereof.
(c) The Consultant shall not, without the written consent of the
Company, disclose to any other person or use, whether directly or indirectly,
any Confidential Information relating to or used by the Company or any of its
affiliates, whether in written, oral or other form, except in connection with
the performance of his duties hereunder. "CONFIDENTIAL INFORMATION" shall mean
information about the Company or any of its affiliates, and their clients and
customers that is not disclosed by the Company or any of its affiliates for
financial reporting purposes and that was learned by the Consultant in the
course of employment by the Company or any of its affiliates or in the course of
performing the services under this Agreement, including (without limitation) any
proprietary knowledge, product and service designs, trade secrets, manuals,
technical information and plans, contracts, systems, procedures, databases,
electronic files, disks and printouts, correspondence, internal reports,
personnel files, information about employees of the Company and its affiliates
relating to their education, experience, skills, abilities, compensation and
benefits, and inter-personal relationships with suppliers to and customers of
the Company and its affiliates, sales and advertising material, business plans,
marketing plans, financial data (including without limitation the revenues,
costs or profits associated with services), customer and industry lists,
customer information, customer lists coupled with product or service pricing,
customer contacts, supplier contacts and other contact information, pricing
policies, supplies, agents, risk analyses, engineering information and computer
reports, computer software, computer systems, computer formats, computer screen
designs and computer input and output specifications, inclusive of any pertinent
documentation, techniques, processes, technical information and know-how. The
Consultant acknowledges that such Confidential Information is specialized,
unique in nature and of great value to the Company and its affiliates, and that
such information gives the Company and its affiliates a competitive advantage.
The Consultant's obligations under this Section 5(b) shall survive the
termination of the Consulting Period and of this Agreement and shall be fully
enforceable thereafter in accordance with the terms of this Agreement.
(d) (i) Confidential Information does not include information which (A)
is or becomes part of the public domain other than as a result of the
Consultant's disclosure, or (B) becomes available to the Consultant on a
nonconfidential basis from a source other than the Company, provided that source
is not bound with respect to that information by a confidentiality agreement
with the Company or otherwise prohibited from transmitting that information by a
contractual, legal or other obligation.
(ii) If the Consultant is requested or (in the opinion of his counsel)
required by law or judicial order to disclose any Confidential Information, the
Consultant shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waiver of the Consultant's compliance with the provisions of this Section 5(c).
The Consultant will not oppose any reasonable action by, and will cooperate
with, the Company to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Confidential
Information. If, failing the entry of a protective order or the receipt of a
waiver hereunder, the Consultant is, in the opinion of his counsel, compelled by
law to disclose a portion of the Confidential Information, the Consultant
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may disclose to the relevant tribunal without liability hereunder that portion
of the Confidential Information which counsel advises the Consultant he is
legally required to disclose, and each of the parties hereto agrees to exercise
such party's best efforts to obtain assurance that confidential treatment will
be accorded such Confidential Information.
(e) If an award by a court or arbitration panel declares that any term
or provision of this Section 5 is excessive in duration or scope or is
unreasonable or unenforceable, the parties agree that the court or arbitration
panel making such determination shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
(f) In the event of a breach or threatened breach by the Consultant of
the provisions of this Section 5, the Consultant acknowledges that the Company
will suffer irreparable injury and may not have an adequate remedy at law and
therefore may be entitled to a temporary restraining order or a preliminary or
permanent injunction restraining the Consultant from such breach without the
requirement of posting security or proving actual damages as well as an
equitable accounting of all profits or benefits arising out of such violation.
In addition, in the event of a breach (that is not immaterial) at any time by
the Consultant of the provisions of this Section 5, the Consultant agrees as
liquidated damages hereunder to repay the full amount of the non-compete
payments made pursuant to Section 5(g). Nothing contained in this Section 5 or
elsewhere in this Agreement shall be construed as prohibiting the Company from
pursuing any other remedies available at law or equity for such breach or
threatened breach by the Consultant.
(g) In consideration of the Consultant's covenants under this Section 5,
the Company shall pay the Consultant a non-compete payment at the annual rate of
$1,800,000 in the first year, $1,800,000 in the second year, $2,300,000 in the
third year, $2,300,000 in the fourth year and $2,300,000 in the fifth year,
quarterly in arrears, commencing on the Effective Date.
(h) By executing this Agreement, Consultant assigns and transfers to the
Company all his right, title, and interest in and to all intellectual property
created, developed, conceived, or reduced to practice while employed as a
Consultant by the Company or its predecessor(s) arising in connection with the
Services. While he is employed by the Company and when he ceases to be employed
by the Company, Consultant shall fully and promptly disclose in writing to the
Company, and hold in trust for the sole right and benefit of the Company, all
ideas, plans, designs, methods, techniques, discoveries, inventions,
developments, improvements, trade secrets, computer programs and software, and
other proprietary data, records, and information that Consultant solely or
jointly develops or reduces to practice while employed by, and arising in
connection with the Services to, the Company (collectively "Intellectual
Property"), whether or not patentable or capable of copyright or trademark
registration, and whether or not created, conceived, developed, or reduced to
practice at the request of the Company or during normal working hours. While
employed by the Company and at all times thereafter, Consultant shall do all
things, and execute all documents (including applications for patents,
copyrights, and trademarks, and for renewals extensions, and divisions
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<PAGE>
thereof), that are requested and reasonably required by the Company to create,
enforce, or evidence the Company's rights to any Intellectual Property.
6. COOPERATION. (a) The Consultant agrees to cooperate with the Company
at all times (including following termination of the Consulting Period for any
reason) by making himself reasonably available to testify on behalf of the
Company or its affiliates, in any action, suit or proceeding, whether civil,
criminal, administrative, or investigative and to assist the Company or any of
its affiliates in any such action, suit, or proceeding by providing information
and meeting and consulting with the Company or representatives or counsel to the
Company or its affiliates, as reasonably requested by such representatives or
counsel. The Consultant shall be reimbursed by the Company for any expenses
(including, but not limited to, legal fees) reasonably incurred by the
Consultant in connection with his compliance with the foregoing covenant.
(b) Consultant shall fully cooperate with the Company and Computer
Associates International, Inc. in connection with filings under the Hart-Scott-
Rodino Antitrust Improvements Act of 1978 and in connection with resolving any
investigation or other inquiry of any governmental entity under the antitrust
laws.
