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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMPUTER MANAGEMENT SCIENCES, INC.
(NAME OF SUBJECT COMPANY)
COMPUTER MANAGEMENT SCIENCES, INC.
(NAME OF PERSONS(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
205213 101
(CUSIP NUMBER OF CLASS OF SECURITIES)
ANTHONY V. WEIGHT
ACTING CHIEF EXECUTIVE OFFICER
COMPUTER MANAGEMENT SCIENCES, INC.
8133 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 737-8955
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSONS(S) FILING STATEMENT)
Copy to:
L. KINDER CANNON III, ESQ.
HOLLAND & KNIGHT LLP
50 NORTH LAURA STREET, SUITE 3900
JACKSONVILLE, FLORIDA 32202
(904) 353-2000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Computer Management Sciences, Inc., a
Florida corporation (the "Company"), and the address of its principal executive
office is 8133 Baymeadows Way, Jacksonville, Florida 32256. The title of the
class of equity securities to which this statement relates is the common stock,
$0.01 par value per share, of the Company (the "Common Stock").
ITEM 2. TENDER OFFER OF PURCHASER.
This statement relates to a cash tender offer by TheBetterPlan ("TBP"),
Inc., a Florida corporation ("Purchaser" or "Merger Subsidiary") and a wholly
owned subsidiary of Computer Associates International, Inc., a Delaware
corporation ("Parent" or "Computer Associates"), disclosed in a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1"), dated February 9, 1999, to
purchase all of the outstanding shares of Common Stock of the Company (the
"Shares") at a price per Share of $28, net to the seller in cash (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase dated February 9, 1999 (the "Offer to Purchase") and the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). The Offer is conditioned upon,
among other things, (i) there having been validly tendered prior to the
expiration of the Offer and not withdrawn a number of Shares which, together
with the Shares then owned by Parent and Purchaser, represents at least a
majority of the Shares outstanding on a fully diluted basis (the "Minimum
Condition") and (ii) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the regulations
thereunder applicable to the purchase of the Shares pursuant to the Offer having
expired or been terminated.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 5, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. A copy of the Merger Agreement is filed as Exhibit 2 hereto and
is incorporated herein by reference in its entirety. Pursuant to the Merger
Agreement, following the consummation of the Offer and the satisfaction or
waiver of certain conditions, the Purchaser will be merged with and into the
Company (the "Merger") and the Company will continue as the surviving
corporation (the "Surviving Corporation"). In the Merger, each outstanding Share
(other than Shares owned by Parent, Purchaser or any subsidiary of either of
them and Shares held by stockholders, if any, who are entitled to and who
properly exercise dissenters' rights under the FBCA (defined below)) will be
converted into the right to receive an amount in cash equal to the price per
Share paid pursuant to the Offer, without interest thereon (the "Merger
Consideration"). The Merger Agreement is summarized in Item 3 of this Statement.
The Offer and the Merger and the transactions contemplated thereby are
collectively referred to herein as the "Transaction."
Based on the information in the Schedule 14D-1, the principal executive
offices of Parent and Purchaser are located at One Computer Associates Plaza,
Islandia, New York 11788-7000.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described or referred to below or incorporated by reference
herein, to the knowledge of the Company, there exists on the date hereof 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, its executive officers, directors or affiliates or (ii) the Parent, the
Purchaser or the executive officers, directors or affiliates of the Parent or
the Purchaser.
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ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its executive officers, directors and affiliates are
described under the caption "Certain Transactions" of the Company's Information
Statement Pursuant to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14f-1 thereunder (the "Information
Statement"), which is attached hereto as Annex A.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Florida Business
Corporation Act, as amended (the "FBCA"), provides that, in general, a business
corporation may indemnify any person who is or was a party to any proceeding
(other than an action by, or in the right of, the corporation) by reason of the
fact that he or she is or was a director or officer of the corporation, against
liability incurred in connection with such proceeding, including any appeal
thereof, provided certain standards are met, including that such officer or
director acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation, and provided
further that, with respect to any criminal action or proceeding, the officer or
director had no reasonable cause to believe his or her conduct was unlawful. In
the case of proceedings by or in the right of the corporation, the FBCA provides
that, in general, a corporation may indemnify any person who was or is a party
to any such proceeding by reason of the fact that he or she is or was a director
or officer of the corporation against expenses and amounts paid in settlement
actually and reasonably incurred in connection with the defense or settlement of
such proceeding, including any appeal thereof, provided that such person acted
in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation, except that no
indemnification shall be made in respect of any claim as to which such person is
adjudged liable unless a court of competent jurisdiction determines upon
application that such person is fairly and reasonably entitled to indemnity. To
the extent that any officers or directors are successful on the merits or
otherwise in the defense of any of the proceedings described above, the FBCA
provides that the corporation is required to indemnify such officers or
directors against expenses actually and reasonably incurred in connection
therewith. However, the FBCA further provides that, in general, indemnification
or advancement of expenses shall not be made to or on behalf of any officer or
director if a judgment or other final adjudication establishes that his or her
actions, or omissions to act, were material to the cause of action so
adjudicated and constitute: (i) a violation of the criminal law, unless the
director or officer had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe it was unlawful; (ii) a transaction
from which the director or officer derived an improper personal benefit; (iii)
in the case of a director, a circumstance under which the director has voted for
or assented to a distribution made in violation of the FBCA or the corporation's
articles of incorporation or (iv) willful misconduct or a conscious disregard
for the best interests of the corporation in a proceeding by or in the right of
the corporation to procure a judgment in its favor or in a proceeding by or in
the right of a shareholder. Article X of the Company's Amended and Restated
Articles of Incorporation provides that the Company shall indemnify any director
or officer, or any former director or officer, or employee to the fullest extent
not prohibited by law. The Company also has purchased insurance with respect to,
among other things, the liabilities that may arise under the statutory
provisions referred to above.
The Merger Agreement provides that, for a period of six years after the
effective time of the Merger (the "Effective Time"), Parent will and will cause
the Surviving Corporation to indemnify and hold harmless the current and former
directors and officers of the Company in respect of acts or omissions occurring
prior to the Effective Time to the same extent such persons are indemnified or
are entitled to indemnification by the Company pursuant to the Company's
articles of incorporation, bylaws or the FBCA in effect on the date of the
Merger Agreement.
For a period of not less than two years after the Effective Time, Parent
will cause to be maintained 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 or officers of the Company on the date of the Merger
Agreement, so long as the annual premium therefor would not be in excess of 115%
of the amount per annum the Company paid in its last full fiscal year. If the
existing D&O Insurance cannot be maintained, expires or is terminated or
cancelled 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 115% of the amount per
annum the Company paid in its last full fiscal year, on terms and conditions
substantially similar to the existing D&O Insurance.
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SUMMARIES OF AGREEMENTS
The following are summaries of certain provisions of the Merger Agreement,
the Stockholder Option Agreement, and the Consulting Agreements (as hereinafter
defined). The summaries are qualified in their entirety by reference to the
respective agreements, each of which is incorporated herein by reference and a
copy of each of which has been filed with the Commission as an exhibit to this
Schedule 14D-9.
MERGER AGREEMENT
THE OFFER. The Merger Agreement provides for the making of the Offer.
The obligation of Purchaser to accept for payment or pay for Shares is subject
to the satisfaction of the Minimum Condition and certain other conditions that
are described in Section 15 of the Offer to Purchase. Pursuant to the Merger
Agreement, Parent and 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 materially adverse to the holders of
Shares.
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, Merger Subsidiary 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 Parent, Purchaser or any subsidiary of either
of them (and other than Shares as to which dissenter's rights have been
exercised in accordance with the FBCA ("Dissenting Shares")) will be
converted into the right to receive $28 in cash or any higher price paid for
each Share in the Offer, without interest. Each share of common stock of
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 Parent.
The Merger Agreement provides that the Merger will be consummated as soon as
practicable after satisfaction of or, to the extent permitted thereunder,
waiver of the conditions to the Merger and shall become effective at such
time as the articles of merger are duly filed with the Department of State of
the State of Florida or, with the consent of the Independent Director
referred to below, at such later time as is specified in the articles of
merger.
BOARD REPRESENTATION. The Merger Agreement provides that, effective
upon acceptance for payment by Purchaser 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 and (ii) the percentage that the number of Shares owned by Parent
or 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 Parent's designees to be elected or appointed to the
Company's Board of Directors, including increasing the number of directors or
seeking and accepting resignations of incumbent directors or both; PROVIDED
that, after the acceptance for payment and prior to the Effective Time, the
Company's Board of Directors shall always have one member who is neither a
designee nor an affiliate of Parent or Purchaser nor an employee of the Company
(an "Independent Director"). No action proposed to be taken by the Company to
amend or terminate the Merger Agreement or waive any action by Parent or
Purchaser shall be effective without the approval of the Independent Director.
The Merger Agreement provides that, from and after the Effective Time,
the directors and officers of Purchaser at the Effective Time will be the
initial directors and officers of the Surviving Corporation, each to hold office
until his or her respective successors are duly elected and qualified. Pursuant
to the Merger Agreement, the Articles of Incorporation (except for a change in
the name of the corporation) and the By-Laws of Purchaser, as in effect
immediately prior to the Effective Time, will be the Articles of Incorporation
and By-Laws of the Surviving Corporation.
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STOCKHOLDER MEETING. The Merger Agreement provides that, if required by
applicable law, the Company will call a meeting of its Stockholders (as defined
in the Schedule 14D-1) 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, Parent 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, Merger
Subsidiary will hold at least a majority of the outstanding Shares on a Fully
Diluted Basis (as defined in the Schedule 14D-1) 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 Merger Subsidiary obtains at least 80% 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 the FBCA.
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, environmental, intellectual property and technology and other
matters.
Parent and Purchaser have also made certain representations and
warranties with respect to corporate existence and power, corporate
authorization, governmental authorization, non-contravention 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 Parent, (i)(a) declare,
set aside or pay any dividends on, or make any other distributions in respect
of, any of its capital stock, other than dividends and distributions by any
direct or indirect wholly owned subsidiary of the Company to its parent, (b)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (c) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities (other than in connection with the exercise of outstanding
company stock options); (ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
Shares upon the exercise of company stock options outstanding on the date of the
Merger Agreement in accordance with their terms on such date); (iii) amend its
articles of incorporation, by-laws or other comparable charter or organizational
documents; (iv) acquire any business including through the acquisition of any
interest in any corporation, partnership, joint venture, association or other
business organization or division thereof; (v) (a) mortgage or otherwise
encumber or subject to any lien any of the Company's intellectual property or
any other material properties or assets, (b) except in the ordinary course of
business consistent with past practice and pursuant to existing contracts or
commitments, sell, lease, transfer or otherwise dispose of any of the Company's
intellectual property or any other material properties or assets or (c) except
in the ordinary course of business consistent with past practice or pursuant to
existing contracts or commitments, license any of the Company's intellectual
property; (vi) make or agree to make any new capital expenditures in excess of
$100,000 except pursuant to certain existing commitments; (vii) make any
material tax election (unless required by law) or settle or compromise any
material income tax liability; (viii) 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 (a) liabilities reflected or reserved against in, or
contemplated by, the most recent
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consolidated financial statements (or the notes thereto) of the Company included
in the documents filed with the Commission or (b) 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, non-competition or similar agreement to
which the Company or any of its subsidiaries is a party; (ix) 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 Parent
prior to filing such suit; (x) (a) enter into or amend any employment agreement,
(b) enter into any agreement pursuant to which the Company or any of its
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
10%, (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 for professional services
or advice, (g) enter into or amend any customer agreements providing for product
replacements or (h) 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; (xi) authorize any of, or commit or agree to
take any of, the foregoing actions; or (xii) (a) take or agree or commit to take
any action that would make any representation or warranty of the Company under
the Merger Agreement inaccurate in any respect at, or as of any time prior to,
the Effective Time or (b) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.
The Company has agreed to give Parent 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 Parent 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 Parent 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 (defined below in this Section) 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 in this Section) with respect to any
such filing or any such transaction. Each of Parent 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 Parent 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.
Each of Parent 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, Parent and the Company decide
that litigation is in their best interests, each of Parent and the Company have
agreed, pursuant to the Merger Agreement, to cooperate and use all reasonable
efforts vigorously to contest and resist any
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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 the Merger or any such other transactions. Pursuant
to the Merger Agreement, each of Parent 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 Parent and the
Company has agreed, pursuant to the Merger Agreement, to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger, and the other
transactions contemplated by the Merger Agreement.
Notwithstanding the foregoing, the Merger Agreement provides that (i)
neither 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 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 (defined in
Section 15 of the Merger Agreement), (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 described in clause (a) or (b) of Section 15 of the
Offer to Purchase and (v) neither Parent nor Purchaser shall be required to
waive any of the conditions to the Offer described in the Schedule 14D-1 or any
of the conditions to the Merger described in the Schedule 14D-1.
AGREEMENTS WITH RESPECT TO EMPLOYEE MATTERS. The Merger Agreement
provides that the Company shall amend the Company's Stock Plans (defined below)
to provide that, at the Effective Time, each of the then outstanding Company
Options (defined below) whether vested or unvested in accordance with the
relevant Stock Plans and stock option agreements 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) $28.00 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 Code, if applicable, and all other terms and conditions of
Company Options 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
Options" means any option granted, and not exercised or expired, to a current or
former employee, director or independent contractor of the Company or any of its
subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock
option, stock bonus, stock award, or stock purchase plan, program, or
arrangement of the Company or any of its subsidiaries or any predecessor thereof
(collectively, the "Stock Plans") or any other contract or agreement entered
into by the Company or any of its subsidiaries.
Pursuant to the Merger Agreement, Parent agreed to take all corporate
action necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery pursuant to the terms described in the
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immediately preceding paragraph. Pursuant to the Merger Agreement, Parent agreed
to cause the shares of Parent Common Stock issuable upon exercise of the assumed
Company Options to be registered, or to be issued pursuant to a then effective
registration statement, no later than 90 days after the Effective Time on Form
S-8 promulgated by the Commission, and to use its best efforts to maintain the
effectiveness of such registration statement or registration statements for so
long as such assumed Company Options remain outstanding. The Merger Agreement
provides that, with respect to those individuals who subsequent to the Merger
will be subject to the reporting requirements under Section 16(a) of the
Exchange Act, Parent shall administer the Company Options assumed pursuant to
the Merger Agreement in a manner that complies with Rule 16b-3 promulgated by
the SEC under the Exchange Act, but shall have no responsibility for such
compliance by the Company or its predecessors.
The Merger Agreement further provides that the Company shall amend the
Stock Plans to provide holders of the Company Options, which Company Options are
then vested and exercisable (including Company Options which became vested and
exercisable in accordance with the relevant Stock Plans and stock option
agreements as a result of the consummation of the Offer or the Merger), the
opportunity to elect to receive cash in an amount set forth below in exchange
for each vested and exercisable Company Option. Pursuant to such amendment,
Parent and the Company shall take all actions necessary to provide that, as to
those holders who so elect, at or immediately prior to the Effective Time, (i)
each vested and exercisable Company Option, so surrendered for cash, shall be
cancelled and (ii) in consideration of such cancellation, and except to the
extent that Parent and the holder of any such Company Option otherwise agree,
the Company shall pay to each such holder of Company Options an amount in cash
in respect thereof equal to the product of (1) the excess of the Merger
Consideration over the exercise price thereof and (2) the number of Shares
subject thereto.
OTHER OFFERS. Pursuant to the Merger Agreement, the Company has agreed
that, until the termination of the Merger Agreement, the Company and its
subsidiaries will not, and will not authorize or permit the officers, directors,
employees or other agents of the Company and its subsidiaries to, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal (defined below) or (ii) subject to the fiduciary duties of
the Board of Directors under applicable law, as advised in writing by counsel to
the Company, and in response to an unsolicited request therefor by a person who
a majority of the Board 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 it may be considering making, or that has made, an Acquisition Proposal;
PROVIDED, nothing herein shall prohibit the Company's Board of Directors from
taking and disclosing to the Company's stockholders a position with respect to a
tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act. The Company has agreed to promptly notify 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 it 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.
"Acquisition Proposal" means any offer or proposal for, or any written
indication of interest in, a merger or other business combination involving the
Company or any of its subsidiaries or the acquisition of any significant equity
interest in, or a significant portion of the assets of, the Company or any of
its subsidiaries, other than the transactions contemplated by the Merger
Agreement; 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.
AGREEMENT WITH RESPECT TO DIRECTOR AND OFFICER INDEMNIFICATION AND
INSURANCE. Pursuant to the Merger Agreement, Parent has agreed, that, for a
period of six years after the Effective Time, it will, and will cause the
Surviving Corporation to, indemnify and hold harmless the current and former
directors and officers of the Company in respect of acts or omissions occurring
prior to the Effective Time to the same extent such persons are indemnified or
are entitled to indemnification by the Company pursuant to the Company's
articles of incorporation, by-laws or the FBCA in effect on the date of the
Merger Agreement, subject to any limitations imposed from time to time by
applicable law. Parent has further agreed that it will cause to be maintained
for a period of not less than
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two years from the Effective Time the Company's current D&O Insurance for all
persons who are directors or officers of the Company on the date of the Merger
Agreement, so long as the annual premium therefor would not be in excess of 115%
of the amount per annum the Company paid in its last full fiscal year, which
amount has been disclosed to Parent. Parent also agreed that 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 115% 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.
OTHER AGREEMENTS. Parent has agreed that it will take all action
necessary to cause 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 (including ensuring that Purchaser has
sufficient funds to consummate the Offer and the Merger). Parent 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 January 7, 1999, between Parent
and the Company.
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) Parent or Purchaser shall have purchased Shares in
an amount equal to at least the Minimum Condition pursuant to the Offer, (ii)
the adoption and approval of the Merger Agreement by affirmative vote of the
Stockholders by requisite vote in accordance with the FBCA, if such vote is
required by the FBCA, (iii) no provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the consummation of the
Merger and no proceeding challenging the Merger Agreement or the transactions
contemplated thereby or seeking to prohibit, alter, prevent or materially delay
the Merger shall have been instituted by any person before any court, arbitrator
or governmental body, agency or official and be pending; (iv) any applicable
waiting period under the HSR Act relating to the Merger shall have expired, and
(v) other than filing the articles of merger in accordance with the FBCA, all
consents, approvals, orders or authorizations or registrations, declarations or
filings or exemptions (collectively, "Consents") required to consummate the
Merger shall have been filed, occurred or been obtained.
