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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
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STERLING SOFTWARE, INC.
(Name of Subject Company)
STERLING SOFTWARE, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
859547107
(CUSIP Number of Class of Securities)
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DON J. MCDERMETT, JR., ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
STERLING SOFTWARE, INC.
300 CRESCENT COURT, SUITE 1200
DALLAS, TEXAS 75201
(214) 981-1000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
WITH COPIES TO:
BLAINE V. FOGG, ESQ.
RICHARD J. GROSSMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
TELEPHONE: (212) 735-3000
|_| Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
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This Amendment No. 1 ("Amendment") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), initially filed with the Securities and Exchange Commission on
February 22, 2000, by Sterling Software Inc., a Delaware corporation (the
"Company"), relating to the offer by Computer Associates International,
Inc., a Delaware corporation ("Computer Associates"), through its
wholly-owned subsidiary, Silversmith Acquisition Corp., a Delaware
corporation, to exchange each outstanding share of common stock, par value
$.10 per share, including the associated preferred stock purchase rights,
of the Company, for 0.5634 shares of common stock, par value $.10 per
share, of Computer Associates (subject to adjustment as set forth in the
Schedule 14D-9 and this Amendment), upon the terms and subject to the
conditions set forth in the Exchange Offer, dated February 22, 2000 (the
"Exchange Offer"), and in the related Letter of Transmittal (the "Letter of
Transmittal" which, together with the Exchange Offer, as amended from time
to time, constitute the "Offer"). Unless otherwise defined herein, all
capitalized terms used herein shall have the respective meanings given such
terms in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION.
(d) All of the information in the Prospectus included in Amendment
No. 1 to the Registration Statement on Form S-4 of Computer Associates
relating to Computer Associates' shares of common stock to be issued in the
Offer and the Merger is hereby incorporated by reference.
ITEM 9. EXHIBITS.
Item 9 of the Schedule 14D-9 is hereby amended by addition of the
following exhibits:
Exhibit No. Description
- ----------- -----------
(a)(5) Prospectus relating to Computer Associates'
shares of common stock to be issued in the Offer
and the Merger (incorporated by reference from
Amendment No. 1 to the Registration Statement on
Form S-4 of Computer Associates, filed on March
13, 2000).
(e)(3) Amendment to Change in Control Severance Agreement, dated as
of February 14, 2000, by and among Sterling Software, Inc.,
Computer Associates International, Inc. and Sam Wyly
(replaces and supercedes the Amendment to Change in Control
Severance Agreement by and among Sterling Software, Inc.,
Computer Associates International, Inc. and Sam Wyly,
previously filed as Exhibit (e)(3) to the
Solicitation/Recommendation Statement on Schedule 14D-9 of
Sterling Software, Inc. filed on February 22, 2000).
SIGNATURE
After due 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.
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
-------------------------
Name: Don J. McDermett, Jr.
Title: Senior Vice President,
General Counsel and Secretary
Dated: March 14, 2000
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(a)(5) Prospectus relating to Computer Associates' shares of common
stock to be issued in the Offer and the Merger (incorporated
by reference from Amendment No. 1 to the Registration
Statement on Form S-4 of Computer Associates, filed on March
13, 2000).
(e)(3) Amendment to Change in Control Severence Agreement, dated as
of February 14, 2000, by and among Sterling Software, Inc.,
Computer Associates International, Inc. and Sam Wyly
(replaces and supercedes the Amendment to Change in Control
Severance Agreement by and among Sterling Software, Inc.,
Computer Associates International, Inc. and Sam Wyly,
previously filed as Exhibit (e)(3) to the
Solicitation/Recommendation Statement on Schedule 14D-9 of
Sterling Software, Inc. filed on February 22, 2000).
Exhibit (e)(3)
AMENDMENT TO
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Amendment"),
dated as of February 14, 2000, by and among Sterling Software, Inc., a
Delaware corporation (the "Company"), Computer Associates International,
Inc., a Delaware corporation (the "Parent") and Sam Wyly (the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive are parties to a Change in
Control Severance Agreement, dated as of November 15, 1999 (the
"Agreement"); and
WHEREAS, the Company, the Parent and the Executive desire to amend the
Agreement as set forth in this Amendment;
NOW THEREFORE, the Company, the Parent and the Executive agree as
follows:
1. This Amendment shall be of no force and effect if the Offer (as
defined in the Agreement and Plan of Merger, dated as of February
14, 2000, by and among the Parent, Silversmith Acquisition Corp.
and the Company) is not consummated.
