AGREEMENT AND PLAN OF MERGER

 

TABLE OF CONTENTS

		Page
ARTICLE I
DEFINITIONS
1.1	Specific Definitions	2
1.2	Other Terms	14
1.3	Interpretation	14
ARTICLE II
THE MERGER
2.1	The Merger	15
2.2	Closing	15
2.3	Effective Time	15
2.4	The Articles of Incorporation	16
2.5	The Bylaws	16
2.6	Directors	16
2.7	Officers	16
ARTICLE III
MERGER CONSIDERATION; EXCHANGE OF SHARES
3.1	Effect on Capital Stock	16
3.2	Payment for Shares	19
3.3	Dissenters’ Rights	21
3.4	Per Share Holdback Payments and Option Holdback Payments	21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1	Organization, Good Standing and Power	23
4.2	Books and Records	23
4.3	Capital Structure	23
4.4	Corporate Authority; Approval	25
4.5	No Conflict; Governmental Filings	26
4.6	Contracts	27
4.7	The Company Financial Statements	30
4.8	Absence of Certain Changes	31

 

 

		Page
4.9	Litigation, Judgments and Orders	34
4.10	Undisclosed Liabilities	34
4.11	Employee Benefits	34
4.12	Compliance with Laws; Permits	37
4.13	Environmental Matters	38
4.14	Taxes	38
4.15	Labor Matters	40
4.16	Insurance	40
4.17	Intellectual Property	40
4.18	Owned and Leased Properties	46
4.19	Takeover Statutes	47
4.20	Related Party Transactions	47
4.21	Brokers and Finders	47
4.22	Complete Disclosure	47
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERSUB
5.1	Organization, Standing and Power	48
5.2	Authority; No Conflict; Required Filings and Consents	48
5.3	Funds	49
5.4	Brokers and Finders	49
ARTICLE VI
CONDUCT PRIOR TO CLOSING
6.1	Conduct Prior to Closing	50
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1	Information	53
7.2	Access	53
7.3	No Solicitation of Transactions	54
7.4	Regulatory Filings	54
7.5	Publicity	55
7.6	Employee Benefits.	55
7.7	Cooperation	57
7.8	Indemnification of Officers and Directors	57
7.9	Resignations	57
7.10	Update Financials	57
7.11	Certain Payments	58

 

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		Page
7.12	Takeover Statute	58
ARTICLE VIII
CONDITIONS
8.1	Conditions to Each Party’s Obligation to Effect the Merger	58
8.2	Conditions to Obligations of Parent and MergerSub	59
8.3	Conditions to Obligations of the Company	61
ARTICLE IX
TERMINATION
9.1	Termination by Mutual Consent	61
9.2	Termination by Either Parent or the Company	61
9.3	Termination by Parent	62
9.4	Termination by the Company	62
9.5	Effect of Termination and Abandonment	62
ARTICLE X
SURVIVAL; INDEMNIFICATION; SHAREHOLDERS’ REPRESENTATIVE
10.1	Survival	62
10.2	Indemnification and Reimbursement of the Parent Indemnified Persons	63
10.3	Indemnification and Reimbursement of the Company Indemnified Persons	64
10.4	Time Limitations	64
10.5	Notice	64
10.6	Third-Party Claims	65
10.7	Resolution of Claims	66
10.8	Sole Remedy	67
10.9	Shareholders’ Representative	67
ARTICLE XI
MISCELLANEOUS AND GENERAL
11.1	Modification or Amendment	69
11.2	Waiver of Conditions	69
11.3	GOVERNING LAW; WAIVER OF JURY TRIAL	69
11.4	Consent to Jurisdiction	70
11.5	Notices	70
11.6	Entire Agreement	71
11.7	No Third Party Beneficiaries	71

 

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		Page
11.8	Obligations of Parent and of the Company	71
11.9	Severability	71
11.10	Assignment	71
11.11	Further Assurances	72
11.12	Specific Performance	72
11.13	Counterparts	72

 

iv

 

EXHIBITS

 

EXHIBIT A —   Form of Voting Agreement
EXHIBIT B —   Form of Cooley Godward LLP Opinion

 

v

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (hereinafter called this “Agreement”) is made as of January 5, 2006 by and among Wily Technology, Inc., a California corporation (“Company”), Computer Associates International, Inc., a Delaware corporation (“Parent”), Watermelon Merger Company, a California corporation and a wholly-owned Subsidiary of Parent (“MergerSub”), and David Strohm, not in any individual capacity but solely in his/her/its capacity as Shareholders’ Representative hereunder (the “Shareholders’ Representative”).