(c) In the event the Company fails to observe the requirements of
Section 5.1 of the Merger Agreement, whether or not enforceable or in force
under such agreement, and the aggregate loss or damage is greater than
$1,500,000, then the Consultant shall be liable for 22% of each dollar of
liability under this Section 6 (including, without limitation, forfeitures under
Section 6(d) for such failure in excess of $1,500,000. The maximum amount of
liability under this Section for the Consultant shall be an amount equal to the
sum of the total payments under this Agreement and the value of the 350,000
options issued to the Consultant in 1999.
(d) The Consultant agrees that, in the event the Department of Justice
or other governmental entity causes a delay in the closing of the Merger, with
his approval, the Company has amended the terms of the grant of 350,000 options
in 1999 to include the following terms:
. none of the options are exercisable until simultaneously with the
closing of the Offer described in the Merger Agreement
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the four months following the substantial
compliance by Computer Associates International, Inc. and the Company
with respect to the Hart-Scott-Rodino Act of 1978 as provided in
Section 7.1(e)(i), all options shall be exercisable
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the period described in Section 7.1(e)(iii) of
the Merger Agreement, 50% of the options shall be exercisable and the
balance shall be forfeited
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within
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the period described in Section 7.1(e)(iv) of the Merger Agreement,
25% of the options shall be exercisable and the balance shall be
forfeited.
7. CONDITIONS TO EFFECTIVENESS. The Effective Date of this Agreement
(the "EFFECTIVE DATE") shall be the date that the merger of the Company and a
wholly-owned subsidiary of Computer Associates International, Inc., becomes
effective pursuant to the Merger Agreement. In the event the Merger Agreement
terminates, this Agreement shall terminate.
8. DUTIES ON TERMINATION. At the Company's request at any time or upon
termination of the Consulting Period for any reason, the Consultant agrees to
deliver promptly to the Company all notebooks, documents, memoranda, reports,
files, samples, books, correspondence, lists, computer tapes or disks, or other
written or graphic records, and the like (and all copies thereof), from the
Company's business, which are or have been in his possession or under his
control.
9. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
10. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be given by first-class mail, certified or
registered with return receipt requested, by reputable overnight carrier or hand
delivery acknowledged in writing by the recipient personally, and shall be
deemed to have been duly given three days after mailing or immediately upon duly
acknowledged hand delivery to the respective persons named below:
If to the Company: PLATINUM TECHNOLOGY International, INC.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Andrew J. Filipowski
with a copy to:
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
President and Chief Operating Officer
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<PAGE>
If to the Consultant:
Michael P. Cullinane
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Either party may change such party's address for notices by notice duly given
pursuant hereto.
11. GOVERNING LAW. This agreement and the legal relations thus created
between the parties hereto shall be governed by and construed under and in
accordance with the internal laws of the State of New York without reference to
the principles of conflicts of laws.
12. ENTIRE AGREEMENT. Except as specifically set forth herein, this
Agreement represents the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements,
representations and understandings. The Consultant acknowledges and agrees that
neither the Company nor anyone acting on its behalf has made, and is not making,
and in executing this Agreement, the Consultant has not relied upon, any
representations, promises or inducements except to the extent the same is
expressly set forth in this Agreement. No amounts payable under this Agreement
shall be considered as compensation under the Consultant's former employment
agreement.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. ASSIGNMENT OF RIGHTS BY THE CONSULTANT. The Consultant may not
assign any rights hereunder without the prior written consent of the Company.
Any such assignment in the absence of such written consent shall be void. The
Company may assign this Agreement to any successor to the Company or a
substantial part of the Company's business or assets provided that upon such
assignment references to the "Company" shall mean Company as it existed prior to
such assignment and further provided that any such assignment shall not expand
Consultant's obligations hereunder.
15. AMENDMENTS; WAIVERS. (a) This Agreement may not be modified,
amended, altered or supplemented except upon the written agreement executed by
the parties hereto.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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16. MUTUAL RELEASE. Upon the Effective Date, the Consultant is hereby
released from and the Company waives, any and all liability, claims, damages,
causes of action, judgments (including any of the foregoing with respect to
costs, penalties, losses and expenses) which the Company has or may have against
the Consultant solely in connection with expenses incurred, or non-monetary
Company resources used, by the Consultant in the performance of his ordinary
course duties as an officer of the Company, provided that Consultant is not
released from any liability pursuant to this Agreement. Upon the Effective Date,
the Company is hereby released from, and the Consultant waives (including any of
the foregoing with respect to costs, penalties, any and all liability, claims,
damages, causes of action, judgments, losses and expenses which the Consultant
may have against the Company solely in connection with expenses the Consultant
incurred, or non-monetary Company resources used, in the performance of his
ordinary course duties as an officer of the Company, provided that the Company
is not released from any liability pursuant to this Agreement, any option
agreements or any other written agreement entered into by the Consultant in
connection with the Merger.
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The Company has caused this Agreement to be executed and
delivered by its duly authorized officer and the Consultant has executed and
delivered this Agreement as of the date set forth above.
/s/ Michael P. Cullinane
------------------------------
MICHAEL P. CULLINANE
CONSULTANT
PLATINUM TECHNOLOGY INTERNATIONAL, INC.
By: /s/ Andrew J. Filipowski
---------------------------
Name: Andrew J. Filipowski
Title: President
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SCHEDULE A
DESCRIPTION OF CONSULTING SERVICES
----------------------------------
Transition Services
Integration Services
Customer Relations and Retention
Employee Relations and Retention
Strategic Planning
<PAGE>
EXHIBIT 5
CONSULTING AND NON-COMPETE AGREEMENT, dated as of March 29,
1999 (the "AGREEMENT"), by and between PLATINUM TECHNOLOGY
International, INC., a Delaware corporation (the "COMPANY"),
and Paul L. Humenansky (the "CONSULTANT").
------------------------------------------------------------
The Company is intending to enter into a Merger Agreement with Computer
Associates International, Inc. (the "MERGER AGREEMENT"), pursuant to which the
Company will become a subsidiary of Computer Associates International, Inc. The
Consultant is a senior executive of the Company, has unique knowledge of the
Company's business and has occupied a position of trust and confidence. The
Company and the Consultant desire that, effective upon the Merger (as defined in
the Merger Agreement), the Consultant will continue as a consultant to the
Company and will agree to refrain from competing with the Company all as set
forth in this Agreement.