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 Parent, (ii)
by either the Company or Parent, if the Merger has not been consummated by
September 30, 1999 (provided that the party seeking to terminate the Merger
Agreement shall not have breached its obligations under the Merger Agreement in
any material respect), (iii) by either the Company or Parent, if there shall be
any law or regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Parent or
the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable, (iv) by either
the Company or Parent, (a) if Parent or Purchaser shall have failed to commence
the Offer within five business days following the date of the Merger Agreement
(provided that Parent shall not be entitled to terminate the Merger Agreement in
the circumstance described in this sub-clause (a) as a result of its breach of
the Merger Agreement), (b) if Parent or Purchaser shall not have purchased any
Shares pursuant to the Offer prior to July 31, 1999 or (c) if the Offer shall
have been terminated without Parent or Purchaser having purchased any Shares
pursuant to the Offer, (v) by Parent, upon the occurrence of any Trigger Event
(defined below), or (vi) by the Company, if prior to the purchase of any Shares
in the Offer, the Company shall have received any Acquisition Proposal which the
Company's Board of Directors has determined is more favorable to the
Stockholders than the transactions contemplated by the Merger Agreement, whether
or not such determination is required by the fiduciary duties of the Company's
Board of Directors.
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 Parent or Purchaser or vice versa, if the Merger
Agreement is terminated, except as stated below. The Company has agreed to pay
Parent a fee in immediately available funds equal to $20,000,000 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 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
8
<PAGE>
agreement or an agreement in principle with respect to any Acquisition Proposal,
(ii) any person or group (as defined in Section 13(d)(3) of the 1934 Act) (other
than Parent or any of its affiliates) shall have become the beneficial owner (as
defined in Rule 13d-3 promulgated under the 1934 Act) of at least 25% of the
outstanding Shares or shall have acquired, directly or indirectly, at least 25%
of the assets of the Company; (iii) subject to the provisions described in the
next paragraph, 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 at any time prior to the consummation of
the Offer as if made at and as of such time, 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 at any time prior to the consummation of the Offer as if made at and as
of such time, or the Company shall have failed to observe or perform in any
material respect any of its obligations under the Merger Agreement; (iv) 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 Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement or
its approval of the entry by Parent and Purchaser into the Stockholder Option
Agreement, in any such case whether or not such withdrawal or modification is
required by the fiduciary duties of the Company's Board of Directors (or any
special committee thereof); or (v) prior to the purchase of any Shares under the
Offer, the Company shall have received any Acquisition Proposal which the
Company's Board of Directors has determined is more favorable to the
Stockholders than the transactions contemplated by the Merger Agreement, whether
or not such determination is required by the fiduciary duties of the Company's
Board of Directors.
The Merger Agreement further provides that, if (x) the only Trigger
Event having occurred is an event pursuant to clause (iii) above and (y) the
breaches of representation or warranty, or failures to observe or perform any
obligation under clause (iii) above (A) individually or in the aggregate would
not have or result in a Material Adverse Effect (defined in Section 15 of the
Merger Agreement) or prevent or materially delay the consummation of the
transactions contemplated by the Merger Agreement or (B) were unintentional,
then the amount of the fee payable by the Company to Parent shall be $5,000,000.
The Company has also agreed that, if the Merger Agreement is terminated
as a result of the occurrence of a Trigger Event, it shall promptly assume and
pay, or reimburse Computer Associates for, all fees payable and expenses
incurred by Computer Associates (including the fees and expenses of its counsel)
in connection with the Merger Agreement.
STOCKHOLDER OPTION AGREEMENT
Under the Stockholder Option Agreement, each shareholder of the Company
that is a party to the Stockholder Option Agreement ("Principal Stockholder")
has granted Purchaser the option (the "Stock Option") to purchase, subject to
the terms and conditions set forth in the Stockholder Option Agreement, for a
price of $28 per Share in cash, or to cause to be tendered pursuant to the
Offer, such Principal Stockholder's Shares (excluding Shares held pursuant to
the Company's Employee Stock Ownership Plan and Trust (the "ESOP") and the
Company's Profit Sharing 401(k) Plan (the "401(k) Plan")). In addition, if the
price to be paid by Purchaser 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, Purchaser 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 Purchaser, to deliver to SunTrust
Bank, Atlanta ("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
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<PAGE>
and 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 Purchaser 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) Purchaser 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 or a trustee of the ESOP or 401(k) Plan (in each
case, if applicable), 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 Purchaser 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 Purchaser 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 Stockholder Option Agreement.
Stockholders holding an aggregate of 5,036,222 Shares and options to
purchase an additional 576,792 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 3,145,802 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 to
the Offer to Purchase).
Purchaser 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.
CONSULTING AND NON-COMPETE AGREEMENTS
The Company and each of Jerry W. Davis and Anthony V. Weight (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
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<PAGE>
the Consultant's services, the Company has agreed to pay consulting fees to each
Consultant at the rate of $250,000 per annum. The Consulting Agreements only
becomes effective upon consummation of the Merger.
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
breach of any material term of the Consulting Agreement, (ii) the Consultant's
continued willful failure or refusal, after written notice, to perform his
duties thereunder, (iii) the Consultant's conviction of a felony or of any
crime involving moral turpitude, fraud or misrepresentation, or (iv) any gross
negligence or willful misconduct by the Consultant resulting in substantial loss
to the Company, substantial damage to the Company's reputation or theft or
defalcation from the Company.
The Consulting Agreements also contain non-competition provisions which
prohibit each Consultant, for a period beginning on the Effective Date and
ending on the fifth anniversary of the Effective Date, from participating or
engaging in any activities or business involving, or relating to, the provision
of information technology consulting and custom software development services,
any other business or activity engaged in by the Company on the date of the
Consulting Agreement, or any other business or activity engaged in by the
Company in the future and in which the Consultant actively participated or any
business or activity of any affiliate of the Company in which the Consultant
actively participated within the United States of America. 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. As compensation for each
Consultant entering into a non-compete agreement, the Company has agreed to pay
to Mr. Davis and Mr. Weight a non-compete payment of $9,500,000 and $4,500,000,
respectively.
In addition, the Consulting Agreement provides 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.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
The Board of Directors of the Company was aware that certain officers and
directors of the Company have certain interests in the Transaction, including
those referred to below, that present actual or potential conflicts of interest
in connection with the Offer and considered such factors along with other
matters described in Item 4 under "Reasons for Recommendation."
As of February 1, 1999, the executive officers and directors of the
Company beneficially owned or may be deemed to have beneficially owned an
aggregate of 4,308,689 Shares (not including approximately 1.4 million Shares
owned by the ESOP, the beneficial ownership of which is attributed to Messrs.
Davis and Weight as trustees of the ESOP) and held Company Options to purchase
an aggregate of 823,292 Shares (whether or not exercisable). On such date, the
Shares beneficially owned or which may be deemed to be beneficially owned by
executive officers and directors of the Company and the Company Options held by
such persons (whether or not exercisable) together constituted approximately 35%
of the outstanding Shares on a fully diluted basis (assuming the exercise of all
outstanding Company Options). If the Merger is consummated, subject to the
election of the Company Option holder, each outstanding Company Option will be
either (i) surrendered and cancelled in exchange for a cash payment equal to the
number of Shares subject to such Company Option, multiplied by the Offer price,
less the aggregate exercise price of such Company Option, or (ii) assumed by
Parent and converted into an option to purchase that number of shares of Parent
common stock and at that price per share determined in the manner described
above in the Section entitled "Merger Agreement -- Agreements with respect to
Employee Matters."
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The following table sets forth, as of February 1, 1999, the number of
Shares and Options beneficially owned or which may be deemed to be beneficially
owned by, and the aggregate amounts to be received (upon tender and purchase of
such Shares and Options pursuant to the Offer) by, each executive officer and
director of the Company who beneficially owns or may be deemed to beneficially
own any Shares or Options, and all executive officers and directors of the
Company as a group. Other than the individuals named below, no executive officer
or director of the Company owns any Shares or Options.
<TABLE>
<CAPTION>
TOTAL CASH AMOUNT
NAME OF DIRECTOR OR TO BE RECEIVED UPON
EXECUTIVE OFFICER OF THE COMPANY SHARES OPTIONS TENDER AND PURCHASE(1)
<S> <C> <C> <C>
Jerry W. Davis(2)(3)(4) 2,482,477 214,810 $ 74,970,256
Anthony V. Weight(4)(5) 1,626,167 182,982 50,184,444
Lawrence A. Longhi 176,768 179,000 7,372,004
R. Halsey Wise 225 200,000 1,256,300
Anthony Colaluca 552 19,500 257,625
Harry C. Stonecipher 22,500 20,250 896,126
Theodore L. Weise 0 6,750 117,281
All Directors and Executive Officers as
a Group (7 Persons) 4,308,689 823,292 $ 135,054,036
</TABLE>
- -------------------------
(1) Assuming that all Options are fully exercisable (based on acceleration
in accordance with their terms upon the consummation of the Offer) and
the Option holder elects to take the cash value of the "in-the-money"
portion of such Option rather than electing to convert such Option into
an option to acquire shares of Parent common stock.
(2) Includes 2,382,454 Shares owned by First Oneida (1995) Limited
Partnership, a Delaware limited partnership ("FO"), of which Mr. Davis
and his wife each own a 49.5% limited partnership interest. Mr. and
Mrs. Davis also each own 50% of the issued and outstanding common stock
of Bull Gator, Inc. ("BG"), a Delaware corporation and the sole general
partner of FO. BG owns a 1% general partner interest in FO. As a
result, Mr. and Mrs. Davis share equally the voting and investment
power over the Shares owned by FO and, as such, Mr. Davis is attributed
with beneficial ownership of all such Shares, although he disclaims
beneficial ownership of Shares controlled by Mrs. Davis through her 50%
interest in FO.
(3) Includes 1,012 Shares owned directly by Mr. Davis' wife.
(4) Technical compliance with the beneficial ownership determination
provisions of Rule 13d-3 of the Exchange Act would require that the
Shares shown above as beneficially owned by Messrs. Davis and Weight
include all of the 1,399,075 Shares owned by the ESOP and the 38,670
Shares owned by the 401(k) Plan, because each of Messrs. Davis and
Weight is a trustee of both the ESOP and the 401(k) (collectively, the
"Trusts"), with shared investment power over all Shares held by the
Trusts and shared voting power over the 38,670 Shares held by the
401(k) and the 35,000 unallocated Shares owned by the ESOP as of
December 31, 1998. Instead, for the sake of clarity, the Shares shown
above as beneficially owned by Messrs. Davis and Weight include only
the 99,011 and 85,412 Shares, respectively, allocated to their
individual participant accounts in the ESOP.
(5) Includes 1,417,438 Shares owned by Sundown (1995) Limited Partnership,
a Delaware limited partnership ("SD"). Mr. Weight is the sole
shareholder of Downunder, Inc. ("DU"), a Delaware corporation and sole
general partner of SD. Mr. Weight is the owner of a 99% limited
partnership interest in SD and DU is the owner of a 1% general
partnership in SD. As such, Mr. Weight has retained sole voting and
investment power over the Shares owned by SD and he is attributed with
beneficial ownership of all such Shares.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
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A. RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Company's Board of Directors (the "Company Board") unanimously has
determined that the Offer and the Merger are fair to, and in the best interests
of, the Stockholders, has approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and recommends that
the Stockholders accept the Offer and tender their Shares pursuant to the Offer.
B. BACKGROUND OF THE OFFER AND THE MERGER.
Within the past twelve months, the Company has engaged in discussions
concerning a business combination that would result in a change in control of
the Company with only one person ("Prior Suitor") other than Parent. Prior
Suitor is a high-growth, publicly-held competitor whose stock for some time has
traded at a substantially higher price-earnings ("P/E") multiple (more than
three times higher immediately prior to announcement of the Offer) than that of
the Company.
In March 1998, Prior Suitor approached the Company with a proposed
stock-for-stock (pooling-of-interests) transaction, in which the Stockholders
would receive Prior Suitor's common shares. Although the Company was then
committed to pursuing its own strategic plan, because of the significant
consolidation occurring in the information technology services industry, some
members of the Company Board had expressed their belief that the Company needed
to grow substantially in order to remain competitive in the marketplace.
Accordingly, the Company entertained discussions with Prior Suitor, which over
time included valuations for the Company's stock in the range of $35 to $40 per
share. At the time of Prior Suitor's initial overture, the Company's stock was
trading in the low $20's per share (although it climbed to its 52-week high of
$28.125 shortly thereafter).
The Company Board expressed concerns about the risks inherent in
accepting an equity security consideration and, in particular, one with a
substantially higher than average P/E multiple, such as Prior Suitor's stock
then enjoyed. Prior Suitor's ability to sustain its enterprise growth rate and
lofty P/E multiple were major issues confronting the Company's management
throughout the discussions with Prior Suitor.
Several meetings were held between the senior executives of Prior
Suitor and the Company in the late summer of 1998, but negotiations were
terminated by the Company when the market prices for the Company's stock and
Prior Suitor's stock began to decline (at the beginning of the significant small
cap market correction in the late summer and early fall of 1998). In early
January 1999, Prior Suitor again contacted the Company in an effort to re-open
discussions relating to a stock-for-stock transaction in the $26 to $28 per
share range. The Company declined to re-enter discussions with Prior Suitor.
Parent first approached the Company through Parent's financial advisor
in early November 1998. On November 11, 1998, a preliminary meeting between
executives of the Company and Parent (together with its financial advisor) was
held in Jacksonville, during which the possible strategic benefits of a business
combination were explored. Preliminary discussions continued by telephone
between the Company and Parent and its
financial advisor through December 1998 and into early January 1999. On
January 15, 1999, executives of Parent met at the Company's Systems Outsourcing
Center ("SOC") in Jacksonville to learn more about the Company and to further
discuss the mutual benefits of a possible combination of the companies. The next
meeting, attended by Parent's President and the senior executive of its services
division and the Company's acting CEO and President, was held in Jacksonville on
January 22, 1999, to continue discussion of the cash consideration and other
significant elements of an acquisition of the Company by Parent.
Parent is the world leader in development of mission-critical business
software, but its business segment devoted to information technology consulting
services is a relatively small part of the total enterprise. Parent has
expressed a strong desire to greatly expand the services component of its
business. In the mid-January meeting of senior executives, it became clear that
there were significant synergies to be realized in combining the companies,
particularly as a result of the combination of Parent's sales and marketing
strengths with the Company's SOC-oriented project delivery model.
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<PAGE>
During the week of January 25, 1999, all members of the Company Board
were informed by telephone of the status of these discussions between Parent and
the Company and they unanimously authorized the acting CEO and the President of
the Company to continue the discussions with Parent regarding a potential
acquisition of the Company by Parent.
On January 28, 1998, the Company's President met with Parent's
President and other executives in New York (with the Company's acting CEO and
CFO joining by telephone) to reach a general understanding in concept concerning
the terms and conditions of a possible cash offer by Parent for all of the
common stock of the Company. At that meeting the parties discussed a valuation
in the range of $26 to $28 net cash to the Stockholders. Parent expressed its
belief that a price at the top of their range ($28 per share) would represent a
significant premium for the Company's stock. In the Company's later financial
analysis, it became clear to the Company Board that only a strategic buyer of
Parent's size and profitability feasibly could pay cash for the Company's stock
in the indicated range.
On January 29, 1999, the Company engaged The Robinson-Humphrey Company,
LLC ("Robinson-Humphrey") as its financial advisor to assist the Company Board
in evaluating Parent's acquisition proposal, as well as other alternatives that
might be available to the Company. Senior management of the Company considered
Parent's proposal to be very attractive to the Stockholders under current
circumstances. On the morning of February 2, 1999, counsel for Parent met with
the Company's counsel for the purpose of delivering initial drafts of a proposed
Merger Agreement, Stockholder Option Agreement and Consulting and Non-Compete
Agreement (collectively, the "Transaction Documents") and providing a general
overview of the principal terms and conditions thereof.
At a telephonic meeting of the Company Board in the afternoon of
February 2, 1999, the Company Board discussed (i) the principal features of
Parent's acquisition proposal, (ii) the Company Board's legal duties in relation
thereto, including whether any further market testing was necessary (in view of
the recently terminated discussions with Prior Suitor regarding a
stock-for-stock transaction) to determine that Parent's proposal represented the
highest value reasonably available to the Stockholders, (iii)
Robinson-Humphrey's evaluation of other likely suitors and their financial
ability to top Parent's proposed purchase price and terms, (iv)
Robinson-Humphrey's preliminary analysis of the fairness to the Stockholders
from a financial standpoint of the Offer and the Merger, (v) the issues
requiring further negotiation with Parent and (vi) the general timetable
anticipated for the proposed transaction. Further negotiations with Parent and
its counsel ensued on February 2, 1999, and continued through the afternoon of
February 5, 1999, at which time the substantially definitive terms and
conditions of the Offer, and the various Transaction Documents were arrived at.
Copies of all significant drafts and revisions of the various Transaction
Documents were distributed to all members of the Company Board promptly upon
their receipt by Company counsel.
At a telephonic meeting commencing at 5:30 p.m. on February 5, 1999,
the Company Board considered the proposed Merger Agreement and other Transaction
Documents and the transactions contemplated thereby. Robinson-Humphrey presented
its analysis of the proposed consideration to be received by the Stockholders
and the financial dynamics of the proposed combination with Parent (as compared
with other possible suitors), and delivered its written opinion to the Company
Board to the effect that, as of the date thereof, the cash consideration to be
received by the Stockholders in the transactions contemplated by the Offer and
the Merger Agreement was fair, from a financial point of view, to the
Stockholders. After discussion, the Company Board unanimously (i) determined
that the aggregate consideration to be received by the Stockholders pursuant to
the Offer and the Merger Agreement is fair to the Stockholders from a financial
point of view and represents the highest value reasonably available to the
Stockholders; (ii) approved and authorized execution and/or implementation of
the Offer, the Merger Agreement, Stockholder Option Agreement and Consulting
Agreements, and the execution by the Principal Stockholder of the Stockholder
Option Agreement; and (iii) authorized the officers of the Company to proceed
with the transaction on terms consistent with those discussed and approved by
the Company Board.
The Merger Agreement, the Stockholder Option Agreement and the
Consulting Agreements were executed by all applicable parties late on February 5
and early on February 6, 1999, and on February 8, 1999, Parent issued a press
release before the opening of the U.S. stock markets announcing such execution
and the impending Offer.