 

RECITALS

 

WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the California General Corporation Law (“CGCL”), Parent, MergerSub and the Company will enter into a business combination transaction pursuant to which MergerSub will merge with, and into the Company, with the Company as the surviving corporation (the “Merger”);

 

WHEREAS, the board of directors of the Company has unanimously (i) determined that the Merger is fair to, and in the best interests of, the Company and its shareholders, (ii) adopted this Agreement in accordance with the CGCL, (iii) directed that this Agreement and the Merger be submitted to the holders of Common Stock and Preferred Stock of the Company for their adoption and approval, and (iv) recommended that the holders of Common Stock and Preferred Stock of the Company vote in favor of the adoption of this Agreement and the approval of the Merger;

 

WHEREAS, immediately following the execution and delivery of this Agreement, and as a condition and inducement to Parent’s and MergerSub’s willingness to enter into this Agreement, certain shareholders of the Company are entering into voting agreements, irrevocable proxies and written shareholders’ consents dated as of the date hereof and substantially in the form attached hereto as Exhibit A (the “Voting Agreements”), providing, among other things, that such shareholders will vote their shares of voting capital stock of the Company in favor of the Merger by written consent;

 

WHEREAS, the Company, Parent and MergerSub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

 

1

 

ARTICLE I

 

DEFINITIONS

 

1.1           Specific Definitions. For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I:

 

“2004 Financial Statements” shall have the meaning set forth in Section 4.7(a).

 

“2005 Financials” shall have the meaning set forth in Section 7.10.

 

“280G Shareholder Vote” shall have the meaning set forth in Section 7.6(d).

 

“Acknowledgment and Waiver” shall have the meaning set forth in Section 3.1(d)(iii).

 

“Acquisition Proposal” shall mean any proposal or offer from any Person (other than Parent and its Affiliates) with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving, or any purchase of all or 10% or more of the Assets or any equity securities of, the Company or any of its Subsidiaries, other than acquisitions of Company capital stock pursuant to (a) the exercise of Company Equity Rights outstanding on the date of this Agreement and (b) the exercise of Company Stock Options outstanding on the date of this Agreement and vested or vesting prior to the Effective Time.

 

“Action” shall mean any civil, criminal, administrative or regulatory action, suit, demand, inquiry, claim, hearing, investigation or proceeding.

 

“Affiliate” shall mean with respect to any Person, any director or executive officer of such Person and any other Person which would constitute an “affiliate” of such Person within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

 

“Aggregate Holdback Amount” shall mean an amount equal to 10% of the Aggregate Purchase Price.

 

“Aggregate Purchase Price” shall mean (i) $375,000,000, minus (ii) the Indebtedness of the Company as of the Closing Date, minus (iii) any out-of-pocket costs, payables, fees and expenses incurred by the Company in connection with this Agreement and the Voting Agreement and the transactions contemplated hereby and thereby (including fees and expenses of the Company’s financial advisors, legal counsel, accountants, auditors and other advisors, and including any fees and expenses of the Company’s accountants and auditors in connection with their audit of the 2004 Financial Statements and in connection with the SAS 100 review of the Interim Financial

 

2

 

Statements), plus (iv) the Option Exercise Price Amount, plus (v) cash and cash equivalents held by the Company on the Closing Date.

 

“Aggregate Share Payment” shall mean the product obtained by multiplying (i) the Notional Payment by (ii) the Share Number.

 

“Agreement” shall have the meaning set forth in the paragraph preceding the Recitals.

 

“Articles of Merger” shall have the meaning set forth in Section 2.3.

 

“Assets” shall mean all of the properties and assets (real, personal or mixed, tangible or intangible, and including Intellectual Property), used or held for use in connection with or material to the continued operation of the business of the Company and its Subsidiaries, taken as a whole.

 

“Audit Date” shall have the meaning set forth in Section 4.7(a).

 

“Balance Sheet Date” shall have the meaning set forth in Section 4.7(a).

 

“Basket Amount” shall have the meaning set forth in Section 10.2(b).

 

“Business Day” shall mean any day other than a day on which banks are not required to open or are authorized to be closed in the City and County of New York, New York, or the City and County of San Francisco, California.

 

“Bylaws” shall have the meaning set forth in Section 2.5.

 

“Cap Amount” shall have the meaning set forth in Section 10.2(b).

 

“CGCL” shall have the meaning set forth in the Recitals.

 

“Certificate” shall mean any stock certificate representing duly issued and validly authorized Shares.

 

“Charter” shall have the meaning set forth in Section 2.4.

 

“Claim Notice” shall have the meaning set forth in Section 10.5.

 

“Closing” shall have the meaning set forth in Section 2.2.

 

“Closing Date” shall have the meaning set forth in Section 2.2.

 

“COBRA” shall have the meaning set forth in Section 4.11(e).

 

“Code” shall mean the Internal