In consideration of the mutual agreements, the Consultant and the
Company agree as follows:
1. SERVICES. (a) The Consultant agrees, at the request of the Company,
that for a period of up to six months from the Effective Date (but in no event
later than September 30, 1999), to remain as an employee to provide transition
services in a capacity substantially similar to Consultant's current employment
and with continuation of compensation on the same basis as current compensation.
(b) For the Consulting Period (as defined in Section 2), the Consultant
shall provide from time to time and as requested by the Company the consulting
services set forth in Schedule A (the "SERVICES"). The Consultant shall report
to the President of Computer Associates International, Inc. The Consultant shall
devote such time and energy to the business of the Company as reasonably
required to perform the Services; the parties agree that the performance of the
Services is not intended to require full time effort (and the Consultant is free
to take other full time employment not inconsistent with the terms of this
Agreement). The Company shall not require the Consultant to travel a greater
amount than in connection with his current employment.
2. TERM. The Consultant and the Company agree that the consulting period
(the "CONSULTING PERIOD") begins on the later of the Effective Date (as defined
in Section 7) and the date the transition employment services under Section 1(a)
end and ends on the second anniversary of the Effective Date. The Consultant
acknowledges that the Consulting Period may be terminated at any time, with or
without cause or for any or no reason, at the option either of the Company or
the Consultant, on 30 days written notice, as provided in Section 4.
3. CONSULTING FEE. Commencing on the Effective Date, the
Company shall pay the Consultant a consulting fee at the annual rate of
$500,000, payable quarterly in arrears. The Company shall reimburse Consultant
for all reasonable costs and expenses incurred in connection with Consultant's
performance of the Services.
<PAGE>
4. TERMINATION. (a) TERMINATION WITHOUT CAUSE. If the Company terminates
the Consulting Period without Cause prior to the second anniversary of the
Effective Date, the Consultant shall be entitled to continued payment of all
consulting fees.
(b) TERMINATION FOR CAUSE. If (i) the Company terminates the Consulting
Period at any time for Cause, or (ii) the Consultant terminates the Consulting
Period at any time, the Consultant shall be entitled to receive the consulting
fees paid through the date of termination. "CAUSE" shall mean (A) the
Consultant's material breach of any material term of this Agreement, including,
but not limited to, the covenants set forth in Section 5 hereof, subject to the
Consultant's right to cure any breach that is curable within a reasonable period
following notice by the Company, (B) the Consultant's conviction of a felony, or
(C) any willful misconduct by the Consultant resulting in substantial loss to
the Company, substantial damage to the Company's reputation or judicially
determined theft or misappropriation from the Company.
(c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant dies or
becomes Disabled, in which event the Consulting Period shall terminate, the
Consultant (or, in the case of death, his estate), shall be entitled to
continued payment of all consulting fees as death or disability benefits.
"DISABLED" shall mean the Consultant's adjudication as mentally incompetent, or
the occurrence of a mental or physical disability for 120 or more days within
any calendar year. Any question as to the existence of his disability as to
which the Consultant and the Company cannot agree shall be determined in writing
by a qualified independent physician mutually acceptable to the Consultant and
the Company. If the Consultant and the Company cannot agree on a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of disability made in writing to the Consultant and the
Company shall be final and conclusive for all purposes.
(d) GENERAL. Upon the termination of the Consulting Period, for any
reason, (i) the Company shall have no further obligations to the Consultant
hereunder, other than as specifically set forth in this Agreement and (ii) the
Consultant shall continue to be bound (subject to the time periods and
limitations set forth herein) by the terms of this Agreement other than Section
1. Confidential Information shall remain confidential under Section 5(c) for so
long as such information is "CONFIDENTIAL INFORMATION".
5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In
consideration for, and as a condition to, the Company's payment of the non-
compete payment and entering into this Agreement, and in connection with the
merger described herein, until the fifth anniversary of the later of the
Effective Date and the date the transition employment services under Section
1(a) end, the Consultant will not directly or indirectly, on Consultant's own
behalf or in the service of or on behalf of any other individual or entity,
either as a proprietor, employee, agent, independent contractor, consultant,
director, officer, partner or stockholder (other than a stockholder of a
corporation listed on a national securities exchange or whose stock is regularly
traded in the over-the-counter market, provided that the Consultant at no time
owns, directly or indirectly, in excess of 2% of the outstanding stock of any
class of any such corporation):
(i) participate or engage in any activities or business developing,
manufacturing, marketing or distributing any products or services offered by
the
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Company on the date of this Agreement, or any products or services offered
by the Company in the future and in which the Consultant actively
participated, recognizing that the Company offers products and services
globally ("COMPETITIVE ACTIVITIES"), including, without limitation, (A)
selling goods or rendering services of the type (or similar to the type)
sold or rendered by the Company, whether by means of electronic, traditional
or other form of commerce; (B) soliciting any person or entity that is a
current customer, that has been a customer within the past three years or
that is or was a prospective customer prior to or during the Consulting
Period, in each case, of the Company or an affiliate of the Company
(provided that it shall not be deemed a breach of this Agreement if the
Consultant solicits such customers for goods or services unrelated to the
Competitive Activities), (C) assisting any person in any way to do, or
attempt to do, anything prohibited by clauses (A) or (B) above and (D) be
employed by any person or entity that has received services of the type
described above from the Consultant or with which the Consultant otherwise
had material contact while employed by the Company or which received
services of the type describe above from any office or employee of the
Company over which Consultant had management responsibility, in either case
to provide or supervise, directly or indirectly, the services comprising a
Competitive Activity; or
(ii) perform any action, activity or course of
conduct which is detrimental in any material respect to the businesses
or business reputation of the Company (or any of its affiliates),
including without limitation (A) soliciting, recruiting or hiring any
employees of the Company (or any of its affiliates) or persons who have
worked for the Company (or any of its affiliates) at any time since
January 1, 1998; provided that the Consultant may hire any employee of
the Company (I) that has been terminated by the Company, (II) in
connection with a business that is not a Competitive Activity
(including any VC Business that is not a Competitive Activity), but
Consultant may not solicit or recruit for such purposes, or (III) to
work in a VC Business (as hereinafter defined), but not to work in or
for any company in which any VC Business invests or otherwise acquires
an interest, and (B) soliciting or encouraging any employee of the
Company (or any of its affiliates) to leave the employment of the
Company.