C. REASONS FOR RECOMMENDATION; FAIRNESS OF THE OFFER AND THE
MERGER
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The Company Board unanimously has determined that the Offer and the
Merger are fair to, and in the best interests of, the Stockholders, and the
Company Board unanimously recommends that the Stockholders accept the Offer,
tender their Shares pursuant to the Offer and approve the Merger. In reaching
these determinations, the Company Board considered the following factors,
each of which, in the view of the Company Board, supported such
determinations:
(i) The Company Board believed, after reviewing written
reports and analyses prepared by Robinson-Humphrey, that values comparable to
the total acquisition price to be paid by the Purchaser would be difficult to
achieve under current market conditions through the possible alternatives to a
sale of the Company, including, in the near term, a continuation of the Company
as an autonomous, publicly-owned entity;
(ii) The Company Board considered that although Company
management expects continued growth and profitability, the market price for
the Shares was not likely to approach the acquisition price in the near term;
(iii) The total acquisition price to be paid by the Purchaser
compares favorably with trading multiples of comparable companies and recent
comparable acquisition multiples and is only slightly less than the highest
price at which the Shares have traded subsequent to the Company's initial public
offering in September 1995;
(iv) The historical market prices and recent trading
activity of the Shares, including the fact that the $28.00 per Share cash
consideration to be received by the Stockholders in the Offer and Merger
represents a premium of approximately 19.1% over the reported closing price
on the last full trading day preceding the public announcement of execution
of the Merger Agreement, and a premium of approximately 70.2% and 67.4% over
the average closing price for the 30 and 60-day periods, respectively,
immediately preceding such date, and the fact that such price would be
payable in cash, thus eliminating any uncertainties in valuing the
consideration to be received by the Stockholders;
(v) The Company Board received the oral opinion of
Robinson-Humphrey, confirmed by its written opinion, dated February 5, 1999,
that, as of the date thereof, the cash consideration to be received by the
Stockholder in the Offer and the Merger, was fair, from a financial point of
view, to the Stockholders;
(vi) The Merger Agreement permits the Company Board (a) in
response to unsolicited inquiries or proposals, which a majority of the Company
Board believes will result in a Superior Acquisition Proposal, and in the
discharge of its fiduciary duties (based on the written advice of legal
counsel), to disclose non-public information to, and participate in discussions
and negotiations with, third parties relating to an acquisition transaction
involving the Company and (b) to withdraw its recommendation and terminate the
Merger Agreement in the exercise of its fiduciary duties (based upon the written
advice of legal counsel); provided, however, that such termination would trigger
the payment by the Company of a break-up fee in the amount of $20,000,000;
(vii) The Offer and the Merger and the purchase of Shares are
not subject to any financing contingency, and Parent has committed to make
available to Merger Subsidiary all funds necessary to complete the Offer, the
Merger, and the purchase of Shares pursuant to the Merger Agreement;
(viii) The history of the negotiations between the Company and
its representatives and Parent and its representatives, including the Company
Board's belief that Parent and the Purchaser would not further increase the
Offer Price and that $28.00 per Share was the highest price that could be
obtained from Parent and the Purchaser; and
(ix) Parent and the Company negotiated the Merger Agreement on
an arms-length basis.
In making the determinations described above, the Company Board also
considered the following:
a. The review of possible alternatives to the
Offer and the Merger, the range of possible benefits and risks to the
Stockholders of such alternatives, and the timing and the likelihood of
actually accomplishing any such alternatives;
15
<PAGE>
b. The timing of the transactions and the premiums
currently being obtained for corporations engaged in similar businesses;
c. Information with respect to the business,
properties, management, financial condition, results of operations, and
prospects of the Company, as well as the likelihood of achieving those
prospects, and the going concern value of the Company (as reflected in part by
the Company's historical and projected operating results);
d. The likelihood that the proposed acquisition will
be consummated, including the experience, reputation, and financial condition of
Parent;
e. The financial aspects of the Merger Agreement,
including the proposed terms, timing, and structure of the acquisition and the
nature, adequacy, and fairness of the consideration offered;
f. The significant consolidation taking place in the
information technology services industry, and the business, marketing, and
competitive consequences of the proposed acquisition to the Company, including
Parent's business plans for the Company and their effects on corporate
constituencies;
g. The possibility that, in the event of an
unanticipated future decline in the Company's business, the trading price of
the Shares or the stock market in general, the consideration that the
Stockholders would obtain in a future transaction might be less advantageous
than the consideration they would receive pursuant to the Offer and the
Merger;
h. The legal, social, economic, and other effects of
the proposed acquisition on the Company's customers, employees, and suppliers
and on the societies and communities in which the Company operates;
i. Oral presentations and written reports and
analyses provided to the Company Board by Robinson-Humphrey, which included its
valuation analyses of the Company and the total acquisition price;
j. The terms and conditions of the Merger
Agreement, including the absence of any financing contingency and the Company
Board's view that it appeared unlikely that there existed other viable buyers
at an equivalent price given the purchase consideration and timing of the
acquisition;
k. The views expressed by management and
Robinson-Humphrey that there appeared to be a limited and identifiable number of
parties with which the Company would be a good strategic fit, and that it was
unlikely that any other party would propose a transaction that was more
favorable to the Stockholders;
l. The structure of the transaction, which is
designed, among other things, to result in receipt by the stockholders at the
earliest practicable time of the consideration to be paid in the Offer and the
fact that the per Share consideration to be paid in the Offer and the Merger is
the same; and
m. The trading history of the Shares, as well as
similar information for other comparable companies.
A copy of Robinson-Humphrey' written opinion, which sets forth the
assumptions, qualifications, and procedures on which it is based, is attached to
this Statement as Exhibit 7, and is incorporated herein by reference. THE
COMPANY'S STOCKHOLDERS ARE URGED TO READ THE ROBINSON-HUMPHREY OPINION IN ITS
ENTIRETY.
The members of the Company Board evaluated the various factors listed
above in light of their knowledge of the business, financial condition and
prospects of the Company and based upon the advice of financial and legal
advisors. In light of the number and variety of factors that the Company Board
considered in connection with its evaluation of the Offer and the Merger, the
Company Board did not find it practicable to assign relative weights to the
foregoing factors and, accordingly, the Company Board did not do so. In addition
to the factors listed above, the
16
<PAGE>
Company Board considered the fact that, while consummation of the Offer would
result in the Stockholders receiving a premium for their Shares over the
trading prices of the Shares prior to the public announcement of the
execution by Parent and the Company of the Merger Agreement, consummation of
the Offer and the Merger would eliminate any opportunity for the Stockholders
(other than Parent and Purchaser) to participate in the potential future
growth of the Company. The Company Board determined, however, that the loss
of such opportunity is reflected in the Offer Price.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated February 4, 1999, the Company
engaged Robinson-Humphrey to act as its financial advisor in connection with the
possible sale of all or a portion of the Company. Pursuant to the terms of the
letter agreement, the Company has agreed to pay Robinson-Humphrey a fee of
$1,300,000 at the time of the consummation of the Merger. The Company also has
agreed to reimburse Robinson-Humphrey for its reasonable out-of-pocket expenses
and has agreed to indemnify Robinson-Humphrey against certain liabilities.
Except as described herein, neither the Company nor any person acting
on its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Jerry W. Davis, the Company's CEO, Anthony V. Weight, the Company's
acting CEO, and Lawrence A. Longhi, the Company's Senior Vice President (or
entities which are the record owners of Shares beneficially owned by Messrs.
Davis, Weight or Longhi) have executed the Stockholder Option Agreement attached
hereto as Exhibit 3 and incorporated herein by reference. The terms and
conditions of the Stockholder Option Agreement are summarized in Item 3 hereof.
No other transactions in the Shares have been effected during the past 60 days
by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, all of the Company's executive
officers, directors and affiliates who own Shares presently intend to tender
such Shares to Purchaser pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY 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 of the Company; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there are no transactions, Board of
Directors resolutions, agreements in principle or signed contracts in response
to the Offer that relate 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.
The purchase of the Shares by Purchaser pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public.
NASDAQ LISTING. Depending on the number of Shares acquired pursuant to
the Offer, the Shares may no longer meet the requirements for continued
inclusion on Nasdaq National Market System ("Nasdaq NMS"). According
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<PAGE>
to Nasdaq NMS's published guidelines, Nasdaq NMS would consider delisting the
Shares if, as a result of the Offer, the number of round lot holders of Shares
were reduced to less than 400, the number of Shares publicly held (excluding
those held by officers and directors of the Company, members of their immediate
families and persons owning 10% or more of the Shares outstanding) were reduced
to less than 750,000, or the aggregate market value of the publicly-held Shares
were reduced to less than $5,000,000. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be eligible
for listing on Nasdaq NMS. If, as a result of the purchase of Shares pursuant to
the Offer, the Shares no longer meet the standards for continued inclusion on
the Nasdaq NMS, the market for Shares could be adversely affected.
REGISTRATION UNDER THE EXCHANGE ACT. The Shares currently are
registered under the Exchange Act. Such registration may be terminated upon
application by the Company to the Commission if there are fewer than 300 record
holders of Shares. It is the intention of Purchaser to seek to cause an
application for such termination to be made as soon after consummation of the
Offer as the requirements for termination of registration of the Shares are met.
Termination of registration of the Shares under the Exchange Act would make
certain provisions of the Exchange Act no longer applicable to the Company, such
as the periodic reporting and record keeping requirements under Section 13(a)
and (b), the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement or information statement pursuant to
Sections 14(a) or 14(c) in connection with stockholders' meetings or action by
written consent and the related requirement of furnishing an annual report to
stockholders, and the requirements of Rule 13e-3 with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act may
be impaired or eliminated.
The Shares currently are "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to extend
credit on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations it is possible that
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities."
DISSENTERS' RIGHTS. Holders of Shares do not have dissenters' rights as
a result of the Offer. If the Merger is consummated with a vote of the
Stockholders and if on the record date fixed to determine the Stockholders
entitled to vote, the Shares are listed on Nasdaq NMS or on a national
securities exchange or are held of record by 2,000 or more of such Stockholders,
then holders of Shares will not have dissenters' rights under the FBCA. If,
however, the Merger is consummated with or without the vote of the Stockholders
but the Shares are not so listed or designated or are not held of record by at
least 2,000 shareholders, then holders of Shares will have certain rights
pursuant to the provisions of Sections 607.1301, 607.1302 and 607.1320 of the
FBCA to dissent and demand determination of, and to receive payment in cash of
the fair value of, their Shares. If the statutory procedures were complied with,
such rights could lead to a judicial determination of the fair value required to
be paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares or the market value of the Shares
could be more or less than the Offer Price or the price provided for in the
Merger Agreement. Section 607.1301(2) of FBCA defines "fair value" as the value
of the shares excluding any appreciation or depreciation in anticipation of the
transaction unless such exclusion would be inequitable.
If any holder of Shares who asserts dissenters' rights under the FBCA
fails to perfect, or effectively withdraws or loses his dissenters' rights, as
provided in the FBCA, the Shares of such shareholder will be converted into the
right to receive the price provided for in the Merger Agreement in accordance
with the Merger Agreement. A shareholder may withdraw his notice of election to
dissent by delivery to Parent of a written withdrawal of his notice of election
to dissent and acceptance of the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRES STRICT ADHERENCE TO THE
18
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APPLICABLE PROVISIONS OF SECTIONS 607.1301, 607.1302 AND 607.1320 OF THE FBCA,
AND WILL ONLY BE AVAILABLE IN CONNECTION WITH THE CONSUMMATION OF THE MERGER.
TAX MATTERS. The following is a summary of the anticipated material
federal income tax consequences to holders whose Shares are purchased pursuant
to the Offer or whose Shares are converted to cash in the Merger (including
Dissenting Shares). This discussion is not a complete description of the federal
income tax consequences of the Offer and the Merger. Furthermore, this
discussion applies only to a holder of Shares who is holding the Shares as a
capital asset (as defined in Section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code")) and who is a United States person (as defined in
Section 7701(a)(30) of the Code) and may not apply to a holder of Shares who or
which is subject to special treatment under the Code, such as a holder who or
which is a non-United States person, a financial institution, an insurance
company, a tax-exempt organization or a person who acquired the Shares pursuant
to the exercise of an employee stock option or otherwise as compensation.
Lastly, this discussion does not address the state, local or foreign tax
consequences of the Offer and the Merger.
BECAUSE OF THE COMPLEXITIES OF THE FEDERAL INCOME TAX LAWS AND BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH HOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER
TO SUCH HOLDER. IN ADDITION, EACH HOLDER SHOULD CONSULT EACH HOLDER'S OWN TAX
ADVISOR REGARDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including Dissenting Shares) will be a taxable transaction. In general, a
holder of Shares will recognize gain or loss equal to the difference between (a)
such holder's adjusted tax basis for the Shares sold pursuant to the Offer or
converted to cash in the Merger (including conversion pursuant to the exercise
of dissenters rights), and (b) the amount of cash received therefor (which
amount does not include any interest paid to a holder of Dissenting Shares).
Gain or loss must be determined separately for each block of Shares (i.e.,
Shares acquired at the same cost in a single transaction) sold pursuant to the
Offer or converted to cash in the Merger. Such gain or loss generally will be
capital gain or loss and will be long-term capital gain or loss if, on the date
of sale (or, if applicable, the date of the Merger), the Shares had been held
for more than one year. Any interest paid to a holder of Dissenting Shares will
be treated as ordinary income.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31% unless the holder complies with certain
identification or exemption requirements. Any amounts so withheld will be
credited against the holder's income tax liability, or refunded, provided that
certain information is provided to the Internal Revenue Service. A tendering
holder may be able to prevent backup withholding by completing the Substitute
Form W-9 included in the Letter of Transmittal. Similarly, a holder who receives
cash in exchange for Shares pursuant to the Merger or upon exercise of
dissenters rights should be able to prevent backup withholding by completing a
Form W-9 or an acceptable substitute therefor. Each holder should consult with
such stockholder's own tax advisor as to such holder's qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
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ITEM 9. MATERIAL REQUIRED TO BE FILED AS EXHIBITS.
Exhibit 1 Letter to Stockholders dated February 9, 1999.*
Exhibit 2 Agreement and Plan of Merger, dated as of February 5, 1999 by
and among Parent, Purchaser and the Company.
Exhibit 3 Stockholder Option Agreement, dated as of February 5, 1999,
among Purchaser and the stockholders of the Company named
therein.
Exhibit 4 Consulting and Non-Compete Agreement, dated as of February 5,
1999, by and between Company and Jerry W. Davis.
Exhibit 5 Consulting and Non-Compete Agreement, dated as of February 5,
1999, by and between Company and Anthony V. Weight.
Exhibit 6 Confidentiality Agreement, dated January 7, 1999, between
Parent and the Company.
Exhibit 7 Opinion of The Robinson-Humphrey Company, LLC, dated February
5, 1999.*
- ------------------
*Included with Schedule 14D-9 mailed to Stockholders.
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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.
COMPUTER MANAGEMENT SCIENCES, INC.
By:/S/ ANTHONY V. WEIGHT
-----------------------------------
Dated: February 9, 1999
Name: Anthony V. Weight
Title: Acting Chief Executive Officer
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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 February 9, 1999
as part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Computer Management Sciences, Inc., a Florida corporation
(the "Company"), to the holders of record of shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock" or the "Shares"). You are
receiving this Information Statement in connection with the possible election of
persons designated by CAI (as defined below) to a majority of the seats on the
Board of Directors of the Company (the "Company Board").
On February 5, 1999, the Company, Computer Associates International,
Inc., a Delaware corporation ("CAI"), and TheBetterPlan ("TBP"), Inc., a Florida
corporation and a wholly owned subsidiary of CAI ("Purchaser"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which (i)
Purchaser will commence a tender offer (the "Offer") for all outstanding Shares
at a price of $28.00 per Share, net to the seller in cash, and (ii) the
Purchaser will be merged with and into the Company (the "Merger"). As a result
of the Offer and Merger, the Company will become a wholly owned subsidiary of
CAI.
The Merger Agreement provides that, promptly after the purchase of a
majority of the outstanding Shares pursuant to the Offer, CAI shall be entitled
to designate such number of directors (the "CAI Designees"), rounded up to the
next whole number, on the Company Board as will give CAI representation
proportionate to its ownership interest. The Merger Agreement requires the
Company to take such action as CAI may request to cause the CAI Designees to be
elected to the Company Board under the circumstances described therein. 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. Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning CAI
and the Purchaser has been furnished to the Company by CAI. The Company assumes
no responsibility for the accuracy or completeness of such information.
RIGHT TO DESIGNATE DIRECTORS; THE CAI DESIGNEES
The Merger Agreement provides that, subject to compliance with
applicable law, promptly upon the purchase of and payment by CAI for Shares
pursuant to the Offer which represent at least a majority of the outstanding
Shares (on a fully diluted basis), CAI will be entitled to designate such number
of CAI Designees, rounded up to the next whole number, on the Company Board as
is equal to the product of the total number of directors on the Company Board
(determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares so
accepted for payment bears to the total number of Shares then outstanding. The
Company will promptly, upon the request of Purchaser, increase the size of the
Company Board or exercise its best efforts to secure the resignations of such
number of directors, or both, as is necessary to enable CAI Designees to be so
elected to the Company Board, and shall cause the CAI Designees to be so
elected. Notwithstanding the foregoing, until the Effective Time (as defined in
the Merger Agreement) of the Merger, the Company Board will have at least one
director who is neither a CAI Designee nor an affiliate of CAI or Purchaser nor
an employee of the Company.
CAI has informed the Company that it will choose the CAI Designees from
the directors and executive officers listed in Schedule I to TBP's Offer to
Purchase, a copy of which is being mailed to the Company's stockholders together
with this Schedule 14D-9. CAI has informed the Company that each of the
directors and executive officers listed in Schedule I to the Offer to Purchase
has consented to act as a director, if so designated. The information on
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such Schedule I is incorporated herein by reference. The business address of
Purchaser is c/o Computer Associates International, Inc., One Computer
Associates Plaza, Islandia, New York 11788-7000.
It is expected that the CAI Designees may assume office at any time
following the purchase by Purchaser of a specified minimum number of Shares
pursuant to the Offer, which purchase cannot be earlier than March 10, 1999, and
that upon assuming office, the CAI Designees will thereafter constitute at least
a majority of the Board.
OUTSTANDING VOTING STOCK OF THE COMPANY
There were 14,644,054 shares of common stock, par value $0.01 per share
(the "Common Stock") of the Company outstanding on February 5, 1999, and each
share is entitled to one vote on each mater presented to the shareholders for a
vote. The only outstanding voting security of the Company is its Common Stock.
MANAGEMENT OF THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
<S> <C> <C>
Jerry W. Davis 54 Chief Executive Officer and Director
Anthony V. Weight 57 Acting Chief Executive Officer, Senior Vice President, Corporate
Secretary, and Director
Lawrence A. Longhi 41 Senior Vice President and Director
R. Halsey Wise 33 President and Chief Operating Officer
Anthony Colaluca 32 Vice President and Chief Financial Officer
Harry C. Stonecipher 62 Director
Theodore L. Weise 54 Director
</TABLE>
JERRY W. DAVIS. Mr. Davis is a founder of the Company and has served
as Chief Executive Officer and Chairman of the Board since the Company's
inception in 1983. He served as President of the Company from 1983 through July
of 1997.
ANTHONY V. WEIGHT. Mr. Weight is a founder of the Company and has
served as Senior Vice President and a director since the Company's inception in
1983. Since August, 1998, Mr. Weight also has been serving as the acting Chief
Executive Officer of the Company. Mr. Weight served as the Company's Treasurer
from 1983 until April 1996 and Chief Financial Officer from March 1995 until
April 1997.
