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See also related Newsday article, "Wang: No Deals Before Vote"

http://www.newsday.com/business/ny-bzca-lutin823a.story

A COMPROMISE PROPOSAL

Banker Proposes Middle Course On CA Proxy Fight

August 23, 2001

In this letter faxed to CA board members on Wednesday night, investment banker Gary Lutin proposed a compromise plan to resolve the differences between current CA management and Texas billionaire Sam Wyly, who is vying to take a greater role in the company.

LUTIN'S PREFACE:

Copied below is the text of a letter sent late this afternoon to both groups of candidates, encouraging them to establish a cooperative agreement for an orderly transition and suggesting the type of terms which may serve the interests of CA shareholders.

The proposition in my letter is intended to put the candidates to the test. The proposed terms should provide a thoroughly reasonable basis for anyone who is willing to cooperate to do so. If a candidate refuses to shake hands now, to assure an orderly transition, you may want to question relying on him to serve shareholders in the future.

Recent reports of threatened disruption -- such as Mr. Wang's statements in this morning's Newsday interview -- could of course be nothing more than posturing for votes. But it's best to find out now rather than after the vote which of the candidates can be relied upon to act responsibly in the interests of shareholders.

Approaching the August 29th meeting date, there appears to be a virtual consensus that change is needed -- the only real issue is how to implement it without disorder. Everyone, including candidates as well as shareholders, needs to focus on the best way to do it and not on who can do what to obstruct it.

GL - 8/22/01

Text of 8/22/01 letter from GL to members of and candidates for CA board

LUTIN & COMPANY 575 MADISON AVENUE, 10th FLOOR NEW YORK, NEW YORK 10022 Telephone (212) 605-0335 Facsimile (212) 605-0325

August 22, 2001

Mr. Russell M. Artzt, Mr. Linus W.L. Cheung, Mr. Alfonse M. D'Amato, Mr. Richard A. Grasso, Ms. Shirley Strum Kenny, Mr. Sanjay Kumar, Mr. Roel Pieper, Mr. Lewis S. Ranieri, Mr. Willem F.P. de Vogel, and Mr. Charles B. Wang c/o Computer Associates International, Inc. One Computer Associates Plaza Islandia, New York 11749

Mr. Richard J. Agnich, Mr. Stephen R. Perkins, Ms. Cece Smith, and Ms. Elizabeth Ann VanStory c/o Ranger Governance, Ltd. 300 Crescent Court, Suite 1000 Dallas, Texas 75201

To each member of and candidate for the board of Computer Associates:

It is my impression that both sides in the contest for CA board seats have become focused during the past few days on legal challenges to shareholder voting rights, public threats of disruption, and private dealmaking for votes. This does not serve the interests of most CA shareholders.

Under these circumstances I strongly encourage CA's existing board and the dissident candidates to consider a practical compromise which assures an orderly accommodation of clearly expressed shareholder interests. This could involve agreeing to a single slate of directors and dropping all proxy-related litigation based on some variation of the following conditions:

1. Board candidates: The commonly adopted slate would consist of seven incumbent directors, including Mr. Wang, and three Ranger nominees. The Ranger nominees would be selected from the four current Ranger candidates by a committee of current independent directors of CA who are not members of the compensation committee.

2. Chairman: Mr. Kumar would become the board's Chairman, and Mr. Wang would become its Vice Chairman.

3. Future board expansion: The board would continue its efforts to recruit at least two new independent directors within six months, increasing board size as required. The recruiting process and selection of candidates would be the responsibility of the nominating committee, which should consist entirely of independent directors of whom half are selected from the Ranger candidates.

4. Poison pill: The board would take appropriate actions to terminate the "Rights Agreement" in one year if the value of CA shares has not by that time equaled or exceeded an average standard for its peer group, such as a multiple of book value or revenue. The board would also adopt a resolution confirming that Mr. Haefner will not be declared an "Adverse Person."

5. Shareholder litigation: The board would establish a special committee, comprised entirely of disinterested directors, to monitor and make recommendations concerning the disposition of shareholder litigation.

It is my impression, from public reports as well as communications with CA Forum participants, that your efforts to negotiate this or a similar form of cooperative plan would be widely supported by CA's shareholders. There is an apparent consensus among shareholders regarding the need for some change at CA. What they will be observing now, and voting on next week, is each candidate's demonstration of responsibility in representing the obvious interests of the company's owners.

Very truly yours,

Gary Lutin

Copyright 2001, Newsday, Inc.

 

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