(b) Notwithstanding anything to the contrary herein,
Consultant may remain a director at those companies for which Consultant is a
director as of the Effective Date and may engage in any activities or
businesses:
(i) involving venture capital activities (a "VC Business"),
including, without limitation, activities undertaken through Platinum Venture
Partners or any similar entities as may be formed in the future, holding
directorships, and through such partnerships exercising veto power over certain
decisions in companies which venture capital investments have been made;
provided that the Consultant shall not without permission in any such venture
invest in any company whose primary business is a Competitive Activity; or
(ii) for which the Company has given permission in writing,
which shall not be unreasonably withheld (or delayed) after the third
anniversary of the Effective Date, provided Consultant's engaging in such
activities or business would not have a material adverse impact on any of the
Company's lines of business; or
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(iii) which Computer Associates International, Inc. shall have confirmed
(which confirmation shall not be unreasonably withheld or delayed) in writing to
Consultant are not inconsistent with the prohibitions of Sections 5(a) and 5(b)
hereof.
(c) The Consultant shall not, without the written consent of the
Company, disclose to any other person or use, whether directly or indirectly,
any Confidential Information relating to or used by the Company or any of its
affiliates, whether in written, oral or other form, except in connection with
the performance of his duties hereunder. "CONFIDENTIAL INFORMATION" shall mean
information about the Company or any of its affiliates, and their clients and
customers that is not disclosed by the Company or any of its affiliates for
financial reporting purposes and that was learned by the Consultant in the
course of employment by the Company or any of its affiliates or in the course of
performing the services under this Agreement, including (without limitation) any
proprietary knowledge, product and service designs, trade secrets, manuals,
technical information and plans, contracts, systems, procedures, databases,
electronic files, disks and printouts, correspondence, internal reports,
personnel files, information about employees of the Company and its affiliates
relating to their education, experience, skills, abilities, compensation and
benefits, and inter-personal relationships with suppliers to and customers of
the Company and its affiliates, sales and advertising material, business plans,
marketing plans, financial data (including without limitation the revenues,
costs or profits associated with services), customer and industry lists,
customer information, customer lists coupled with product or service pricing,
customer contacts, supplier contacts and other contact information, pricing
policies, supplies, agents, risk analyses, engineering information and computer
reports, computer software, computer systems, computer formats, computer screen
designs and computer input and output specifications, inclusive of any pertinent
documentation, techniques, processes, technical information and know-how. The
Consultant acknowledges that such Confidential Information is specialized,
unique in nature and of great value to the Company and its affiliates, and that
such information gives the Company and its affiliates a competitive advantage.
The Consultant's obligations under this Section 5(b) shall survive the
termination of the Consulting Period and of this Agreement and shall be fully
enforceable thereafter in accordance with the terms of this Agreement.
(d) (i) Confidential Information does not include information
which (A) is or becomes part of the public domain other than as a result of the
Consultant's disclosure, or (B) becomes available to the Consultant on a
nonconfidential basis from a source other than the Company, provided that source
is not bound with respect to that information by a confidentiality agreement
with the Company or otherwise prohibited from transmitting that information by a
contractual, legal or other obligation.
(ii) If the Consultant is requested or (in the opinion of his
counsel) required by law or judicial order to disclose any Confidential
Information, the Consultant shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waiver of the Consultant's compliance with the provisions of
this Section 5(c). The Consultant will not oppose any reasonable action by, and
will cooperate with, the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information. If, failing the entry of a protective order or the
receipt of a waiver hereunder, the Consultant is, in the opinion of his counsel,
compelled by law to disclose a portion of the Confidential Information, the
Consultant
-4-
<PAGE>
may disclose to the relevant tribunal without liability hereunder that portion
of the Confidential Information which counsel advises the Consultant he is
legally required to disclose, and each of the parties hereto agrees to exercise
such party's best efforts to obtain assurance that confidential treatment will
be accorded such Confidential Information.
(e) If an award by a court or arbitration panel declares that any term
or provision of this Section 5 is excessive in duration or scope or is
unreasonable or unenforceable, the parties agree that the court or arbitration
panel making such determination shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
(f) In the event of a breach or threatened breach by the Consultant of
the provisions of this Section 5, the Consultant acknowledges that the Company
will suffer irreparable injury and may not have an adequate remedy at law and
therefore may be entitled to a temporary restraining order or a preliminary or
permanent injunction restraining the Consultant from such breach without the
requirement of posting security or proving actual damages as well as an
equitable accounting of all profits or benefits arising out of such violation.
In addition, in the event of a breach (that is not immaterial) at any time by
the Consultant of the provisions of this Section 5, the Consultant agrees as
liquidated damages hereunder to repay the full amount of the non-compete
payments made pursuant to Section 5(g). Nothing contained in this Section 5 or
elsewhere in this Agreement shall be construed as prohibiting the Company from
pursuing any other remedies available at law or equity for such breach or
threatened breach by the Consultant.
(g) In consideration of the Consultant's covenants under this Section 5,
the Company shall pay the Consultant a non-compete payment at the annual rate of
$1,800,000 in the first year, $1,800,000 in the second year, $2,300,000 in the
third year, $2,300,000 in the fourth year and $2,300,000 in the fifth year,
quarterly in arrears, commencing on the Effective Date.
(h) By executing this Agreement, Consultant assigns and transfers to the
Company all his right, title, and interest in and to all intellectual property
created, developed, conceived, or reduced to practice while employed as a
Consultant by the Company or its predecessor(s) arising in connection with the
Services. While he is employed by the Company and when he ceases to be employed
by the Company, Consultant shall fully and promptly disclose in writing to the
Company, and hold in trust for the sole right and benefit of the Company, all
ideas, plans, designs, methods, techniques, discoveries, inventions,
developments, improvements, trade secrets, computer programs and software, and
other proprietary data, records, and information that Consultant solely or
jointly develops or reduces to practice while employed by, and arising in
connection with the Services to, the Company (collectively "Intellectual
Property"), whether or not patentable or capable of copyright or trademark
registration, and whether or not created, conceived, developed, or reduced to
practice at the request of the Company or during normal working hours. While
employed by the Company and at all times thereafter, Consultant shall do all
things, and execute all documents (including applications for patents,
copyrights, and trademarks, and for renewals extensions, and divisions
-5-
<PAGE>
thereof), that are requested and reasonably required by the Company to create,
enforce, or evidence the Company's rights to any Intellectual Property.