LAWRENCE A. LONGHI. Mr. Longhi joined the Company as a systems
consultant in 1984 and has served as a director since 1985. Mr. Longhi served as
a Vice President from 1985 until February 1996, when he was appointed as a Group
Vice President. In 1997 he was promoted to Senior Vice President.
R. HALSEY WISE. Mr. Wise joined the Company as President and Chief
Operating Officer on July 18, 1997. Prior to joining the Company, from August
1994 to July 1997, Mr. Wise was employed as Vice President of Investment Banking
with The Robinson-Humphrey Company, Inc., and co-led the Information Technology
Services group. Mr. Wise was employed by J.P. Morgan in the Mergers and
Acquisitions group from 1993 to August 1994, and by First Union Corporation in
the Corporate Finance group from 1987 through 1992.
ANTHONY COLALUCA. Mr. Colaluca joined the Company in September of
1996 as a Vice President and Chief Accounting Officer. In April of 1997, Mr.
Colaluca was appointed as the Chief Financial Officer of the Company. For
approximately seven years prior to joining the Company, Mr. Colaluca, a
certified public accountant, held various positions with KPMG Peat Marwick, LLP,
including Senior Manager, Manager, Supervising Senior Accountant and Senior
Accountant.
A-2
<PAGE>
HARRY C. STONECIPHER. Mr. Stonecipher was elected as a director of
the Company on October 25, 1995. He has served as President, Chief Operating
Officer and a director of The Boeing Company since August 1997. He served as
President, Chief Executive Officer and a director of McDonnell Douglas
Corporation from 1994 through July 1997. Mr. Stonecipher previously served as
Chairman and Chief Executive Officer of Sundstrand Corporation (a manufacturer
of aerospace and electronic equipment) from 1991 through 1994 and as its
President from 1987 through 1991. Mr. Stonecipher also currently serves on the
Boards of Directors of Cincinnati Milacron, Inc. and Sentry Insurance.
THEODORE L. WEISE. Mr. Weise was appointed as a director of the
Company on October 13, 1998, to fill a vacancy created by the death of Mr. Perry
E. Esping. Mr. Weise has served as President and Chief Executive Officer and a
director of Federal Express Corp. since February, 1998. Prior to that, Mr. Weise
held several other positions with Federal Express Corp., including Executive
Vice President and Chief Operating Officer from February, 1996 through February,
1998, and Senior Vice President, Air Operations from 1991 through February,
1996. Mr. Weise also serves as a director of Resortquest International, Inc.
The Board of Directors consists of five members. Messrs. Longhi and
Stonecipher are Class I directors, Messrs. Weight and Weise are Class II
directors, and Mr. Davis is a Class III director. Mr. Esping passed away in
July, 1998. The terms of the Class I directors expire in 1999, the terms of the
Class II directors expire in 2000, and the terms of the Class III directors
expire in 2001. The Articles of Incorporation and Bylaws provide that the size
of the Board of Directors may be changed (to not fewer than three or more than
nine members) by amendment of the Bylaws by the Board of Directors or by holders
of 66b% of the outstanding Common Stock.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Company's Board of Directors has a Compensation Committee, an Audit
Committee, and an Executive Committee. The Compensation Committee consists of
Messrs. Stonecipher and Weise. The Compensation Committee is responsible for
establishing salaries, bonuses and other compensation for the Company's
executive officers. See "Board Compensation Committee Report on Executive
Compensation." The Compensation Committee also is responsible for administering
the Company's stock option plans and for establishing the terms and conditions
of all stock option grants thereunder. The Compensation Committee met two times
during 1998 (and once in 1999 after Mr.
Weise's appointment).
The members of the Audit Committee are Messrs. Stonecipher and Weight. The
duties of the Audit Committee are to recommend to the Board of Directors the
selection of independent certified public accountants, to meet with the
Company's independent certified public accountants to review the scope and
results of the annual audit, and to consider various accounting and auditing
matters related to the Company, including its system of internal controls and
financial management practices. The Audit Committee met one time during 1998.
The members of the Executive Committee are Messrs. Davis and Weight. The
Executive Committee is empowered to exercise all of the authority of the Board
of Directors of the Company, except as limited by the Florida Business
Corporation Act. Under the Florida Business Corporation Act ("FBCA"), an
executive committee may not, among other things, recommend to shareholders
actions required to be approved by shareholders, fill vacancies on the board of
directors, amend the bylaws or approve the reacquisition or issuance of shares
of a company's capital stock. The Executive Committee met two times during 1998.
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
During 1998, the Company's Board of Directors held two meetings. Each
director attended all of the Board meetings and meetings of committees of which
he is a member, either personally or by conference telephone call.
A-3
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Officers, directors, and ten percent shareholders are required by the SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file.
Based on a review of forms submitted to the Company during and with
respect to the fiscal year ended December 31, 1998, all Reporting Persons (as
defined in Section 16(a)) filed all required reports. The following Reporting
Persons filed late reports: Theodore L. Weise filed a Form 3 "Initial Statement
of Beneficial Ownership" more than 10 days following the event which resulted in
his becoming a Reporting Person.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
COMPENSATION OF DIRECTORS
Non-employee directors receive stock options for their services pursuant
to the 1995 Non-Employee Director Stock Option Plan (the "Director Plan"). The
Director Plan provides for the grant of non-qualified options to purchase Common
Stock to non-employee directors of the Company. The Director Plan authorizes the
issuance of a maximum of 168,750 shares of Common Stock. The Director Plan is
administered by the Compensation Committee. The Director Plan provides for the
automatic grant of: (a) an option to purchase an aggregate of 6,750 shares of
the Common Stock upon the initial election of each non-employee director of the
Company, and (b) an option to purchase an additional 4,500 shares of Common
Stock immediately following each annual meeting of the Company's shareholders
(beginning with the meeting held in 1996) at which such non-employee director is
either re-elected to, or continues to serve as an incumbent member of, the
Company's Board of Directors. Each such option is granted at an exercise price
equal to the fair market value of the Common Stock on the date of grant. All
options granted under the Director Plan have a term of 10 years and vest in
equal installments over the first five years of such term. No director who is an
employee of the Company receives separate compensation for services rendered as
a director.
COMPENSATION OF EXECUTIVE OFFICERS
1995 STOCK INCENTIVE PLAN. The primary purpose of the 1995 Stock Incentive
Plan (the "1995 Plan") is to provide an incentive to key employees who are in a
position to make significant contributions to the Company. The 1995 Plan is
administered by the Compensation Committee. Under the 1995 Plan, the
Compensation Committee has discretion to award stock options, stock appreciation
rights ("SARs") and restricted stock to employees. A total of 1,956,250 shares
of Common Stock has been reserved for issuance pursuant to the exercise of
options and SARs granted under the 1995 Plan and the grant of restricted stock
awards. Options may be either incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), which permits the
deferral of taxable income related to the exercise of such options, or
nonqualified options not entitled to such deferral. Subject to the provisions of
the 1995 Plan, the Compensation Committee, in its discretion, selects the
recipients of awards and the number of shares or options granted thereunder and
determines other matters such as (i) vesting schedules, (ii) the exercise price
of options (which cannot be less than 100%, in the case of incentive stock
options, or 50%, in the case of nonqualified options, of the fair market value
of the Common Stock on the date of grant). All awards are nontransferable.
Options and SARs expire immediately upon termination of an optionee's employment
either for cause or voluntarily by the optionee without the Company's consent,
or within three months of termination of employment with the Company for other
reasons (twelve months in the case of death or disability). The restrictions
upon stock awards lapse over time or upon the occurrence of specified events,
and the restricted shares are forfeited if the recipient ceases to be an
employee of the Company before the restrictions lapse.
PROFIT SHARING -- 401(K) PLAN. The Company has a Profit Sharing -- 401(k)
Plan, which is qualified under Sections 401 (a) and (k) of the Code (the "401(k)
Plan"), pursuant to which the Company may make certain discretionary
contributions, subject to certain limitations (described below), in each plan
year. Each participant becomes vested ratably in the Company's contributions on
behalf of the participant at the rate of 20% after two years of service with the
Company and an additional 20% for each year of service thereafter, becoming
fully vested after six years of service. Additionally, all employees of the
Company may elect to have the Company make certain salary reduction
contributions on their behalf, which the Company will match up to 50% of the
employee's deferral
A-4
<PAGE>
(capped at 6% of the employee's compensation). Subject to certain annual
contribution limitations (described below) and other requirements of the Code,
an employee may elect to contribute up to 15% of his total compensation to the
401(k) Plan, but no more than the allowed annual limit on a pre-tax basis. Each
participant in the 401(k) Plan is fully vested in his salary reduction
contributions account.
EMPLOYEE STOCK OWNERSHIP PLAN. Pursuant to the ESOP, which is qualified
under Sections 401(a) and 4975(e)(7) of the Code, the Company may make
discretionary contributions, subject to certain minimum and maximum requirements
(described below) in each plan year. Some or all of the amount contributed may
be used at the discretion of the Board of Directors to purchase Common Stock of
the Company, which is allocated to individual participant accounts. Employees
may not make contributions under the ESOP. Each participant becomes vested
ratably in their participant account at the rate of 20% after two years of
service with the Company and an additional 20% for each year of service
thereafter, becoming fully vested after six years of service. Each participant
who has reached age 55 and has participated in the ESOP for 10 years may, during
the first 90 days of each plan year, make an election to have some or all of
their participant account transferred to an investment other than the Company's
stock. Common stock of the Company which is allocated to an individual
participant's account may be distributed to the participant or his or her
beneficiary upon the participant's termination of employment, retirement, death
or disability.
The following table sets forth the annual and long-term compensation
received in 1998 and the prior two years by the Company's Chief Executive
Officer and the four most highly compensated executive officers (collectively,
the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
-------------------------- ------------------------
Number of
NAME AND PRINCIPAL POSITION Securities Underlying
SALARY BONUS OPTIONS/SARS
<S> <C> <C> <C>
Jerry W. Davis
Chief Executive Officer
1996 $222,807 $-- --
1997 198,468 -- --
1998 240,007 -- --
Anthony V. Weight
Acting Chief Executive Officer
1996 72,000 108,135 --
1997 72,000 101,344 --
1998 72,000 113,254 --
Lawrence A. Longhi
Senior Vice President
1996 72,000 220,801 --
1997 72,000 168,090 29,000
1998 72,000 152,654 150,000
R. Halsey Wise
President and Chief Operating Officer
1996 -- -- --
1997 71,750 -- 200,000
1998 200,000 23,300 --
Anthony Colaluca
Vice President and Chief Financial Officer
1996 26,720 -- 1,500
1997 94,038 -- 5,500
1998 99,012 43,762 12,500
</TABLE>
A-5
<PAGE>
OPTION GRANTS IN 1998
The following table sets forth information concerning options to purchase
shares of the Company's Common Stock granted during 1998 to the Named Executive
Officers. The amounts shown as potential realizable values on the options
identified in the table are based on assumed annualized rates of appreciation in
the price of the Common Stock of 5% and 10% over the term of the options. Actual
gains, if any, on stock option exercises are dependent on any future increases
in the market price of the Common Stock. There can be no assurance that the
potential realizable values reflected in this table will be achieved.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NAME NUMBER OF % OF TOTAL POTENTIAL
SECURITIES OPTIONS EXERCISE MARKET PRICE REALIZABLE VALUE AT
UNDERLYING GRANTED TO PRICE OF ASSUMED ANNUAL
OPTIONS EMPLOYEES IN ($ PER UNDERLYING EXPIRATION RATES OF STOCK
GRANTED FISCAL YEAR SHARE) SECURITY ON DATE PRICE APPRECIATION
DATE OF GRANT FOR OPTION TERM
5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence A. Longhi 100,000 18.1% $14.00 $14.00 09/15/08 $880,452 $2,231,239
50,000 9.0% 16.25 16.24 11/17/08 510,977 1,294,916
Anthony Colaluca 7,500 1.4% 16.25 16.25 11/17/08 76,647 194,237
5,000 0.9% 14.50 14.50 12/22/08 45,595 115,546
</TABLE>
AGGREGATE OPTION EXERCISES IN 1998 AND DECEMBER 31, 1998 OPTION VALUES
The following table sets forth information concerning the exercise of
stock options during 1998 by the Named Executive Officers and the value of
unexercised options held by the Named Executive Officers as of December 31,
1998.
<TABLE>
<CAPTION>
1998 OPTION EXERCISES FISCAL YEAR END OPTION VALUES
NAME NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SECURITIES OPTIONS AT FISCAL YEAR AT FISCAL YEAR END
UNDERLYING OPTIONS VALUE REALIZED END EXERCISABLE (E) EXERCISABLE (E)
EXERCISED DURING UPON EXERCISE(1) /UNEXERCISABLE (U) /UNEXERCISABLE (U)(2)
1998
<S> <C> <C> <C> <C>
Jerry W. Davis -- $ -- 214,810(E) $3,178,544(E)
Anthony V. Weight -- -- 182,982(E) 2,707,585(E)
Lawrence A. Longhi 100,078 1,843,637 5,800(E) 25,375(E)
173,200(U) 495,250(U)
R. Halsey Wise -- -- 79,999(E) --
120,001(U) --
Anthony Colaluca -- -- 1,700(E) 6,838(E)
17,800(U) 43,600(U)
</TABLE>
- ----------------
(1) Represents the amount by which the market value of the Common Stock on the
date of exercise exceeded the exercise price of the respective options
exercised.
(2) Represents the market value of the Common Stock as of December 31, 1998
($17.375 per share) less the exercise price of the options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board's Compensation Committee currently consists of Messrs.
Stonecipher and Weise, who are outside directors. There were no transactions and
relationships between the Compensation Committee members or the Chief Executive
Officer and the Company required to be reported herein.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS INFORMATION
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
A-6
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation programs are intended to enable it to
attract and retain talented executives and to reward them appropriately. The
Compensation Committee (the "Committee") attempts to determine the appropriate
total levels of compensation, as well as the appropriate mix of base salary,
annual incentives and long-term incentives. In determining compensation,
consideration is given both to overall Company performance and to individual
performance, taking into account the contributions made by the executive toward
improving Company performance. Consideration is also given to the executive's
position, location, and level of responsibility in the structure of the Company
and the job performance of the executive in planning, providing direction for,
and implementing the Company's strategy. The Committee's primary objective in
establishing compensation programs is to support the Company's goal of
maximizing the value of shareholders' investment in the Company.
The Company's program for executive compensation consists of three
components: base salary, an annual incentive (bonus) payment, and long-term
incentives. An executive's base salary is determined through a combination of
several factors: an evaluation of the sustained performance of the executive,
prevailing levels of pay for positions of comparable responsibility in the
industry, level of responsibility, and prior experience. Payments under the
Company's annual incentive plans are tied to the Company's level of
profitability. Actual incentive payments are determined by applying a formula
based on Company performance to each executive's annual incentive opportunity.
Applying this formula results in payments at the targeted incentive opportunity
level when budgeted earnings are achieved, and payments below the target level
when earnings are below those set by the budget. The formula provides for
payments above the targeted level only when earnings exceed those set in the
budget.
The Company's long term incentives are in the form of stock options, stock
appreciation rights ("SARs") and restricted stock awarded to executives and
other key employees under the 1995 Stock Incentive Plan (the "1995 Plan")
adopted by the Board of Directors and approved by the Company's shareholders
effective as of September 1, 1995. The objective of these awards is to advance
the longer term interests of the Company and its shareholders and complement
incentives tied to annual performance. These awards provide rewards to
executives and other key employees upon the creation of incremental shareholder
value and attainment of long-term earnings goals. Stock incentive awards under
the 1995 Plan produce value to executives only if the price of the Company's
stock appreciates, thereby directly linking the interests of executives with
those of the shareholders. Subject to the provisions of the 1995 Plan, the
Compensation Committee, in its discretion, selects the recipients of awards and
the number of shares or options granted thereunder and determines other matters,
such as (i) vesting schedules, (ii) the exercise price of options, (iii) the
duration of awards and (iv) the price of SARs. Options and SARs expire
immediately upon termination of an optionee's employment either for cause or
voluntarily by the optionee without the Company's consent. The restrictions upon
stock awards lapse over time or upon the occurrence of specified events, and the
restricted shares are forfeited if the recipient ceases to be an employee of the
Company before the restrictions lapse.
Mr. Davis' 1998 compensation was approved by the Committee applying the
principles outlined above in the same manner as they were applied to the other
executives of the Company. In addition, the Committee reviews the compensation
paid to chief executive officers of comparable companies and considers those
compensation levels in determining Mr. Davis' compensation.
The Committee believes that the program it has adopted serves to focus the
efforts of the Company's executives on the attainment of a sustained high rate
of Company growth and profitability for the benefit of the Company and its
shareholders.
COMPENSATION COMMITTEE
Harry C. Stonecipher
Theodore L. Weise
A-7
<PAGE>
PERFORMANCE GRAPH
The following graph is a comparison of the cumulative total returns for
the Company's Common Stock as compared with the cumulative total return for the
NASDAQ Stock Market (U.S.) Total Return Index and the NASDAQ Computer & Data
Processing Services Stocks ("C&DPS") Nasdaq Total Return Index. The cumulative
return of the Company was computed by dividing the difference between the price
of the Company's Common Stock at the end of each measurement period (December
31, 1995, December 31, 1996, December 31, 1997, and December 31, 1998) and the
beginning of the cumulative measurement period (September 29, 1995) by the price
of the Company's Common Stock at the beginning of the cumulative measurement
period. The total return calculations are based upon an assumed $100 investment
on September 29, 1995, the date of the Company's initial public offering.
COMPARISON OF THIRTY-NINE MONTH CUMULATIVE RETURN
[Performance Graph Here]
<TABLE>
<CAPTION>
9/29/95 12/31/95 12/31/96 12/31/97 12/31/98
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Computer Management
Services, Inc. $100 $127 $374 $307 $279
Nasdaq C&DPS Index $100 $104 $129 $158 $284
Nasdaq Stock Market U.S. $100 $101 $124 $153 $215
</TABLE>
EMPLOYMENT AGREEMENTS
R. HALSEY WISE. On July 18, 1997, the Company entered into an
employment agreement with R. Halsey Wise ("Executive") to serve as the Company's
President and Chief Operating Officer (the "Agreement"). The Agreement provides
Executive with a base salary of $200,000 per year, which is reviewed annually by
the Compensation Committee and may be increased in the sole discretion of the
Committee. Executive also is entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable to similarly
situated executive officers of the Company. The Agreement provides for an
initial employment term of three years, and is thereafter annually renewed for
successive one-year terms unless either party notifies the other in writing that
such Agreement will not be renewed at the end of the then current employment
term. The Company may terminate the Agreement due to Executive's death or
disability, or for cause. The Agreement defines "cause" as (a) the willful and
continued failure of Executive to perform his duties under the Agreement after
written notice of such
A-8
<PAGE>
inadequate performance or (b) the willful engaging in illegal conduct or gross
misconduct by Executive, which is materially and demonstrably injurious to the
Company. Executive may terminate the Agreement at any time.
In the event the Company terminates Executive for reasons other than
death, disability or cause, Executive will be entitled to his base salary and
accrued benefits through the date of termination of employment and severance in
an amount equal to Executive's base salary as of the termination date annualized
for one full year (the "Severance Payment"). In the event the Agreement is
terminated by the Company for cause or by Executive voluntarily, Company will
pay Executive all accrued base salary and benefits through the termination date,
but Executive will not be entitled to a Severance Payment. The Agreement also
prohibits the Executive for a period of two years following termination of the
Agreement from disclosing or utilizing certain confidential information or
competing with Company through the solicitation of certain protected clients or
employees of Company directly for Executive's own benefit or indirectly for the
benefit of any other person or entity.
ANTHONY COLALUCA. The Company entered into an Amendment to
Confidentiality and Nonsolicitation Agreement (the "Amendment")with Mr.
Colaluca, the Company's Vice President and Chief Financial Officer, on September
16, 1996. The Amendment provides, in relevant part, that the Company will pay
Mr. Colaluca eighteen months of compensation in the event he is terminated as a
result of any merger or acquisition transaction to which the Company is a party.
No other executive officer of the Company has an employment contract
nor does any other executive officer have any contract, agreement or arrangement
providing for compensation in the event of a change-in-control of the Company.
CERTAIN TRANSACTIONS
On June 13, 1997, the Company loaned funds to Jerry W. Davis, Jr., who is
employed by the Company as Director of MIS and who is the son of Chief Executive
Officer Jerry W. Davis. The loan is evidenced by a Note in the original
principal amount of $200,000, with interest at the rate of 7.25% per annum, both
principal and interest payable in thirty-six (36) monthly installments of
$1,445.61 each. At the end of the thirty-six month period, the remaining
principal balance is due in full. The Note is secured by a first mortgage on
improved residential real property located in Duval County, Florida, with an
appraised value at least equal to the principal amount of the loan.
The Company loaned Jerry W. Davis, the Company's CEO, approximately $2.5
million under a promissory note dated April 17 1998, the proceeds of which were
used to pay federal income tax obligations arising from the exercise in late
1997 of certain non-qualified stock options of the Company. This note bears
interest at 5.6% per annum and is payable interest only monthly until maturity,
March 31, 1999, when the full amount of unpaid principal and interest are due
and payable. The Company also loaned approximately $4.7 million to William
Victor Aviation, LP, a limited partnership controlled by Jerry W. Davis and
Anthony V. Weight, the Company's CEO and acting CEO, respectively, under a
promissory note dated July 2, 1998, which was subsequently extended on December
31, 1998. The proceeds of this loan were used to purchase an aircraft that is
used for both personal and business purposes. This note bears interest at 5.6%
per annum and is payable interest only monthly until maturity, May 31, 1999,
when the full amount of unpaid principal and interest are due and payable.
The Company loaned Anthony V. Weight, the Company's acting CEO, $230,000
under a promissory note dated January 20,1999. The proceeds of this loan were
used to fund certain short-term cash requirements of Mr. Weight. This note bears
interest at 5.6% per annum and is payable interest only monthly until maturity,
March 31, 1999, when the full amount of unpaid principal and interest are due
and payable.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS OF THE COMPANY
The following table sets forth certain information regarding the
beneficial ownership of the Company's outstanding shares of Common Stock as of
December 31, 1998, by: (i) each of the Company's directors and Named Executive
Officers (as identified above under "Compensation of Directors and Executive
Officers--Executive
A-9
<PAGE>
Compensation); (ii) all Named Executive Officers and directors of the Company,
as a group; and (iii) each person known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock. Except as indicated by the
notes to the following table, each of the holders listed below has sole voting
power and investment power over the shares beneficially owned.
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares
Beneficially
Owned with Percent of
Sole Voting Outstanding
and Sole Other Shares Total Shares Shares
Investment Beneficially Beneficially Owned Beneficially Owned
NAME AND BUSINESS ADDRESS(1) Power(2) Owned(3)
<S> <C> <C> <C> <C>
Jerry W. Davis (3)(4)(5)(6) 214,810 3,821,212 4,036,022 27.6%
Anthony V. Weight(3)(6)(7) 306,299 2,855,144 3,161,483 21.6%
Lawrence A. Longhi 89,470 93,098 182,568 1.2%
R. Halsey Wise 80,224 0 80,224 *
Anthony Colaluca 1,955 59 2,014 *
Harry C. Stonecipher 33,300 0 33,300 *
Theodore L. Weise 1,350 0 1,350 *
All executive officers and directors 727,408 5,238,650 5,966,058 40.8%
as a group (7 persons)
Employee Stock Ownership Plan and 1,399,075 0 1,399,075 9.6%
Trust
First Oneida (1995) Limited 2,382,454 0 2,382,454 16.3%
Partnership
Sundown (1995) Limited Partnership 1,417,438 0 1,417,438 9.7%
CMSI Capital, L.P.(8) 929,665 0 929,665 6.4%
Marsh & McLennan Companies, Inc. (9) 0 1,295,957 1,295,957 9.0%
Putnam Investments, Inc. (9) 0 1,295,957 1,295,957 9.0%
Putnam Investment Management, Inc. (9) 0 1,295,957 1,295,957 9.0%
The Putnam Advisory Company, Inc. (9) 0 1,295,957 1,295,957 9.0%
</TABLE>
- -----------------
*Less than 1.0%
(1) The business address of all executive officers and directors listed above
is 8133 Baymeadows Way, Jacksonville, FL 32256, except for the following:
Harry C. Stonecipher, The Boeing Company, 7755 E. Marginal Way South,
Seattle, WA 98124-2207 and Theodore L. Weise, Federal Express Corp., 2005
Corporate Avenue, Third Floor, Memphis, TN 38312.
(2) "Shares Beneficially Owned with Sole Voting and Sole Investment Power"
includes (a) shares registered in the name of the shareholder and (b) in
the case of the executive officers and directors, shares obtainable by
virtue of fully-vested and exercisable stock options. Of the total 727,408
shares owned by the 7 executive officers and directors, 497,441 represent
shares (neither issued nor outstanding) obtainable through such stock
options.
(3) "Other Shares Beneficially Owned" includes (a) as to Messrs. Davis and
Weight only, all the shares owned by the Employee Stock Ownership Plan and
Trust (the "ESOP") and all the shares owned by the Computer Management
Sciences, Inc., Profit Sharing 401(k) Plan and Trust ("401(k)") because
each is a Trustee of both Trusts, with shared investment power over all of
such shares and shared voting power over all shares held by the 401(k) and
all unallocated shares held by the ESOP; (b) as to the individual directors
and officers other than Messrs. Davis and Weight, shares allocated to the
shareholder's individual participant account in the ESOP over which the
shareholder has sole voting power pursuant to the terms of the ESOP and
Section 409(e) of the
A-10
<PAGE>
Internal Revenue Code, but no investment power; and (c) as to the seven
directors and executive officers as a group, all the ESOP shares and all
the 401(k) shares, counting each share only one time.
(4) As to Mr. Davis, "Other Shares Beneficially Owned" includes 2,382,454
shares owned by First Oneida (1995) Limited Partnership, a Delaware limited
partnership ("FO"), of which Mr. Davis and his wife each own a 49.5%
limited partnership interest. Mr. and Mrs. Davis also each own 50% of the
issued and outstanding common stock of Bull Gator, Inc., ("BG"), a Delaware
corporation and the sole general partner of FO. BG owns a 1% general
partner interest in FO. As a result, Mr. and Mrs. Davis share equally
voting and investment power over the shares owned by FO and, as such, Mr.
Davis is attributed with beneficial ownership of all such shares.
(5) As to Mr. Davis, "Other Shares Beneficially Owned" includes 1,012 shares
owned directly by his wife. (6) Included among the total number of ESOP
shares attributed to Messrs. Davis and Weight under the "Other Shares
Beneficially Owned" column are 99,011 shares and 85,412 shares,
respectively, allocated to their individual participant accounts in the
ESOP, over which they possess, in their capacity as individual plan
participants, sole voting power.
(7) As to Mr. Weight, "Other Shares Beneficially Owned" includes 1,417,438
shares owned by Sundown (1995) Limited Partnership, a Delaware limited
partnership ("SD"). Mr. Weight is the sole shareholder of Downunder (1995),
Inc. a Delaware corporation ("DU"), which is the sole general partner of
SD. Mr. Weight is the owner of a 99% limited partnership interest in SD and
DU is the owner of a 1% general partnership in SD. As such, Mr. Weight has
retained sole voting and investment power over the shares owned by SD and
he is attributed with beneficial ownership of all such shares.
(8) CMSI Capital, L.P., is a Delaware limited partnership, the limited partners
of which are W. Robinson Frazier as Trustee of the Jerry W. Davis
Children's Trust under Agreement dated 9/17/95 and W. Robinson Frazier as
Trustee of the Anthony V. Weight Children's Trust under Agreement dated
9/17/95 (collectively, the "Children's Trusts"). The Children's Trusts hold
a total 99% interest in the assets of CMSI Capital, L.P. The general
partner is CMSI Investments, Inc., which holds a 1% interest in the assets
of CMSI Capital, L.P. The Children's Trusts are the registered owners of
all of the issued and outstanding stock of CMSI Investments, Inc. Neither
Mr. Davis nor Mr. Weight possesses any voting or investment powers,
directly or indirectly, over the stock held by CMSI Capital, L.P. The
mailing address of CMSI Capital, L.P., is c/o W. Robinson Frazier, Esq.,
1515 Riverside Avenue, Jacksonville, FL 32204.
(9) Putnam Investments, Inc., a Massachusetts corporation ("PI") and wholly
owned subsidiary of Marsh & McLennan Companies, Inc. ("M&MC"), a Delaware
corporation, wholly owns two registered investment advisers: Putnam
Investment Management, Inc., a Massachusetts corporation which is the
investment adviser to the Putnam family of mutual funds and The Putnam
Advisory Company, Inc., a Massachusetts corporation which is the investment
adviser to PI's institutional clients (collectively, the "Putnam
Subsidiaries"). The shares shown as beneficially owned by each of M&MC, PI,
and the Putnam Subsidiaries in the above schedule represent the same
1,295,957 shares. The Putnam Subsidiaries have investment power over the
shares as investment managers, but each of the mutual funds' trustees have
voting power over the shares held by each fund, and The Putnam Advisory
Company, Inc., has shared voting power over the shares held by the
institutional clients. M&MC owns the shares directly but has no voting or
investment power over the shares of Common Stock. PI may be deemed to have
shared investment power as the parent holding company of the Putnam
Subsidiaries. The mailing address for PI and the Putnam Subsidiaries is One
Post Office Square, Boston, MA 02109; the address for M&MC is 1166 Avenue
of the Americas, New York, NY 10036. The source of all information provided
in the schedule and this footnote concerning the beneficial ownership of
M&MC, PI, and the Putnam Subsidiaries is taken from Form 13G as filed with
the Securities and Exchange Commission and the Company on January 27, 1998,
pursuant to Rule 13d-1(b)(1)(ii)(E) and (G).
A-11
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TEXT
Exhibit 1 Letter to Stockholders of the Company dated February 9, 1999.*
Exhibit 2 Agreement and Plan of Merger, dated as of February 5, 1999 by
and among Parent, Purchaser and the Company.
Exhibit 3 Stockholder Option Agreement, dated as of February 5, 1999,
among Purchaser and the stockholders of the Company named
therein.
Exhibit 4 Consulting and Non-Compete Agreement, dated as of February 5,
1999, by and between Company and Jerry W. Davis.
Exhibit 5 Consulting and Non-Compete Agreement, dated as of February 5,
1999, by and between Company and Anthony V. Weight.
Exhibit 6 Confidentiality Agreement, dated January 7, 1999, between
Parent and Company.
Exhibit 7 Opinion of The Robinson-Humphrey Company, LLC, dated February
5, 1999.*
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*Included with Schedule 14D-9 mailed to Stockholders.
<PAGE>
LETTER TO STOCKHOLDERS
EXHIBIT 1
COMPUTER MANAGEMENT SCIENCES, INC.
February 9, 1999
Dear Fellow Shareholder:
We are pleased to inform you that Computer Management Sciences, Inc.
("CMSI" or the "Company") has entered into an agreement with Computer Associates
International, Inc. ("CAI"), pursuant to which a wholly owned subsidiary of CAI
has commenced a tender offer today to purchase all the outstanding common stock
of CMSI for $28 per share, net to the seller in cash. Under the agreement, the
tender offer, if consummated, will be followed by a merger in which any
remaining shares of CMSI common stock will be acquired for $28 per share, net
to the seller in cash, or any higher price paid per share pursuant to the
tender offer, and the Company will become a wholly owned subsidiary of CAI.
Your Board of Directors ("Board") unanimously has determined that the
tender offer and the merger are fair to, and in the best interest of, the
Company's shareholders, has approved the offer and the merger, and recommends
that shareholders accept the offer and tender their shares pursuant to it. In
addition to the benefit of this transaction to our shareholders, we believe that
the combination will benefit greatly both companies.
In connection with the transaction, certain executive officers and
directors of the Company and their affiliates have granted to CAI options to
acquire the approximately 30.8% of the outstanding common stock of the Company
owned by such persons, on a fully diluted basis.
Accompanying this letter are CAI's Offer to Purchase, Letter of
Transmittal, and other related documents, together with the recommendation of
your Company's Board contained in the enclosed Schedule 14D-9. These documents
set forth the terms and conditions of the tender offer. In determining to
approve the merger agreement and the transactions contemplated by it, your Board
gave careful consideration to a number of factors described in the attached
Schedule 14D-9, which has been filed by the Company with the Securities and
Exchange Commission. Among other things, the Board considered the opinion of the
Company's financial advisor, The Robinson-Humphrey Company, LLC, to the effect
that, as of the date thereof, the consideration to be received by the
shareholders in the tender offer and in the merger is fair, from a financial
point of view, to them. The Schedule 14D-9 and CAI's Offer to Purchase describe
in more detail the reasons for the Board's conclusions and contain other
important information regarding the tender offer. The Board urges you to
consider this information carefully.
CMSI's Board, management, and employees thank you sincerely for your
loyal support throughout the years. On behalf of the Board of Directors,
Sincerely,
/S/ JERRY W. DAVIS
Jerry W. Davis, Chairman of the Board and
Chief Executive Officer
<PAGE>
Exhibit 99(2)
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AGREEMENT AND PLAN OF MERGER
Dated as of February 5, 1999
Among
COMPUTER ASSOCIATES INTERNATIONAL, INC.
THEBETTERPLAN ("TBP"), INC.
And
COMPUTER MANAGEMENT SCIENCES, INC.
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER
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SECTION 1.1. The Offer.........................................................................................1
SECTION 1.2. Company Action....................................................................................2
SECTION 1.3. Directors.........................................................................................2
ARTICLE II
THE MERGER
SECTION 2.1. The Merger........................................................................................3
SECTION 2.2. Conversion of Shares..............................................................................3
SECTION 2.3. Surrender and Payment.............................................................................4
SECTION 2.4. Dissenting Shares.................................................................................5
SECTION 2.5. Stock Options.....................................................................................5
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation......................................................................6
SECTION 3.2. Bylaws............................................................................................6
SECTION 3.3. Directors and Officers............................................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company.....................................................7
(a) Organization, Standing and Corporate Power.............................................................7
(b) Subsidiaries...........................................................................................7
(c) Capital Structure......................................................................................7
(d) Authority; Noncontravention............................................................................8
</TABLE>
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(e) SEC Documents; Financial Statements; No Undisclosed Liabilities........................................9
(f) Disclosure Documents...................................................................................9
(g) Absence of Certain Changes or Events..................................................................10
(h) Litigation............................................................................................11
(i) Absence of Changes in Stock and Benefit Plans.........................................................11
(j) Participation and Coverage in Benefit Plan............................................................11
(k) ERISA Compliance......................................................................................11
(l) Taxes.................................................................................................12
(m) State Takeover Statutes...............................................................................13
(n) Brokers; Schedule of Fees and Expenses................................................................14
(o) Permits; Compliance with Laws; Environmental Matters..................................................14
(p) Contracts; Debt Instruments...........................................................................14
(q) Opinion of Financial Advisor..........................................................................16
(r) Interests of Officers and Directors...................................................................16
(s) Technology............................................................................................16
(t) Change of Control.....................................................................................17
SECTION 4.2. Representations and Warranties of Parent and Merger Subsidiary...................................17
(a) Organization, Standing and Corporate Power............................................................17
(b) Authority; Noncontravention...........................................................................17
(c) Disclosure Documents..................................................................................18
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business..............................................................................19
SECTION 5.2. Stockholder Meeting; Proxy Material..............................................................20
SECTION 5.3. Access to Information............................................................................21
SECTION 5.4. Other Offers.....................................................................................21
SECTION 5.5. State Takeover Statutes..........................................................................21
</TABLE>
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ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
<S> <C> <C>
SECTION 6.1. Obligations of Merger Subsidiary.................................................................22
SECTION 6.2. Voting of Shares.................................................................................22
SECTION 6.3. Indemnification..................................................................................22
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification................................................22
SECTION 7.2. Public Announcements.............................................................................24
SECTION 7.3. Confidentiality..................................................................................24
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each Party......................................................24
ARTICLE IX
TERMINATION
SECTION 9.1. Termination......................................................................................25
SECTION 9.2. Effect ofTermination.............................................................................26
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and Warranties...................................................26
SECTION 10.2. Notices.........................................................................................26
SECTION 10.3. Amendments; No Waivers..........................................................................27
SECTION 10.4. Fees and Expenses...............................................................................27
SECTION 10.5. Successors and Assigns..........................................................................28
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 10.6. Governing Law...................................................................................28
SECTION 10.7. Counterparts; Effectiveness; Interpretation.....................................................29
SECTION 10.8. Enforcement.....................................................................................29
SECTION 10.9. Severability....................................................................................29
SECTION 10.10 Entire Agreement; No Third Party Beneficiaries..................................................29
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of February 5, 1999
among COMPUTER ASSOCIATES INTERNATIONAL, INC., a Delaware
corporation ("Parent"), THEBETTERPLAN ("TBP"), INC., a Florida
corporation and a wholly owned subsidiary of Parent ("Merger
Subsidiary"), and COMPUTER MANAGEMENT SCIENCES, INC., a
Florida corporation (the "Company").
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER. (a) Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto, Merger Subsidiary shall, as promptly as practicable
after the date hereof, but in no event later than five business days following
the public announcement of the terms of this Agreement, commence an offer (the
"Offer") to purchase all of the outstanding shares of common stock, par value
$.01 per share (the "Shares"), of the Company at a price of $28.00 per Share,
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 materially adverse to the holders of Shares.