6. COOPERATION. (a) The Consultant agrees to cooperate with the Company
at all times (including following termination of the Consulting Period for any
reason) by making himself reasonably available to testify on behalf of the
Company or its affiliates, in any action, suit or proceeding, whether civil,
criminal, administrative, or investigative and to assist the Company or any of
its affiliates in any such action, suit, or proceeding by providing information
and meeting and consulting with the Company or representatives or counsel to the
Company or its affiliates, as reasonably requested by such representatives or
counsel. The Consultant shall be reimbursed by the Company for any expenses
(including, but not limited to, legal fees) reasonably incurred by the
Consultant in connection with his compliance with the foregoing covenant.
(b) Consultant shall fully cooperate with the Company and Computer
Associates International, Inc. in connection with filings under the Hart-Scott-
Rodino Antitrust Improvements Act of 1978 and in connection with resolving any
investigation or other inquiry of any governmental entity under the antitrust
laws.
(c) In the event the Company fails to observe the requirements of
Section 5.1 of the Merger Agreement, whether or not enforceable or in force
under such agreement, and the aggregate loss or damage is greater than
$1,500,000, then the Consultant shall be liable for 22% of each dollar of
liability under this Section 6 (including, without limitation, forfeitures under
Section 6(d) for such failure in excess of $1,500,000. The maximum amount of
liability under this Section for the Consultant shall be an amount equal to the
sum of the total payments under this Agreement and the value of the 400,000
options issued to the Consultant in 1999.
(d) The Consultant agrees that, in the event the Department of Justice
or other governmental entity causes a delay in the closing of the Merger, with
his approval, the Company has amended the terms of the grant of 400,000 options
in 1999 to include the following terms:
. none of the options are exercisable until simultaneously with the
closing of the Offer described in the Merger Agreement
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the four months following the substantial
compliance by Computer Associates International, Inc. and the Company
with respect to the Hart-Scott-Rodino Act of 1978 as provided in
Section 7.1(e)(i), all options shall be exercisable
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within the period described in Section 7.1(e)(iii) of
the Merger Agreement, 50% of the options shall be exercisable and the
balance shall be forfeited
. if all antitrust issues with the Department of Justice or other
governmental entity to permit the completion of the Merger shall have
been resolved within
-6-
<PAGE>
the period described in Section 7.1(e)(iv) of the Merger Agreement,
25% of the options shall be exercisable and the balance shall be
forfeited.
7. CONDITIONS TO EFFECTIVENESS. The Effective Date of this Agreement
(the "EFFECTIVE DATE") shall be the date that the merger of the Company and a
wholly-owned subsidiary of Computer Associates International, Inc., becomes
effective pursuant to the Merger Agreement. In the event the Merger Agreement
terminates, this Agreement shall terminate.
8. DUTIES ON TERMINATION. At the Company's request at any time or upon
termination of the Consulting Period for any reason, the Consultant agrees to
deliver promptly to the Company all notebooks, documents, memoranda, reports,
files, samples, books, correspondence, lists, computer tapes or disks, or other
written or graphic records, and the like (and all copies thereof), from the
Company's business, which are or have been in his possession or under his
control.
9. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
10. NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be given by first-class mail, certified or
registered with return receipt requested, by reputable overnight carrier or hand
delivery acknowledged in writing by the recipient personally, and shall be
deemed to have been duly given three days after mailing or immediately upon duly
acknowledged hand delivery to the respective persons named below:
If to the Company: PLATINUM TECHNOLOGY International, INC.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Andrew J. Filipowski
with a copy to:
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
President and Chief Operating Officer
If to the Consultant:
Paul L. Humenansky
1815 South Meyers Road
Oakbrook Terrace, IL 60181
-7-
<PAGE>
Either party may change such party's address for notices by notice duly given
pursuant hereto.
11. GOVERNING LAW. This agreement and the legal relations thus created
between the parties hereto shall be governed by and construed under and in
accordance with the internal laws of the State of New York without reference to
the principles of conflicts of laws.
12. ENTIRE AGREEMENT. Except as specifically set forth herein, this
Agreement represents the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements,
representations and understandings. The Consultant acknowledges and agrees that
neither the Company nor anyone acting on its behalf has made, and is not making,
and in executing this Agreement, the Consultant has not relied upon, any
representations, promises or inducements except to the extent the same is
expressly set forth in this Agreement. No amounts payable under this Agreement
shall be considered as compensation under the Consultant's former employment
agreement.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. ASSIGNMENT OF RIGHTS BY THE CONSULTANT. The Consultant may not
assign any rights hereunder without the prior written consent of the Company.
Any such assignment in the absence of such written consent shall be void. The
Company may assign this Agreement to any successor to the Company or a
substantial part of the Company's business or assets provided that upon such
assignment references to the "Company" shall mean Company as it existed prior to
such assignment and further provided that any such assignment shall not expand
Consultant's obligations hereunder.
15. AMENDMENTS; WAIVERS. (a) This Agreement may not be modified,
amended, altered or supplemented except upon the written agreement executed by
the parties hereto.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
-8-
<PAGE>
16. MUTUAL RELEASE. Upon the Effective Date, the Consultant is hereby
released from and the Company waives, any and all liability, claims, damages,
causes of action, judgments (including any of the foregoing with respect to
costs, penalties, losses and expenses) which the Company has or may have against
the Consultant solely in connection with expenses incurred, or non-monetary
Company resources used, by the Consultant in the performance of his ordinary
course duties as an officer of the Company, provided that Consultant is not
released from any liability pursuant to this Agreement. Upon the Effective Date,
the Company is hereby released from, and the Consultant waives (including any of
the foregoing with respect to costs, penalties, any and all liability, claims,
damages, causes of action, judgments, losses and expenses which the Consultant
may have against the Company solely in connection with expenses the Consultant
incurred, or non-monetary Company resources used, in the performance of his
ordinary course duties as an officer of the Company, provided that the Company
is not released from any liability pursuant to this Agreement, any option
agreements or any other written agreement entered into by the Consultant in
connection with the Merger
-9-
<PAGE>
The Company has caused this Agreement to be executed and delivered by
its duly authorized officer and the Consultant has executed and delivered this
Agreement as of the date set forth above.
/s/ Paul L. Humenansky
------------------------------
PAUL L. HUMENANSKY
CONSULTANT
PLATINUM TECHNOLOGY INTERNATIONAL, INC.