Subject to the terms of the Offer in this Agreement and the satisfaction (or
waiver to the extent permitted by this Agreement) of the conditions to the
Offer, Merger Subsidiary shall accept for payment all Shares validly tendered
and not withdrawn pursuant to the Offer as soon as practicable after the
applicable expiration date of the Offer and shall pay for all such Shares
promptly after acceptance; PROVIDED that Merger Subsidiary may extend the Offer
if, at the scheduled expiration date of the Offer or any extension thereof any
of the conditions to the Offer shall not have been satisfied, until such time as
such conditions are satisfied or waived, and Merger Subsidiary may extend the
Offer for a further period of time of not more than 20 business days to meet the
objective (which is not a condition to the Offer) that there be validly
tendered, in accordance with the terms of the Offer, prior to the expiration
date of the Offer (as so extended) and not withdrawn a number of Shares, which
together with Shares then owned by Parent and Merger Subsidiary, represents at
least 80% of the Fully Diluted Shares.
(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
<PAGE>
of Shares. Parent, Merger Subsidiary and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material
respect. Parent and Merger Subsidiary agree to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-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 (i) unanimously 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
February 5, 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 fair to and in the best interest of
the Company's stockholders, (ii) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and the
Stockholder Option Agreement and the transactions contemplated thereby, which
approval satisfies in full the requirements of Sections 607.0901 and 607.0902 of
the General Corporation Act of the State of Florida (the "Florida Law"), and
(iii) unanimously resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by its stockholders. The Company
further represents that The Robinson-Humphrey Company LLC has delivered to the
Company's Board of Directors its opinion that the consideration to be paid in
the Offer and the Merger is fair to the holders of Shares from a financial point
of view. The Company has been advised that all of its directors and executive
officers presently intend either to tender their Shares pursuant to the Offer or
to vote in favor of the Merger. The Company will promptly furnish Parent and
Merger Subsidiary with a list of its stockholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case as of the most recent practicable date, and
will provide to Parent and Merger Subsidiary such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent or Merger
Subsidiary may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced the Company will file with the SEC and disseminate to holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") which shall reflect the recommendations of the Company's Board of
Directors referred to above, subject to the fiduciary duties of the Board of
Directors of the Company as advised in writing by Holland & Knight LLP, counsel
to the Company. The Company, Parent and Merger Subsidiary each agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule 14D-9 prior to its being filed with the
SEC.
SECTION 1.3. DIRECTORS. (a) Effective upon the acceptance for
payment by Merger Subsidiary of a majority of the Shares pursuant to the Offer,
Parent shall be entitled to designate the number of directors, rounded up to the
next whole number, on the Company's Board of Directors that equals the product
of (i) the total number of directors on the Company's Board of Directors (giving
effect to the election of any additional directors pursuant to this Section) and
(ii) the percentage that the number of Shares owned by Parent or Merger
Subsidiary (including Shares accepted for payment) bears to the total number of
Shares outstanding, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including,
-2-
<PAGE>
without limitation, increasing the number of directors, or seeking and accepting
resignations of incumbent directors, or both; PROVIDED that, after the
acceptance for payment and prior to the Effective Time (defined below in Section
2.1(b)), the Company's Board of Directors shall always have one member who is
neither a designee nor an affiliate of Parent or Merger Subsidiary nor an
employee of the Company (an "Independent Director"). If the number of
Independent Directors is reduced below one for any reason prior to the Effective
Time, the departing Independent Director shall be entitled to designate a person
to fill such vacancy. No action proposed to be taken by the Company to amend or
terminate this Agreement or waive any action by Parent or Merger Subsidiary
shall be effective without the approval of the Independent Director. At such
times, the Company will use its best efforts to cause individuals designated by
Parent to constitute the same percentage as such individuals represent on the
Company's Board of Directors of (x) each committee of the Board, (y) each board
of directors of each subsidiary (defined below in Section 4.1(a)) and (z) each
committee of each such board.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act
(defined below in Section 4.1(d)) and Rule 14f-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 the Florida 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 Merger Subsidiary will file articles of merger with the Department of State
of the State of Florida and make all other filings or recordings required by
Florida Law in connection with the Merger. The Merger shall become effective at
such time as the articles of merger are duly filed with the Department of State
of the State of Florida or, with the consent of the Independent Director, at
such later time as is specified in the articles 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 Florida Law.
SECTION 2.2. CONVERSION OF SHARES. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned
by Parent, Merger Subsidiary or any subsidiary of either of them
immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Surviving Corporation
with the same rights, powers and
-3-
<PAGE>
privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.2(a) or as
provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$28.00 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration").
SECTION 2.3. SURRENDER AND PAYMENT. (a) Prior to the Effective
Time, Parent shall appoint a bank or trust company (the "Exchange Agent") for
the purpose of exchanging certificates representing Shares for the Merger
Consideration. Parent will make available to the Exchange Agent, as needed, the
Merger Consideration to be paid in respect of the Shares (the "Exchange Fund").
For purposes of determining the Merger Consideration to be made available,
Parent shall assume that no holder of Shares will perfect his right to appraisal
of his Shares. Promptly after the Effective Time, Parent will send, or will
cause the Exchange Agent to send, to each holder of Shares at the Effective Time
a letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Exchange Agent).
The Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided in this Section 2.3. The Exchange Fund shall not be used for
any other purpose, except as provided in this Agreement.
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Exchange Agent
of a certificate or certificates representing such Shares, together with a
properly completed letter of transmittal covering such Shares and such other
documents as may be reasonably requested, will be entitled to receive the Merger
Consideration payable in respect of such Shares. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid
to a person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "person" means an individual, a corporation, a partnership, 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 Shares. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article II.
(e) Any portion of the Exchange Fund made available to the
Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Parent, upon
demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section 2.3 prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by holders
-4-
<PAGE>
of Shares immediately prior to such time as such amounts would otherwise escheat
to or become property of any governmental entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear of any claims or
interest of any person previously entitled hereto.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which
appraisal rights have been perfected shall be returned to Parent, upon demand.
SECTION 2.4. DISSENTING SHARES. Notwithstanding Section 2.2,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with Florida Law shall not
be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his right to appraisal.
If after the Effective Time such holder fails to perfect or withdraws or loses
his right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.5. STOCK OPTIONS. (a) The Company shall amend each
of the Company's Stock Plans (defined below) to provide that, at the Effective
Time, each of the then outstanding Company Options (defined below), whether
vested or unvested in accordance with the relevant Stock Plans and stock option
agreements, 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) $28.00 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
Company Options 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
Options" means any option granted, and not exercised or expired, to a current or
former employee, director or independent contractor of the Company or any of its
subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock
option, stock bonus, stock award, or stock purchase plan, program, or
arrangement of the Company or any of its subsidiaries or any predecessor thereof
(collectively, the "Stock Plans") or any other contract or agreement entered
into by the Company or any of its subsidiaries.
(b) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery pursuant to the terms set forth in this Section 2.5. Parent shall cause
the shares of Parent Common Stock issuable upon exercise of the assumed Company
Options to be registered, or to be issued pursuant to a then effective
registration statement,
-5-
<PAGE>
no later than 90 days after the Effective Time on Form S-8 promulgated by the
SEC and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such assumed
Company Options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, Parent shall administer the Company Options
assumed pursuant to this Section 2.5 in a manner that complies with Rule 16b-3
promulgated by the SEC under the Exchange Act, but shall have no responsibility
for such compliance by the Company or its predecessors.
(c) Paragraphs (a) and (b) of this Section 2.5
notwithstanding, the Company shall further amend the Stock Plans to provide
holders of Company Options, which Company Options are then vested and
exercisable (including Company Options which became vested and exercisable in
accordance with the relevant Stock Plans and stock option agreements as a result
of the consummation of the Offer or the Merger), the opportunity to elect to
receive cash in an amount set forth below in exchange for each vested and
exercisable Company Option. Pursuant to such amendment, Parent and the Company
shall take all actions necessary to provide that, as to those holders who so
elect, at or immediately prior to the Effective Time, (i) each vested and
exercisable Company Option, so surrendered for cash, shall be cancelled and (ii)
in consideration of such cancellation, and except to the extent that Parent and
the holder of any such Company Option otherwise agree, the Company shall pay to
each such holder of Company Options an amount in cash in respect thereof equal
to the product of (1) the excess of the Merger Consideration over the exercise
price thereof and (2) the number of Shares subject thereto.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be
the certificate of incorporation of the Surviving Corporation until amended
in accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to the name of the Company.
SECTION 3.2. BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation, and (ii)
the officers of the Merger Subsidiary at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Merger Subsidiary as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and each of its 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
subsidiaries is duly
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qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), business,
assets, results of operations or prospects of 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. All the outstanding shares of
capital stock of each such subsidiary have been validly issued and are fully
paid and nonassessable and are owned by the Company, by another subsidiary of
the Company or by the Company and another such subsidiary, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock (other than restrictions under applicable
securities laws)). Except for the capital stock of its subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other ownership
interest in any person.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). At the time
of execution of this Agreement, (i) 14,644,054 shares of Common Stock were
issued and outstanding, (ii) no shares of Preferred Stock were issued and
outstanding, (iii) no shares of Common Stock were held by the Company in its
treasury or by any of the Company's subsidiaries, and (iv) 2,556,785 shares of
Common Stock were reserved for issuance pursuant to the Stock Plans. Except as
set forth above, at the time of execution of this Agreement, no shares of
capital stock or other voting securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Stock Plans will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. 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
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and correct copies of the Stock Plans and all forms of Company Options. Section
4.1(c) of the Disclosure Schedule sets forth a complete and accurate list of all
Company Options outstanding as of the date of this Agreement and the exercise
price of each outstanding Company Option.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to enter into this Agreement and, except for any
required approval by the Company's stockholders in connection with the
consummation of the Merger, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger. This Agreement has been duly
executed and delivered by the Company and, assuming this Agreement constitutes a
valid and binding agreement of Parent and Merger Subsidiary, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any of its subsidiaries under, (i) the Articles of Incorporation or By-Laws
of the Company or the comparable charter or organizational documents of any of
its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its subsidiaries or their respective properties or assets, other than, in
the case of clause (ii) or (iii) above, any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate could not
reasonably be expected to (A) have a Material Adverse Effect, (B) impair the
ability of the Company to perform its obligations under this Agreement or (C)
prevent or materially delay consummation of any of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with or exemption by (collectively,
"Consents") any federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (ii) compliance with any applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "Exchange Act"), (iii) the filing of articles of
merger in accordance with Florida 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 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, 1996 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement
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of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Company Filed SEC
Documents (defined below in Section 4.1(g)), neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) and there is no existing condition, situation
or set of circumstances which are required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto, except for liabilities
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(f) DISCLOSURE DOCUMENTS. (i) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(ii) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement and at the
time of any distribution thereof, such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.1(f)(ii) will not apply to statements
or omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger Subsidiary specifically
for use therein.
(iii) The information with respect to the Company or any
subsidiary that the Company furnishes to Parent or Merger Subsidiary in writing
specifically for use in the Offer Documents will not, at the time of the filing
thereof, at the time of any distribution thereof and at the time of the
consummation of the Offer, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents"), since December 31, 1997, the
Company has conducted its business only in the ordinary course consistent with
past practice, and there has not been (i) any event, occurrence or development
of a state of circumstances which has had or could reasonably be expected to
have a Material Adverse Effect, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in
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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, 1997, or (B) any entry by the Company or any of its subsidiaries
into any employment, deferred compensation, severance or termination agreement
with any such current or former director, officer or employee, except in the
ordinary course of business consistent with past practice, (v) any damage,
destruction or loss, whether or not covered by insurance, that has had or could
have a Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company or any of its subsidiaries, (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 $100,000 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 $100,000 for any one transaction or
$500,000 in the aggregate, (x) any making of any loan, advance or capital
contributions to or investment in any person other than in the ordinary course
of business consistent with past practice, but in no event in the amount of more
than $100,000 for any one transaction or $500,000 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,
other than transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement, but in
no event representing commitments on behalf of the Company or any of its
subsidiaries of more than $100,000 for any transaction or $500,000 for any
series of transactions, (xii) any material labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
subsidiaries, which employees were not subject to a collective bargaining
agreement at December 31, 1997, or any material lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to such employees or (xiii)
any agreement, commitment, arrangement or undertaking by the Company or any of
its subsidiaries to perform any action described in clauses (i) through (xii).
(h) LITIGATION. Except as disclosed in the Company Filed SEC
Documents or in Section 4.1(h) of the Disclosure Schedule, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries that, individually
or in the aggregate, could reasonably be expected to (i) have a Material Adverse
Effect, (ii) impair the ability of the Company to perform its obligations under
this Agreement or (iii) prevent or materially delay the consummation of the
Offer, the Merger or any of the other transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
subsidiaries having, or which, insofar as reasonably can be foreseen, in the
future would have, any such effect. Section 4.1(h) of the Disclosure Schedule
sets forth, 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
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would exceed $250,000, the forum, the parties thereto, the subject matter
thereof and the amount of damages claimed.
(i) ABSENCE OF CHANGES IN STOCK AND BENEFIT PLANS. Since
December 31, 1997, 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"),
other than immaterial amendments to any such Benefit Plan.
(j) PARTICIPATION AND COVERAGE IN BENEFIT PLAN. 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 increase (other
than in an immaterial manner) 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) 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 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 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.
(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.
Any Benefit Plan intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and, to the
Company's knowledge, nothing has occurred to cause the loss of such qualified
status.
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(iii) No Benefit Plan is covered by Title IV of ERISA or
Section 412 of the Code. Neither the Company nor any of its subsidiaries has
incurred or expects to incur any liability under Title IV of ERISA 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 claims against or
otherwise involving any of the Benefit Plans and no suit, action or other
litigation has been brought against or with respect to any Benefit Plan
(excluding, in each case, claims for benefits incurred in the ordinary course of
Benefit Plan activities).
(v) All 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
and other taxes, tariffs or governmental charges or assessments of any nature
whatsoever as well as any interest, penalties and additions thereto.
(i) The Company and each of its subsidiaries have timely filed
all tax returns, statements, reports and forms required to be filed with any tax
authority and in accordance with all applicable laws. All such tax returns are
correct and complete in all 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.
(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.
(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. The Company has provided
Parent with a list of all Federal, state, local, and foreign income tax returns
filed with respect to the Company and any of its subsidiaries for taxable
periods ended on or after December 31, 1995, indicating those tax returns that
have been audited, and indicating those tax returns that currently are the
subject of audit. The Company has provided Parent with correct and complete
copies of all its Federal income tax returns, and examination reports, and
statements of deficiencies assessed against or agreed to by the Company and any
of its subsidiaries since December 31, 1995.
(iv) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of taxes or agreed to any extension
of time with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has filed
a consent pursuant to Section 341(f) of the Code concerning collapsible
corporations. Neither the Company nor any of its subsidiaries is a party to any
tax allocation or sharing agreement. Neither the Company nor any of its
subsidiaries has any 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
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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 adjustment pursuant to Section 481(a) of the
Code (or similar provisions of other law or regulations) in its current or in
any future taxable period by reason of a change in accounting method; nor does
the Company or any of its subsidiaries have any knowledge that the Internal
Revenue Service (or other taxing authority) has proposed or is considering
proposing, any such change in accounting method. Neither the Company nor any of
its subsidiaries is a party to any agreement, contract, or arrangement that,
individually or collectively, could give rise to the payment of any 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 unanimously 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 provisions of Sections 607.0901 and 607.0902 of
Florida Law. To the best of the Company's knowledge, no other "fair price",
"moratorium", "control share acquisition", or other anti-takeover statute or
similar statute or regulation, applies or purports to apply to the Offer, the
Merger, this Agreement or any of the other transactions contemplated hereby or
thereby.
(n) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than The
Robinson-Humphrey Company LLC, the fees and expenses of which will be paid by
the Company (and a copy of whose engagement letters and a calculation of the
fees that would be due thereunder has been provided to Parent), is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its subsidiaries.
Assuming consummation of the Offer and the Merger, no such engagement letter
obligates the Company to continue to use their services or pay fees or expenses
in connection with any future transaction.
(o) PERMITS; COMPLIANCE WITH LAWS; 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 material respects with all applicable statutes,
laws or material ordinances, regulations, rules, judgments, decrees or orders of
any Governmental Entity, and neither the Company nor any of its subsidiaries has
received any notice from any Governmental Entity or any other person that either
the Company or any of its subsidiaries is in violation of, or has violated, in
any material respect any applicable statutes, laws or material ordinances,
regulations, rules, judgments, decrees or orders.
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(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.
(p) CONTRACTS; DEBT INSTRUMENTS. (i) Except as otherwise
disclosed in Section 4.1(p)(i) of the Disclosure Schedule, neither the Company
nor any of its subsidiaries is a party to or subject to:
(A) any union contract, or any employment, consulting,
severance, termination, or indemnification agreement, contract or
arrangement providing for future payments, written or oral, with any
current or former officer, consultant, director or employee which (1)
exceeds $100,000 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 $50,000 or $150,000, respectively, and is not terminable by
it or its subsidiary on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(B) any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of
revenues of $100,000 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 $100,000;
(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, impaired or adversely affected by reason of
the execution of this Agreement, the closing of the Offer or the
Merger, or the consummation of the other transactions contemplated
hereby;
(E) any agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment that limits in any
material respect the freedom of the Company or any subsidiary of the
Company to compete in any line of business or with any person or in any
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geographic area or which would so limit in any material respect the
freedom of the Company or any subsidiary of the Company after the
Effective Time; or
(F) any other agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment not made in the
ordinary course of business which is material to the Company and its
subsidiaries taken as a whole.
(ii) Neither the Company nor any subsidiary of the Company is
in default in any material respect under the terms of any exclusive license or
distribution agreement or arrangement that, by its terms, provides for payments
to the Company or any of its subsidiaries of $100,000 or more per annum or any
other material license or distribution agreement or arrangement, true and
complete copies or descriptions of all of which have been delivered to Parent.
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 is (A) a list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its subsidiaries in an aggregate principal
amount in excess of $100,000 is outstanding or may be incurred and (B) the
respective principal amounts currently outstanding thereunder. For purposes of
this Section 4.1(p)(iii), "indebtedness" shall mean, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person upon which interest charges are
customarily paid, (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(E) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (F) all capitalized lease obligations of such
person, (G) all obligations of others secured by any Lien on property or assets
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed, (H) all obligations of such person under interest rate or
currency swap transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course of business), (J) all obligations of
such person to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar securities or
property, and (K) all guarantees and arrangements having the economic effect of
a guarantee of such person of any indebtedness of any other person.