By: /s/ Andrew J. Filipowski
---------------------------
Name: Andrew J. Filipowski
Title: President
-10-
<PAGE>
SCHEDULE A
DESCRIPTION OF CONSULTING SERVICES
----------------------------------
Transition Services
Integration Services
Customer Relations and Retention
Employee Relations and Retention
Strategic Planning
<PAGE>
EXHIBIT 6
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
-----------------------------------
AMENDMENT NO. 1 TO RIGHTS AGREEMENT ("Amendment No. 1"), dated as of
March 29, 1999, between PLATINUM technology International, inc., a Delaware
corporation (the "Company"), and HARRIS TRUST AND SAVINGS BANK (the "Rights
Agent"), amending the Rights Agreement, dated as of December 21, 1995, between
the Company and the Rights Agent (the "Rights Agreement").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has approved an Agreement
and Plan of Merger (the "Merger Agreement") by and among Computer Associates
International, Inc., a Delaware corporation ("Parent"), HardMetal, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent ("Acquisition
Sub"), and the Company, providing for Acquisition Sub to commence an all-cash
tender offer for all outstanding shares of the common stock, $.001 par value per
share, of the Company (the "Offer") and for the subsequent merger of Acquisition
Sub with and into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has determined that the
Merger Agreement and the transactions contemplated thereby, including, without
limitation, the Offer and the Merger, are fair to and in the best interests of
the Company and its stockholders;
WHEREAS, the willingness of Parent and Acquisition Sub to enter into the
Merger Agreement is conditioned on, among other things, the amendment of the
Rights Agreement on the terms set forth herein;
WHEREAS, Section 27 of the Rights Agreement provides that the Company may
from time to time supplement or amend the Rights Agreement without the approval
of any holders of Rights Certificates to, among other things, make any
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing signed
by the Company and the Rights Agent; provided, however, that from and after such
time as any Person becomes an Acquiring Person, the Rights Agreement may not be
amended in any manner which would adversely affect the interest of the holders
of Rights; and
WHEREAS, in compliance with Section 27 of the Rights Agreement, the Company
desires to amend the Rights Agreement as hereinafter set forth and has executed
and delivered this Amendment No. 1 immediately prior to the execution and
delivery of the Merger Agreement.
<PAGE>
NOW, THEREFORE, the Company hereby amends the Rights Agreement as follows:
1. Section 1 of the Rights Agreement is hereby amended by adding the
following definitions thereto:
"Acquisition Sub" shall mean HardMetal, Inc., a Delaware corporation
and a wholly-owned subsidiary of Parent.
"Merger" shall mean the merger of Acquisition Sub with and into the
Company as contemplated by the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of March 29, 1999, by and among Parent, Acquisition Sub and the Company,
as the same may be amended in accordance with the terms thereof.
"Offer" shall have the meaning set forth in the Merger Agreement.
"Parent" shall mean Computer Associates International, Inc., a
Delaware corporation.
2. Section 1(a) of the Rights Agreement is hereby amended by adding to
the end thereof the following:
"Notwithstanding anything to the contrary contained herein, neither
Parent nor any Affiliate of Parent shall be or become an Acquiring Person
(and no Shares Acquisition Date shall occur) as a result of (i) the
announcement, commencement or consummation of the Offer, or (ii) the
execution, delivery or performance of the Merger Agreement (or any
amendment thereto in accordance with the terms thereof) or the consummation
of the transactions contemplated thereby (including, without limitation,
the Offer and the Merger)."
3. Section 3(a) of the Rights Agreement is hereby amended by adding to
the end thereof the following:
"Notwithstanding anything to the contrary contained herein, no
Distribution Date shall occur as a result of (i) the announcement,
commencement or consummation of the Offer, or (ii) the execution, delivery
or performance of the Merger Agreement (or any amendment thereto in
accordance with the terms thereof) or the consummation of the transactions
contemplated thereby (including, without limitation, the Offer and the
Merger)."
4. Section 7(a) of the Rights Agreement is hereby amended by replacing
"(the "Final Expiration Date"), (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof
2-
<PAGE>
(the "Redemption Date"), or (iii) the time at which such rights are exchanged as
provided in Section 24 hereof" with the following:
", (ii) immediately prior to the effective time of the Merger (the
earlier of (i) and (ii) being herein referred to as the "Final Expiration
Date"), (iii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date"), or (iv) the time at which such
Rights are exchanged as provided in Section 24 hereof."
5. Section 11 of the Rights Agreement is hereby amended by adding to the
end thereof the following:
"(o) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 11 will not apply to or be triggered by (i) the
announcement, commencement or consummation of the Offer, or (ii) the
execution, delivery or performance of the Merger Agreement (or any
amendment thereto in accordance with the terms thereof) or the consummation
of the transactions contemplated thereby (including, without limitation,
the Offer and the Merger)."
6. Section 13 of the Rights Agreement is hereby amended by adding to the
end thereof the following:
"(d) Notwithstanding anything to the contrary contained herein, the
provisions of this Section 13 will not apply to or be triggered by the
execution, delivery or performance of the Merger Agreement or any amendment
thereto or the consummation of the transactions contemplated thereby
(including, without limitation, the Merger)."
7. The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights Agreement as amended by this Amendment No. 1.
8. Capitalized terms used herein but not defined herein shall have the
respective meanings ascribed to them in the Rights Agreement.
9. Except as set forth herein, the Rights Agreement shall remain in full
force and effect and shall be otherwise unaffected hereby.
10. This Amendment No. 1 may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3-
<PAGE>
IN WITNESS WHEREOF, Company has caused this Amendment No. 1 to be duly
executed, all as of the day and year first above written.
PLATINUM technology International, inc.
Attest:
By: /s/ Larry S. Freedman By: /s/ Michael P. Cullinane
--------------------------- ---------------------------
Name: Name:
Title: Title:
IN WITNESS WHEREOF, the undersigned, Harris Trust and Savings Bank, as
Rights Agent under the Rights Agreement, hereby acknowledges and agrees to this
Amendment No. 1.
HARRIS TRUST AND SAVINGS BANK
Attest:
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
<PAGE>
EXHIBIT 8
CONSENT
OF
CREDIT SUISSE FIRST BOSTON CORPORATION
Board of Directors
PLATINUM technology International, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Members of the Board:
We hereby consent to the inclusion of our opinion letter, dated March 28, 1999,
to the Board of Directors of PLATINUM technology International, inc. (the
"Company") as Annex B to the Solicitation/Recommendation on Schedule 14D-9
relating to the proposed offer by Computer Associates International, Inc. to
purchase all outstanding shares of common stock, par value $0.001 per share, of
the Company, and to references made to our firm and such opinion in such
Schedule 14D-9. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under, nor do we admit that we are
"experts" for purposes of, the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
------------------------------
Name: Joseph T. Josephson
Title: Managing Director
April 5, 1999
<PAGE>
EXHIBIT 9
Contact: Doug Robinson - Investor Relations Bob Gordon - Public Relations
(516) 342-2745 (516) 342-2391
[email protected] [email protected]
COMPUTER ASSOCIATES COMMENCES TENDER OFFER FOR
PLATINUM TECHNOLOGY INTERNATIONAL, INC.
ISLANDIA, N.Y., April 2, 1999--Computer Associates International, Inc. (NYSE:
CA) announced that HardMetal, Inc., a wholly-owned merger subsidiary of CA,
commenced a tender offer today for all of the outstanding shares of Platinum
TECHNOLOGY International, INC. (NASDAQ: PLAT) common stock (including the
associated Rights) at a price of $29.95 per share, net to the seller in cash.
The offer is being made pursuant to the Agreement and Plan of Merger dated as of
March 29, 1999 among CA, HardMetal, Inc. and Platinum TECHNOLOGY International,
INC. ("Platinum"). It is conditioned, among other things upon a number of shares
being tendered and not withdrawn such that, upon consummation of the offer, CA
and its affiliates will beneficially own in the aggregate not less than a
majority of the shares on a fully diluted basis. The offer will expire at 12:00
midnight, New York City time, on Thursday, April 29, 1999, unless the offer is
extended.
The Board of Directors of Platinum TECHNOLOGY International, INC. has
unanimously approved the offer and the Merger Agreement and has unanimously
recommended that stockholders of Platinum TECHNOLOGY International, Inc. accept
the offer.
The information agent for the offer is MacKenzie Partners, Inc. 156 Fifth
Avenue, New York, NY 10010, telephone (212) 929-5500 or (800) 322-2885.
PLATINUM provides software products and consulting services that help Global
10,000 companies manage and improve their IT infrastructures-including systems
and database management, e-commerce, application infrastructure management,
data warehousing, knowledge management, decision support, and year 2000
reengineering. The 12-year-old company has more than 120 officers across six
continents.
Computer Associates International, Inc. (NYSE: CA), the world leader in mission-
critical business computing, provides software, support and integration services
in more than 100 countries around the world. CA has more than 13,000 employees
and had revenue of $5.1 billion in calendar year 1998.
For more information about CA, please call 516-342-5224 or email [email protected].
CA's World Wide Web address is www.cai.com.
All referenced product names are trademarks of their respective companies.
###
<PAGE>
EXHIBIT 10
March 24, 1999
PLATINUM technology International, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: President
Dear Sir:
PLATINUM technology International, inc., a Delaware corporation
("PLATINUM"), and Computer Associates International, Inc., a Delaware
corporation ("Company"), are engaged in discussions with respect to a possible
transaction between PLATINUM and Company (a "Transaction"), and during the
course of such discussions, PLATINUM and Company may each disclose and make
available to the other certain information concerning its business, financial
condition, operations, assets and liabilities (collectively, the "Confidential
Information"). Subject to paragraph 4 below, the term "Confidential
Information" shall include all information concerning PLATINUM and Company
(whether prepared by the disclosing party, its advisors or otherwise and
irrespective of the form of communication, whether written, oral, electronic or
other) which is furnished hereunder to a party or its Representatives now or in
the future by or on behalf of the disclosing party, and shall also include all
notes, analyses, compilations, studies, interpretations or other documents
prepared by each party or its Representatives which contain, reflect or are
based upon, in whole or in part, the information furnished to such party or its
Representatives pursuant hereto. As a condition to being furnished with the
Confidential Information, each of PLATINUM and Company agree as follows:
1. Non-Disclosure of Confidential Information. (a) Each of PLATINUM and
Company shall (i) use the Confidential Information obtained from the other
solely for the purpose of evaluating a possible Transaction involving PLATINUM
and Company and for no other purpose (competitive or otherwise); (ii) not
disclose the Confidential Information to any third party, except for disclosures
to its directors, executive officers, employees and representatives and advisors
(such as independent accountants and attorneys) acting on its behalf
(collectively, its "Representatives") who need to know such information for the
purpose of evaluating a possible Transaction involving PLATINUM and Company;
(iii) inform its Representatives of the confidential nature of the Confidential
Information and direct its Representatives to treat the Confidential Information
confidentially; (iv) take all additional precautions reasonably necessary
<PAGE>
to prevent the disclosure of the Confidential Information by its Representatives
to any third party; and (v) be responsible for any breach of this Agreement by
its Representatives.
(b) If either party is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, it is agreed that such party will provide the other party with
prompt notice of such request so that such other party may seek an appropriate
protective order and/or waive the notifying party's compliance with the
provisions of this Agreement. If in the absence of a protective order, either
party is nonetheless compelled to disclose Confidential Information, such party
may disclose only that portion of such information that such party is advised by
a written opinion of counsel is legally required without liability hereunder;
provided, however, that such party gives to the other party written notice of
the information to be disclosed as far in advance of its disclosure as is
practicable and, upon such other party's request, uses reasonable efforts (at
the other party's expense) to obtain assurances that confidential treatment will
be accorded to such information.
2. Non-Disclosure of Negotiations or Agreements. Neither PLATINUM nor
Company shall, and each of PLATINUM and Company shall direct its Representatives
not to, disclose to any third party the existence, status or terms of any
discussions, negotiations or agreements between them, without obtaining the
prior consent of the other party, provided that a party may make such disclosure
after the signing of a definitive agreement for a Transaction if, in the
reasonable opinion of outside counsel for such party, such disclosure is
required by law, regulation, exchange rule or Nasdaq National Market
requirement.
3. Ownership of Confidential Information. All written Confidential
Information delivered by one party hereto to the other party pursuant to this
Agreement shall be and remain the property of the delivering party, and upon the
written request of the delivering party, the receiving party shall (i) promptly
return the Confidential Information delivered to it and shall not retain any
copies or other reproductions or extracts thereof, (ii) destroy or have
destroyed all memoranda, notes, reports and documents and all copies and other
reproductions and extracts thereof prepared by the receiving party or others in
connection with its review of the Confidential Information and (iii) provide a
certificate to the delivering party certifying that the foregoing materials
have, in fact, been destroyed or returned, signed by an authorized offer
supervising such destruction or return.