(q) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of The Robinson-Humphrey Company LLC, 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. None of the Company's
or any of its subsidiaries' officers or directors has direct or indirect any
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
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of a stockholder and rights under existing employee benefit plans and except for
any such interest which would not be required to be disclosed under the Exchange
Act.
(s) TECHNOLOGY. (i) The Company exclusively owns, or is
licensed to use, without restriction (other than as set forth in Section
4.1(s)(i) of the Disclosure Schedule), the rights to all patents, trademarks,
trade names, service marks, copyrights and any applications therefor, maskworks,
net lists, schematics, inventories, technology, trade secrets, source codes,
know-how, computer software programs or applications and tangible or intangible
proprietary information or material that in any material respect are used or
proposed to be used in the business of the Company and any of its subsidiaries
as currently conducted or proposed to be 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, 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) No Company Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has entered into any agreement to
indemnify any other person against any charge of infringement of any Company
Intellectual Property Right. 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.
(t) CHANGE OF CONTROL. Except as set forth in Section 4.1(i),
4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in or increase 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
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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. Pursuant to the
terms of the relevant stock option agreements, all then outstanding Company
Options will immediately vest and become exercisable in connection with the
consummation of the Offer.
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 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 of any Governmental Entity 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 articles of
merger in accordance with Florida 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.
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(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.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. CONDUCT OF BUSINESS. During the period from the
date of this Agreement to the Effective Time, the Company shall, and shall cause
its subsidiaries to, carry on their respective businesses in the ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior written
approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned subsidiary of
the Company to its parent, (ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (iii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities (other than in connection
with the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
Shares upon the exercise of Company Options outstanding on the date of this
Agreement in accordance with their terms on such date);
(c) amend its articles or certificate of incorporation,
by-laws or other comparable charter or organizational documents;
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(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 $100,000, except pursuant to existing commitments which are set forth
in Section 5.1 of the Disclosure Schedule;
(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 Holland & Knight LLP, counsel to the Company, waive the benefits of,
or agree to modify in any manner, any confidentiality, standstill,
non-competition 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 agreement, (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 10%, (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 for professional services or
advice, (vii) enter into any customer agreements providing for product
replacements or (viii) 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;
(k) authorize any of, or commit or agree to take any of, the
foregoing actions; or
(l) (i) take or agree or commit to take any action that would
make any representation or warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the
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Effective Time or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.
SECTION 5.2. STOCKHOLDER MEETING; PROXY MATERIAL. The Company
shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to
be duly called and held as soon as reasonably practicable following Merger
Subsidiary's acquisition of Shares in the Offer for the purpose of voting on the
approval and adoption of this Agreement and the Merger unless a vote of
stockholders of the Company is not required by Florida Law. The Directors of the
Company shall, subject to their fiduciary duties as advised in writing by
Holland & Knight LLP, 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 Holland & Knight
LLP, counsel to the Company, will use its best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
SECTION 5.3. ACCESS TO INFORMATION. From the date hereof until
the Effective Time, the Company will give Parent, its counsel, financial
advisors, auditors and other authorized representatives access (during normal
business hours and upon reasonable notice) to the offices, properties, books and
records of the Company and the subsidiaries, will furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request and will instruct the Company's employees, counsel and
financial advisors to cooperate with Parent in its investigation of the business
of the Company and the subsidiaries; PROVIDED that no investigation pursuant to
this Section 5.3 shall affect any representation or warranty given by the
Company to Parent hereunder.
SECTION 5.4. OTHER OFFERS. Until the termination of this
Agreement, the Company and its subsidiaries will not, and will not authorize or
permit the officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal (defined below) or (ii) subject
to the fiduciary duties of the Board of Directors of the Company under
applicable law, as advised in writing by Holland & Knight LLP, 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
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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 (including ensuring that Merger
Subsidiary has sufficient funds to consummate the Offer and the Merger).
SECTION 6.2 VOTING OF SHARES. Parent agrees to make a quorum
and vote all Shares acquired in the Offer or otherwise beneficially owned by it
in favor of adoption of this Agreement at the Company Stockholder Meeting.
SECTION 6.3 INDEMNIFICATION. For six years after the Effective
Time, Parent agrees that it will and will cause the Surviving Corporation to
indemnify and hold harmless the current and former directors and officers of the
Company in respect of acts or omissions occurring prior to the Effective Time to
the same extent such persons are indemnified or are entitled to indemnification
by the Company pursuant to the Company's articles of incorporation, by-laws or
the Florida Law in effect on the date of this Agreement, subject to any
limitations imposed from time to time by 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 or
officers of the Company on the date of this Agreement, so long as the annual
premium therefor would not be in excess of 115% 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 115% 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.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR ACT FILINGS; REASONABLE EFFORTS;
NOTIFICATION. (a) Each of Parent and the Company shall (i) promptly make or
cause to be made the filings required of such party or any of its subsidiaries
under the HSR Act with respect to the transactions contemplated by this
Agreement, (ii) comply at the earliest practicable date with any request under
the HSR Act for additional information, documents, or other material received by
such party or any of its subsidiaries from the Federal Trade Commission or the
Department of Justice or any other Governmental Entity in respect of such
filings or such transactions, and (iii) cooperate with the other party in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental Entity
under any Antitrust Laws (defined below) with respect to any such filing or any
such transaction. Each party shall promptly inform the other party of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. Neither party shall participate in any meeting with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party notice of the meeting and, to the extent
permitted by such Governmental Entity, the opportunity to attend and
participate.
(b) Each of Parent and the Company shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other federal,
state or foreign statutes, rules, regulations, orders or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, and, if by
mutual agreement, Parent and the Company decide that litigation is in their best
interests, each of Parent and the Company shall cooperate and use all reasonable
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent (each an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of any
such transaction. Each of Parent and the Company shall use all reasonable
efforts to take such action as may be required to cause the expiration of the
notice periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
(c) Subject to the fiduciary duties of the Board of Directors
of the Company as advised in writing by Holland & Knight LLP, counsel to the
Company, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Company Disclosure Documents and the Offer Documents, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
(d) Notwithstanding anything to the contrary in Section
7.1(a), (b) or (c), (i) neither Parent nor any of its subsidiaries shall be
required to divest any of their respective businesses, product lines or assets,
(ii) neither Parent nor any of its subsidiaries shall be required to take or
agree to take
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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 Section VIII.
(e) Each party shall give prompt notice to the other parties
upon learning of (i) any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it
to comply with or satisfy in any respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; PROVIDED, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent
or Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting it or any of
its subsidiaries (x) which, in the case of the Company, if pending on
the date of this Agreement would have been required to have been
disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l),
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 and such press release will be issued
no later than the next business day immediately succeeding the date of this
Agreement.
SECTION 7.3. CONFIDENTIALITY. Parent and its subsidiaries will
hold, and will cause their Representatives (defined in the Confidentiality
Agreement, dated January 7, 1999 (the "Confidentiality Agreement"), between
Parent and the Company) to hold, any Evaluation Material (defined in the
Confidentiality Agreement) in confidence in accordance with the terms of the
Confidentiality Agreement.
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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 Florida Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such Law;
(ii) any applicable waiting period under the HSR Act relating
to the Merger shall have expired;
(iii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the Merger, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent
or materially delay the Merger shall have been instituted by any person
before any court, arbitrator or governmental body, agency or official
and be pending;
(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 Florida 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.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company
and Parent;
(b) by either the Company or Parent, if the Merger
has not been consummated by September 30, 1999 (PROVIDED that the party
seeking to terminate this Agreement shall not have breached its
obligations under this Agreement in any material respect);
(c) by either the Company or Parent, if there shall
be any law or regulation that makes consummation of the Merger illegal
or otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is entered
and such judgment, injunction, order or decree shall become final and
nonappealable;
(d) by either the Company or Parent, (x) if Parent or
Merger Subsidiary shall have failed to commence the Offer within five
business days following the date of this Agreement (PROVIDED that
Parent shall not be entitled to terminate this Agreement pursuant to
this sub-clause (x) as a result of its breach of this Agreement), (y)
if Parent or Merger Subsidiary shall not have purchased any Shares
pursuant to the Offer prior to July 31, 1999 or
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(z) if the Offer shall have been terminated without Parent or Merger
Subsidiary having purchased any Shares pursuant to the Offer;
(e) by Parent, upon the occurrence of any Trigger
Event described in clauses (i) through (v) of Section 10.4(b); or
(f) by the Company, upon the occurrence of any
Trigger Event described in clause (v) of Section 10.4(b).
SECTION 9.2. EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto or their respective
officers and directors, except that the agreements contained in Sections 7.3,
10.4, 10.6 and 10.8 shall survive the termination hereof and except to the
extent that such termination results from the willful and material breach by a
party of any of its 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
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(b) if to the Company, to:
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
Attention: Halsey Wise
President and Chief Operating Officer
Fax: 904-367-0134
with a copy to:
Holland & Knight LLP
50 North Laura Street
Jacksonville, Florida 32202
Attention: L. Kinder Cannon III
Fax: 904-358-2199
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 $20,000,000 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 person or group (as defined in Section 13(d)(3) of
the 1934 Act) (other than Parent or any of its affiliates) shall have
become the beneficial owner (as defined in Rule 13d-3
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promulgated under the 1934 Act) of at least 25% of the outstanding
Shares or shall have acquired, directly or indirectly, at least 25% of
the assets of the Company;
(iii) 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 at any time prior to
the consummation of the Offer as if made at and as of such time, 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 at any time prior to the
consummation of the Offer as if made at and as of such time, or the
Company shall have failed to observe or perform in any material respect
any of its obligations under this Agreement;
(iv) 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
(v) prior to the purchase of any Shares under the Offer, the
Company shall have received any Acquisition Proposal which the Board of
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;
PROVIDED that, if (x) the only Trigger Event having occurred is an event
pursuant to clause (iii) above and (y) the breaches of representation or
warranty, or failures to observe or perform any obligation under clause (iii)
above (A) individually or in the aggregate would not have or result in a
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement or (B) were unintentional, then the
amount of the fee payable by the Company to the Parent under this Section
10.4(b) shall be $5,000,000 instead of $20,000,000.
(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.
SECTION 10.5. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of Parent or any of its wholly-owned subsidiaries, the right to purchase
Shares pursuant to the Offer, but any such transfer or assignment will not
relieve Merger Subsidiary of its obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
SECTION 10.6. GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the law of the State of New York, except that
the consummation and effectiveness of the Merger shall be governed by, and
construed in accordance with, Florida Law.
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SECTION 10.7. COUNTERPARTS; EFFECTIVENESS; INTERPRETATION.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
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. In addition, 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 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 (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.
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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
THEBETTERPLAN ("TBP"), INC.
By: /S/ STEVEN M. WOGHIN
----------------------------------
Name: Steven M. Woghin
Title: Vice President and Secretary
COMPUTER MANAGEMENT SCIENCES, INC.
By: /S/ ANTHONY V. WEIGHT
----------------------------------
Name: Anthony V. Weight
Title: Acting Chief Executive Officer
and Corporate Secretary
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ANNEX I
Notwithstanding any other provision of the Offer, Parent and
Merger Subsidiary shall not be required to accept for payment or (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, and may terminate the Offer, if (i) by the expiration of the Offer,
the Minimum Condition shall not have been satisfied, (ii) by the expiration of
the Offer, the applicable waiting period under the HSR Act shall not have
expired or been terminated, or (iii) at any time on or after February 5, 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 or by any other person, domestic
or foreign, before any Governmental Entity or arbitrator, (i)
challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the
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, (iv)
seeking to require divestiture by Parent or any of its subsidiaries or
affiliates of any Shares, or (v) that otherwise, in the judgment of
Parent, is likely to materially adversely affect the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken
as a whole; 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 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 (v) of paragraph (a)
above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a
prospective change) in the business, assets, condition (financial or
otherwise), capitalization, operations or results of operations of the
Company or any of its subsidiaries that, in the reasonable judgment of
Parent, is or is likely to have a Material Adverse Effect; or
<PAGE>
(d) a tender or exchange offer for some or all of the Shares
shall have been made by another person, or it shall have been publicly
disclosed or Parent shall have otherwise learned that (i) any person or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have
acquired beneficial ownership of more than 25% of any class or series
of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall
have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 25% of any
class or series of capital stock of the Company (including the Shares)
other than acquisitions for bona fide arbitrage purposes only and other
than as disclosed in a Schedule 13D or 13G on file with the Commission
on February 5, 1999, (ii) any such person or group which, prior to
February 5, 1999, had filed such a Schedule with the Commission shall
have acquired beneficial ownership of additional shares of any class or
series of capital stock of the Company (including the Shares), through
the acquisition of stock, the formation of a group or otherwise, which,
together with such ownership as is reflected on such Schedule, shall
constitute 25% or more of any such class or series, or shall have been
granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of additional shares of any class or
series of capital stock of the Company (including the Shares) which,
together with such ownership as is reflected on such Schedule, shall
constitute 25% or more of any such class or series or (iii) any person
shall have filed a Notification and Report Form under the HSR Act
reflecting an intent to acquire the Company or any material portion of
assets of the Company or securities of the Company which, together with
such ownership as is reflected on any such Schedule, shall constitute
25% or more of any such class of securities; or
(e) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the American Stock Exchange, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any material limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which would reasonably be
expected to have a Material Adverse Effect or prevent (or materially
delay) the consummation of the Offer or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, a material
acceleration or worsening thereof; or
(f) any Consent (other than the filing of articles of merger
or approval by the stockholders of the Company of the Merger (if
required by Florida Law)) required to be filed, occurred or been
obtained by the Company or any of its subsidiaries or Parent of any of
its subsidiaries (including Merger Subsidiary) in connection with the
execution and delivery of this Agreement, the Offer and the
consummation of the transactions contemplated by this Agreement shall
not have been filed, occurred or been obtained (other than any such
Consents the failure to file, occur or obtain in the aggregate, could
not reasonably be expected to (i) have a Material Adverse Effect or
(ii) prevent or materially delay the consummation of the Offer or the
Merger); or
(g) the Company shall have breached or failed to perform in
any material respect any of its covenants or agreements under this
Agreement, or any of the representations and warranties of the Company
set forth in this Agreement that is qualified as to materiality shall
not be true when made or at any time prior to consummation of the Offer
as if made at and as of such time, or any of the representations and
warranties set forth in this Agreement that is
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not so qualified shall not be true in any material respect when made or
at any time prior to the consummation of the Offer as if made at and as
of such time; or
(h) any party to the Stockholder Option Agreement other than
Merger Subsidiary or Parent shall have breached or failed to perform in
any material respect any of its agreements under the Stockholder Option
Agreement or any of the representations and warranties of any such
party set forth in the Stockholder Option Agreement shall not be true
in any material respect, in each case, when made or at any time prior
to the consummation of the Offer as if made at and as of such time, or
the Stockholder Option Agreement shall have been invalidated or
terminated with respect to any Shares subject thereto; or
(i) this Agreement or the Stockholder Option Agreement shall
have been terminated in accordance with its terms; or
(j) 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
(k) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or
agreement in principle with respect to any Acquisition Proposal;
which, in the 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 sole discretion in whole at any time or in part from time to
time. The failure by Parent or Merger Subsidiary at any time to exercise its
rights under any of the foregoing conditions shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
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 99(3)
AGREEMENT, dated as of February 5, 1999, among TheBetterPlan
("TBP"), Inc., a Florida corporation ("Buyer"), and the
holders (the "Stockholders") of the shares of common stock,
$0.01 par value (the "Shares") of Computer Management
Sciences, Inc., a Florida 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 opposite such Stockholder's name on the signature pages hereto
and any additional Shares 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 $28.00 per Stockholder Share (as
adjusted pursuant to Section 1.6, the "Purchase Price"). With respect to each
Stockholder, such Stockholder's Shares do not include Shares held pursuant to
(i) the Company's Employee Stock Ownership Plan and Trust (the "ESOP") created
pursuant to the Trust Agreement, dated as of November 17, 1989, between the
Company and the trustee thereof or (ii) the Company's Profit Sharing-401(k) Plan
dated December 30, 1994 (the "401(k) Plan").
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.
<PAGE>
(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 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 a certified or bank cashier's check
or checks payable to or upon the order of such Stockholder in 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. Each of the Stockholders
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
-2-
<PAGE>
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 any change in the Company's capital stock by reason
of stock dividends, stock splits, mergers, consolidations, recapitalizations,
combinations, conversions, exchanges of shares, extraordinary or liquidating
dividends, or 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, 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 Florida 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
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<PAGE>
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 this Agreement in accordance
with its terms.
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. 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. 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. 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 (other than Shares
held pursuant to the ESOP or the 401(k) Plan). 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
-4-
<PAGE>
acquire any securities of the Company. 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 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,
-5-
<PAGE>
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. 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 or a trustee of
the ESOP or the 401(k) Plan (if such Stockholder is such a director or trustee),
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
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<PAGE>
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 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
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<PAGE>
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.
TheBetterPlan ("TBP"), Inc.
<TABLE>
By: /S/ STEVEN M. WOGHIN
-----------------------
Name: Steven M. Woghin
Title: Vice President and Treasurer
c/o 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 SUNDOWN (1995) LIMITED PARTNERSHIP,
- ------ ------- a Delaware limited partnership
<S> <C> <C>
1,417,438 0
By: DOWNUNDER (1995) COMPANY, INC.
as general partner
/S/ ANTHONY V. WEIGHT
------------------------------
Name: Anthony V. Weight
Title: President
c/o Anthony V. Weight
13918 Mandarin Oaks Lane
Jacksonville, Florida 32223
SHARES OPTIONS
- ------ -------
123,317 182,982 /S/ ANTHONY V. WEIGHT
---------------------
Anthony V. Weight
13918 Mandarin Oaks Lane
Jacksonville, Florida 32223
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
SHARES OPTIONS FIRST ONEIDA (1995) LIMITED PARTNERSHIP,
- ------ ------- a Delaware limited partnership
<S> <C> <C>
2,382,454 0
By: BULL GATOR, INC., as general partner
/S/ JERRY W. DAVIS
------------------------------
Name: Jerry W. Davis
Title: President
c/o Jerry W. Davis
8210 Bahia Blanca Court
Jacksonville, Florida 32256
SHARES OPTIONS
- ------ -------
0 214,810 /S/ JERRY W. DAVIS
------------------
Jerry W. Davis
8210 Bahia Blanca Court
Jacksonville, Florida 32256
SHARES OPTIONS
- ------ -------
183,748 179,000 /S/ LARRY A. LONGHI
-------------------
Larry A. Longhi
14173 Pine Island Drive
Jacksonville, Florida 32224
SHARES OPTIONS CMSI CAPITAL, L.P., a Delaware limited
- ------ ------- partnership
929,665 0 By: CMSI INVESTORS, INC.,
as general partner
By: /S/ W. ROBINSON FRAZIER
------------------------
Name: W. Robinson Frazier
Title: President
c/o Frazier & Frazier
Suite A
1515 Riverside Avenue
Jacksonville, Florida 32204
</TABLE>
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<PAGE>
Exhibit 99(4)
CONSULTING AND NON-COMPETE AGREEMENT, dated as of February 5,
1999 (the "AGREEMENT"), by and between Computer Management
Sciences, Inc., a Florida corporation (the "COMPANY"), and
Jerry W. Davis (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, 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. CONSULTING 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 the Company. 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.
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 an annual consulting fee of $250,000, payable
in advance on the Effective Date and the first anniversary of the Effective
Date.
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 (i) the
Consultant's breach of any material term of this Agreement, including, but not
limited to, the covenants set forth in Section 5 hereof; (ii) the Consultant's
continued willful failure or refusal, after written notice, to perform his
duties hereunder, (iii) the Consultant's conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation, or
<PAGE>
(iv) any gross negligence or willful misconduct by the Consultant resulting in
substantial loss to the Company, substantial damage to the Company's reputation
or theft or defalcation from the Company.
(c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant
dies or becomes Disabled, in which event the Consulting Period terminates, 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 preventing the Consultant from
performing his duties 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 by the terms of this Agreement
other than Section 1.
5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In
consideration for, and as a condition to, the Company's payment of the
non-compete payment, and in connection with the merger described herein, until
the fifth 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 1% of the
outstanding stock of any class of any such corporation):
(i) participate or engage in any activities or
business involving, or relating to, (I) the provision of information
technology consulting and custom software development services, (II)
any other business or activity engaged in by the Company on the date of
this Agreement, or any other business or activity engaged in by the
Company in the future and in which the Consultant actively participated
or (III) any business or activity of any affiliate of the Company in
which the Consultant actively participated (or, in each case of I, II
and III, in any activities or business that are incidental thereto)
within the United States of America ("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 or traditional 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 fewer than
three such
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<PAGE>
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 and (B) soliciting or encouraging any employee of the
Company (or any of its affiliates) to leave the employment of the
Company.
(b) 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.
(c) (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)
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<PAGE>
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.
(d) 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.
(e) 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 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 payment made pursuant to
Section 5(f). 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.
(f) In consideration of the Consultant's covenants under this
Section 5, the Company shall pay the Consultant on the Effective Date a
non-compete payment in the sum of $9,500,000.
(g) 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
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<PAGE>
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, knowledge,
and information that Consultant solely or jointly knows, creates, conceives,
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. If the Company is unable for any reason
whatsoever to obtain Consultant's signature or assistance, Consultant
irrevocably appoints the Company and each of its officers as his agent and
attorney-in-fact, with full power of substitution, to sign, execute, and file in
the name and on behalf of Consultant any document required to prosecute or apply
for any foreign or United States patent, copyright, trademark, or other
proprietary protection, including renewals, extensions, and divisions, and to do
all other lawful acts and things to further the issuance or prosecution of
patent, copyright, trademark, or other proprietary protection, all with the same
legal force and effect as if done or executed by Consultant.
6. COOPERATION WITH REGARD TO LITIGATION. 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.
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.
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 equipment, 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), relating to the Company's business, which are or have been in his
possession or under his control.
-5-
<PAGE>
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 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: Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
Attention: R. Halsey Wise
President and Chief
Operating Officer
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:
Jerry W. Davis
8210 Bahia Blanca Court
Jacksonville, Florida 32256
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.
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<PAGE>
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.
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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<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/ Jerry W. Davis
----------------------------------
Jerry W. Davis
COMPUTER MANAGEMENT SCIENCES, INC.
By: /S/ R. HALSEY WISE
------------------------------
Name: R. Halsey Wise
Title: President and Chief
Operating Officer
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<PAGE>
SCHEDULE A
DESCRIPTION OF CONSULTING SERVICES
Transition Services
Integration Services
Customer Relations and Retention
Employee Relations and Retention
Strategic Planning
<PAGE>
Exhibit 99(5)
CONSULTING AND NON-COMPETE AGREEMENT, dated as of February 5,
1999 (the "AGREEMENT"), by and between Computer Management
Sciences, Inc., a Florida corporation (the "COMPANY"), and
Anthony V. Weight (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, 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. CONSULTING 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 the Company. 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.
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 an annual consulting fee of $250,000, payable in advance on
the Effective Date and the first anniversary of the Effective Date.
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 (i) the
Consultant's breach of any material term of this Agreement, including, but not
limited to, the covenants set forth in Section 5 hereof; (ii) the Consultant's
continued willful failure or refusal, after written notice, to perform his
duties hereunder, (iii) the Consultant's conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation, or
<PAGE>
(iv) any gross negligence or willful misconduct by the Consultant resulting in
substantial loss to the Company, substantial damage to the Company's reputation
or theft or defalcation from the Company.
(c) TERMINATION UPON DEATH OR DISABILITY. If the Consultant dies or
becomes Disabled, in which event the Consulting Period terminates, 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 preventing the Consultant from
performing his duties 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 by the terms of this Agreement other than
Section 1.
5. NON-COMPETITION; CONFIDENTIALITY; PAYMENTS. (a) In consideration
for, and as a condition to, the Company's payment of the non-compete payment,
and in connection with the merger described herein, until the fifth 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 1% of the
outstanding stock of any class of any such corporation):
(i) participate or engage in any activities or business
involving, or relating to, (I) the provision of information technology
consulting and custom software development services, (II) any other
business or activity engaged in by the Company on the date of this
Agreement, or any other business or activity engaged in by the Company
in the future and in which the Consultant actively participated or
(III) any business or activity of any affiliate of the Company in which
the Consultant actively participated (or, in each case of I, II and
III, in any activities or business that are incidental thereto) within
the United States of America ("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 or traditional 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 fewer than three such
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<PAGE>
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
and (B) soliciting or encouraging any employee of the Company (or any
of its affiliates) to leave the employment of the Company.
(b) 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.
(c) (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)
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<PAGE>
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.
(d) 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.
(e) 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 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 payment made pursuant to Section 5(f).
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.
(f) In consideration of the Consultant's covenants under this Section
5, the Company shall pay the Consultant on the Effective Date a non-compete
payment in the sum of $4,500,000.
(g) 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
4
<PAGE>
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, knowledge,
and information that Consultant solely or jointly knows, creates, conceives,
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. If the Company is unable for any reason
whatsoever to obtain Consultant's signature or assistance, Consultant
irrevocably appoints the Company and each of its officers as his agent and
attorney-in-fact, with full power of substitution, to sign, execute, and file in
the name and on behalf of Consultant any document required to prosecute or apply
for any foreign or United States patent, copyright, trademark, or other
proprietary protection, including renewals, extensions, and divisions, and to do
all other lawful acts and things to further the issuance or prosecution of
patent, copyright, trademark, or other proprietary protection, all with the same
legal force and effect as if done or executed by Consultant.
6. COOPERATION WITH REGARD TO LITIGATION. 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.
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.
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 equipment, 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),
relating to the Company's business, which are or have been in his possession or
under his control.
5
<PAGE>
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 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: Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
Attention: R. Halsey Wise
President and Chief
Operating Officer
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:
Anthony V. Weight
13918 Mandarin Oaks Lane
Jacksonville, FL 32223
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.
6
<PAGE>
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.
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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<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/ Anthony V. Weight
-------------------------------------
Anthony V. Weight
COMPUTER MANAGEMENT SCIENCES, INC.
By:/s/ R. Halsey Wise
-------------------------------------
Name: R. Halsey Wise
Title: President and Chief
Operating Officer
8
<PAGE>
SCHEDULE A
DESCRIPTION OF CONSULTING SERVICES
Transition Services
Integration Services
Customer Relations and Retention
Employee Relations and Retention
Strategic Planning
<PAGE>
Exhibit 99(6)
MUTUAL NONDISCLOSURE AGREEMENT
This mutual nondisclosure agreement (the "Agreement") made by and
between Computer Associates International, Inc., a Delaware corporation, with
offices located at One Computer Associates Plaza, Islandia, New York 11788-7000
("CA") and Computer Management Sciences, Inc., a corporation with offices at
Jacksonville, FL ("Company").
WHEREAS, CA is in the business of developing, manufacturing and
licensing proprietary computer software programs and, in connection therewith
has developed certain information that CA considers to be confidential
consisting of, or concerning the matter described in Exhibit A hereto (the "CA
Information"); and
WHEREAS, Company has expressed an interest in reviewing the CA
Information for the purpose described in Exhibit A (the "Purpose"); and
WHEREAS, Company has developed certain information that Company
considers to be confidential consisting of, or concerning the matter described
in Exhibit B hereto (the "Company Information"); and
WHEREAS, CA has expressed an interest in reviewing the Company
Information for the purpose described in Exhibit B (the "Purpose"); and
WHEREAS, the CA Information and the Company Information, (referred
to collectively as the "Information"), whether subject to patent or copyright
protection, or not capable of being so protected are highly confidential and
proprietary to, and constitute trade secrets of each respective company; and
each party is willing to disclose its Information to the other only if the
recipient on behalf of itself, its employees, agents, successors, heirs and
assigns, agrees to make no use or disclosure thereof except as provided herein.
NOW, THEREFORE, in consideration of the mutual disclosure of the
Information by the parties to each other, each of the parties, on behalf of
itself, its employees, agents, successors, heirs and assigns, agrees and
promises as follows:
1. In the absence of prior written consent of the disclosing party,
the receiving party shall not disclose to any third party, directly or
indirectly, the existence or contents of the Information, whether disclosed
either orally, in writing, or by any other means, nor the results of its
evaluation thereof. Each receiving party may disclose the Information to its
employees but only to the extent necessary to carry out the Purpose as described
in the applicable Exhibit. Each receiving party further warrants and agrees to
use its best efforts to prevent disclosure of the Information by its employees,
as well as any of its agents, successors, heirs and assigns to whom such
receiving party discloses such Information, by taking at least such steps to
protect such Information as it takes to protect its own confidential and
proprietary information, including by obtaining a written agreement of each such
person to maintain the confidentiality of the Information.
<PAGE>
2. Each disclosing party shall at all times retain sole and
exclusive title to, ownership of, all rights in and control over the use of all
its Information.
3. Each receiving party shall refrain from making or causing to be
made any copies of the Information without prior written authorization of the
disclosing party.
4. Each receiving party, upon written request from the disclosing
party, shall promptly destroy or return all of the disclosing party's
Information to the disclosing party.
5. Each receiving party shall make no use, directly or indirectly,
of the other party's Information furnished hereunder beyond the Purpose, without
first securing the prior written consent of the disclosing party.
6. The obligations imposed on each receiving party under this
Agreement shall expire on the earlier of: (a) the date upon which the disclosing
party consents in writing to disclosure of its Information by the receiving
party; or (b) the date upon which the disclosing party formally announces,
releases, or otherwise discloses its Information to the public or otherwise
without an accompanying written undertaking by the recipient to protect such
Information from unauthorized disclosure.
7. As used herein, the term "Information" shall not include any
information that the recipient can establish: (a) was known to the recipient
prior to disclosure hereunder without an obligation of confidentiality; (b) was
obtained by the recipient from a third party having the right to disclose it;
(c) was or became generally available to the public without violation of this
Agreement; (d) was disclosed with the written authorization of the disclosing
party; or (e) was developed by the recipient independent of any reference to the
Information and independent of the participation of any person who had access to
the Information.
8. Either party may: (i) develop, manufacture, market and provide
any products or services, directly or through any third party, which are
competitive to the other party; and (ii) freely assign and re-assign its
employees in any way it chooses.
9. The parties understand and agree that: (i) no contract or
agreement providing for any transaction involving the parties shall be deemed to
exist between them unless and until a final definitive agreement has been
executed and delivered, and Company hereby waive, in advance, any claims
(including, without limitation, breach of contract) in connection with any
transaction between the parties unless and until the parties shall have entered
into a final definitive agreement; (ii) unless and until a final definitive
agreement regarding a transaction between the parties has been executed and
delivered, none of the parties 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 therein; and (iii) each party
reserves the right, in its sole discretion, to reject any and all proposals made
by a party or any of its representatives with regard to a transaction between
the parties, and to terminate discussions and negotiations at any time.
2
<PAGE>
10. Each of Company and CA understand that the other has endeavored
to include in the Information materials that may be relevant to an evaluation of
the Merger, and each acknowledges that the other and its Representatives make no
representation or warranty (express or implied) under this Agreement as to the
accuracy or completeness of the Information. Each of Company and CA agrees that
neither party hereto, nor their respective Representatives, shall have any
liability to the other party or its Representatives based upon this Agreement
for any such inaccuracy or incompleteness, it being understood that only those
particular representations and warranties that may be made with regard to such
information in a definitive agreement, when, as and if executed, and subject to
such limitations and restrictions as may be specified in any such definitive
agreement, shall have any legal effect.
11. Each of Company and CA agrees that in the event it or anyone to
whom it transmits the Information pursuant to this Agreement is requested or
becomes legally compelled (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demands or similar
process) to disclose any of the Information, it agrees to provide the other
party with prompt written notice so that such party may seek a protective order
or other appropriate remedy or waive compliance with the provisions of this
Agreement. If such protective order or other remedy is not obtained or if such
party, in its sole discretion, waives compliance with any provision of this
Agreement, the other party will furnish only that part of the Information that
is legally required and will exercise reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
12. Each of Company and CA agrees that no failure or delay by the
other in exercising any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise of any right, power, or privilege
thereunder.
13. Each of Company and CA agrees that the other may be irreparably
injured by a breach of this Agreement by it or its representatives and that such
injured party may be entitled to equitable relief, including injunctive relief
and specific performance, in the event of any breach of the provisions of this
Agreement. Such remedies shall not be deemed to be the exclusive remedy for a
breach of this Agreement, but shall be in addition to all other remedies
available at law or equity. Company and CA each agrees that the other shall have
the right to enforce all the terms of this Agreement.
14. For a period of one year, neither party will, without written
consent of the other party, directly or indirectly solicit for employment any of
the individuals involved in the discussions between the parties; provided,
however, that the foregoing provision will not prevent either party from
employing any such person who contacts it on his or her own initiative without
any direct or indirect solicitation or encouragement.
3
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, and
further intending to bind its employees, agents, successors, heirs and assigns,
the parties have executed this Agreement as of the 7th day of January, 1999.
COMPUTER ASSOCIATES COMPUTER MANAGEMENT SCIENCES, INC.
INTERNATIONAL, INC.
BY /S/ CHARLES P. MCWADE BY /S/ R. HALSEY WISE
------------------------------- ------------------------------
NAME CHARLES P. MCWADE NAME R. HALSEY WISE
----------------------------- ----------------------------
TITLE SENIOR VICE PRESIDENT TITLE PRESIDENT / COO
---------------------------- ---------------------------
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<PAGE>
EXHIBIT A
CA INFORMATION consists of:
(i) Any oral or written information disclosed by CA to Company, (ii) all
discussions, documents and correspondence between CA and Company, including,
without limitation, the terms, conditions and existence of this agreement; (iii)
CA's identity, involvement and possible interest in this matter.
PURPOSE of disclosure is:
To discuss potential business opportunities.
<PAGE>
EXHIBIT B
COMPANY INFORMATION consists of: (i) Any oral or written information disclosed
by Company to CA; (ii) all discussions, documents and correspondence between CA
and Company, including, without limitation, the terms, conditions and existence
of this agreement; (iii) Company's identity, involvement and possible interest
in this matter.
PURPOSE of disclosure is:
To discuss potential business opportunities.
<PAGE>
OPINION OF THE ROBINSON-HUMPHREY COMPANY, LLC
EXHIBIT 7
February 5, 1999
The Board of Directors
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
Dear Gentlemen:
We understand that Computer Management Sciences, Inc. (the "Company")
intends to enter into an Agreement and Plan of Merger (the "Merger Agreement")
by and among Computer Associates International, Inc. ("Parent") and a direct
wholly-owned subsidiary of Parent ("Subsidiary"). We understand that under the
Merger Agreement, Parent will acquire the Company through a merger of Subsidiary
with and into the Company (the "Proposed Transaction"). As promptly as
practicable (but in no event later than five business days from and including
the date of the initial public announcement of the Merger Agreement), Parent
shall cause Subsidiary to commence an offer to purchase for cash (the "Offer")
all of the Company's issued and outstanding common shares at a purchase price of
$28.00 per common share to the tendering stockholder in cash. The terms and
conditions of the Proposed Transaction are set forth in more detail in the
Merger Agreement dated as of February 5, 1999.
We have been requested by the Company to render our opinion with
respect to the fairness, from a financial point of view, to the Company's
stockholders of the consideration to be received in the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Merger
Agreement dated as of February 5, 1999, (2) publicly available information
concerning the Company which we believe to be relevant to our inquiry, (3)
financial and operating information with respect to the business, operations and
prospects of the Company furnished to us by the Company, (4) a trading history
of the Company's common stock from September 29, 1995 to the present and a
comparison of that trading history with those of other companies which we deemed
relevant, (5) a comparison of the historical financial results and present
financial condition of the Company with those of other companies which we deemed
relevant, (6) a comparison of the financial terms of the Proposed Transaction
with the terms of certain other recent transactions which we deemed relevant and
(7) certain historical data relating to acquisitions of publicly traded
companies, including percentage premiums and price to earnings ratios paid in
such acquisitions. In addition, we have had discussions with the management of
the Company concerning its business, operations, assets, present condition and
future prospects and undertook such other studies, analyses and investigations
as we deemed appropriate.
<PAGE>
We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our opinion without
independent verification. With respect to the financial forecasts/projections of
the Company we have assumed that such forecasts/projections have been reasonably
prepared on bases reflecting the current good faith estimates and judgments of
the management of the Company as to the future financial performance of the
Company. In arriving at our opinion, we have conducted only a limited physical
inspection of the properties and facilities of the Company and have not made nor
obtained any evaluations or appraisals of the assets or liabilities of the
Company. Furthermore, we were not authorized to solicit, and did not solicit,
interest from any party with respect to the acquisition or merger of the
Company. Our opinion is necessarily based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
We have acted as financial advisor to the Company in connection with
the Proposed Transaction and will receive a fee for our services, the majority
of which is contingent upon the consummation of the Proposed Transaction. In
addition, the Company has agreed to indemnify us for certain liabilities arising
out of the rendering of this opinion. We have also performed various investment
banking services for the Company in the past (including acting as the lead
underwriter for the Company in its 1995 initial public offering) and have
received customary fees for such services. In the ordinary course of our
business, we actively trade in the equity securities of the Company for our own
account and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.
Based upon and subject to the foregoing, we are of the opinion as of
the date hereof that, from a financial point of view, the consideration to be
received by the stockholders of the Company in the Proposed Transaction is fair
to the stockholders of the Company.
Very truly yours,
THE ROBINSON-HUMPHREY COMPANY, LLC