4. Information Not Deemed Confidential Information. The term
"Confidential Information" does not include information which (i) becomes
generally available to the public other than as a result of a disclosure by the
receiving party or its Representatives in violation of this Agreement; (ii) was
available on a non-confidential basis prior to disclosure to the receiving party
pursuant to this Agreement; or (iii) becomes available to the receiving party on
a non-confidential basis from a source other than the delivering party or its
Representatives, provided that such source is not known by the receiving party
to be bound by a confidentiality agreement with such delivering party or its
Representatives.
-2-
<PAGE>
5. No Warranty. Neither PLATINUM nor Company makes any representation or
warranty as to the accuracy and completeness of any Confidential Information
provided by it, and no liability shall result to the delivering party from its
use, except as set forth in a definitive agreement for a Transaction. Only the
representations and warranties that are made in a definitive agreement for a
Transaction, when, as, and if it is executed, and subject to such limitations
and restrictions as may be specified therein, shall have any legal effect. It
is understood that the Confidential Information is not being furnished for use
in an offer or sale of securities of either party and is not designed to satisfy
the requirements of federal or state securities law in connection with any offer
or sale of such securities.
6. No Agreement. Unless a definitive agreement regarding a Transaction
between PLATINUM and Company has been executed and delivered, neither Company
nor PLATINUM will be under any legal obligation of any kind whatsoever with
respect to such a Transaction by virtue of this Agreement except for the matters
specifically agreed to herein. Each party further acknowledges and agrees that
each party reserves the right, in its sole discretion, to reject any and all
proposals made by the other party or any of its Representatives with regard to a
Transaction between PLATINUM and Company, and to terminate discussions and
negotiations with the other party at any time.
7. Due Diligence Contacts. It is understood that each party will arrange
for appropriate contacts for due diligence purposes. Unless otherwise agreed by
either party, all (i) communications regarding a possible Transaction, (ii)
requests for additional information, (iii) requests for facility tours or
management meetings, or (iv) discussions or questions regarding procedures, will
be submitted or directed solely to the following designated persons for the
other party:
for PLATINUM: Larry Freedman
Michael Cullinane; and
for Company: Charles McWade
Steven M. Woghin
8. Non-public Information; Trading in Securities. Each of PLATINUM and
Company has outstanding publicly-held securities and acknowledges that (i) the
Confidential Information may contain material non-public information, and (ii)
the negotiations and status of negotiations between the parties may constitute
material non-public information. Each of the parties acknowledges that it is
(i) aware, and has advised or will advise its Representatives, that the United
States securities laws prohibit any person in possession of material non-public
information about a company from purchasing or selling securities of such
company and from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person may
purchase or sell such securities and (ii) familiar with the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder, and each of PLATINUM and Company agrees that it will neither use nor
permit any of its Representatives to use any Confidential Information in
violation of such Act or rules or regulations, including, without limitation,
Rules 10b-5 and 14e-3. Each of PLATINUM and
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Company agrees to take all reasonable precautions to prevent any trading in
securities of PLATINUM and Company by their respective officers, directors,
employees and agents having knowledge of any proposed transaction between the
parties until the proposed transaction has been sufficiently publicly disclosed.
9. Purpose and Use of Confidential Information. PLATINUM and Company
understand and agree that the Confidential Information shall be used solely for
the purpose of evaluating a potential business transaction and not to affect, in
any way, either party's relative competitive position to the other party, and
that only information reasonably necessary to evaluate a proposed transaction
shall be disclosed or exchanged.
10. No Waiver. No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof, or the exercise of any right, power or privilege hereunder. Any waiver
of a breach hereof shall be in writing and shall not operate or be construed as
a waiver of any other or subsequent breach.
11. Remedies. It is understood and agreed that either party will suffer
irreparable harm if this agreement is breached by the other party or its
Representatives, including without limitation a breach of paragraph 2 or 7 by
the other party or its Representatives which would result in significant and
material damages to the non-breaching party. It is understood and agreed that
money damages would not be a sufficient remedy for any breach of this Agreement
by either party or its Representatives and that the non-breaching party shall be
entitled to equitable relief, including specific performance and injunction, as
a remedy for any such breach. Such remedies shall not be deemed to be the
exclusive remedies for a breach of this Agreement by either party or its
Representatives, but shall be in addition to all other remedies available at law
or in equity to the non-breaching party.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal law of, and not the choice of law provisions or law
of conflicts of, the State of Delaware.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between PLATINUM and Company.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: /s/ Charles McWade
-----------------------------------
Name: Charles McWade
Title: Senior Vice President
Accepted and agreed:
PLATINUM technology International, inc.
By: /s/ Larry S. Freedman
----------------------------------------
Name: Larry S. Freedman
Title: Senior Vice President and General
Counsel
Dated: March 24, 1999
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[LETTERHEAD OF PLATINUM TECHNOLOGY INTERNATIONAL, INC.]
April 5, 1999
Dear Stockholder:
I am pleased to report that on March 29, 1999, our company entered into a
merger agreement with Computer Associates International, Inc. ("Computer
Associates") and one of its subsidiaries that provides for our acquisition by
Computer Associates. You should know and consider the following important
highlights of the merger agreement.
. a subsidiary of Computer Associates has made a tender offer for all of our
outstanding shares of common stock at a price per share of $29.25 in cash
. if the tender offer is successful and after approval by our stockholders
(if necessary), we will merge with a subsidiary of Computer Associates, and
all shares not tendered in the offer will be converted into the right to
receive $29.25 in cash in the merger
. Our board of directors has unanimously approved the merger agreement and
the Computer Associates offer
Our board of directors carefully considered many factors when it decided to
recommend Computer Associates' offer. These factors included our current and
historical stock price, the opinion of Credit Suisse First Boston Corporation
that the offer price of $29.25 per share is fair to the holders of the Company's
common stock (other than the Computer Associates and its affiliates) from a
financial point of view and Computer Associates' contractual obligations under
the merger agreement. After careful consideration, our board of directors
unanimously recommends that you accept the Computer Associates offer and tender
your shares to Computer Associates.
Accompanying this letter is:
. a copy of our Solicitation/Recommendation Statement on Schedule 14D-9
. Computer Associates' Offer to Purchase and related materials, including a
Letter of Transmittal for use in tendering shares
We urge you to read the enclosed materials carefully.
<PAGE>
In light of the proposed transaction with Computer Associates, our 1999
annual meeting of stockholders will be postponed pending completion of the
tender offer and the merger. Our management and directors thank you for the
support you have given the company.
On behalf of the Board of Directors,
Sincerely,
/s/ Andrew J. Filipowski
Andrew J. Filipowski
Chairman of the Board, President and
Chief Executive Officer