2. The Agreement is hereby amended by replacing every occurrence of
the term "Employee Benefits" with the term "Medical Benefits" and
by the addition of a definition of Medical Benefits as follows:
(c) Medical Benefits means the medical, dental, health, hospital,
disability and vision benefits provided under any and all benefit
policies, plans, programs or arrangements of the Company that may
now exist or any successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company in
which the Executive is entitled to participate or in which the
Executive becomes entitled to participate.
3. Section 4(a)(i) is hereby amended to read as follows:
(i) pay to the Executive, within five (5) business days after the
Termination Date, a lump sum payment in an amount equal to
$15,899,901 as satisfaction in full for Executive's severance pay
and loss of certain perquisites and benefits that would otherwise
have been enjoyed by the Executive and for the execution of the
Executive's non-competition covenant in Section 10 hereof. The
parties agree that twenty-five (25) percent of the lump sum
payment shall be allocable to, and deemed as consideration for,
the Executive's non-competition covenant in Section 10 hereof.
4. Section 4(a)(ii) is hereby amended in its entirety to read as
follows:
(ii) for 84 months following the Termination Date, arrange at its sole
expense, to provide the Executive with Medical Benefits that are
substantially similar to the better of (when considered in the
aggregate) (x) those Medical Benefits which the Executive was
receiving or entitled to receive immediately prior to the Change
in Control, or (y) those Medical Benefits which the Executive was
receiving or entitled to receive immediately prior to the
Termination Date. If and to the extent that any Medical Benefit
described above in this Section 4(a)(ii) cannot be provided under
any applicable law or regulation or under any policy, plan,
program or arrangement of the Company, then the Company will take
all action necessary to ensure that such Medical Benefit is
provided through other means to the Executive, his dependents and
beneficiaries, as applicable.
5. Section 4(a)(iv) of the Agreement is hereby amended to read in
its entirety as follows:
(iv) upon the payment to the Company by the Executive (or his
designee) of the cash surrender value of the split dollar life
insurance policy maintained by the Company with respect to the
Executive's life, transfer and assign to the Executive (or his
designee) all right, title and interest of the Company in and to
such split dollar life insurance policy.
6. The Company shall give the Executive the right to purchase (such
right to remain open until the expiration of thirty (30) days
from the Termination Date) at current book value, the Company
vehicle which was customarily provided to the Executive as of
immediately prior to the Executive's Date of Termination.
7. The Agreement is hereby amended by the addition of a new Section
10 (and amended as necessary in respect of required renumbering):
10. Non-Competition; Confidentiality: (a) Executive agrees and acknowledges
that reasonable limits on his ability to engage in activities which are
competitive with the Company are warranted in order to protect the
Company's trade secrets and proprietary information and are warranted in
order to protect the Company in developing and maintaining its reputation,
good will and status in the marketplace. In that regard, during the 60
months following the Termination Date (the "Continuation Period"), the
Executive will not directly or indirectly, on Executive'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 Executive at no time
owns, directly or indirectly, in excess of 5% of the outstanding stock of
any class of any such corporation):
(i) participate or engage in any activities or business developing,
manufacturing, marketing or distributing any products or services offered
by the Company as of the Effective Time (as defined in the Agreement and
Plan of Merger, dated as of February 14, 2000, by and among the Parent,
Silversmith Acquisition Corp. and the Company), or any products or services
offered by the Company subsequent to the Effective Time and in which the
Executive actively participated, recognizing that the Company offers
products and services globally ("Competitive Activities"), including,
without limitation, (A) selling goods or rendering services of the type (or
similar to the type) sold or rendered by the Company, whether by means of
electronic, traditional or other form of commerce; (B) soliciting any
person or entity that is a current or prospective customer or has been a
customer, in each case, of the Company, while the Executive has been
employed by the Company (provided that it shall not be deemed a breach of
this Agreement if the Executive solicits such customers for goods or
services unrelated to the Competitive Activities) and (C) assisting any
person in any way to do, or attempt to do, anything prohibited by clauses
(A) or (B) above; or
(ii) solicit (other than pursuant to general, non-targeted
advertisements) any employee of the Company, who was an employee at or
prior to the Effective Time, to leave the employment of the Company.
(b) Notwithstanding anything to the contrary herein, Executive may
remain a director at those companies for which Executive is a director as
of the Effective Time, and may engage in any activities or businesses for
which the Company has given permission in writing, which shall not be
unreasonably withheld (or delayed) following the expiration of three years
from the date the Offer is consummated, provided Executive's engaging in
such activities or business would not have a material adverse impact on any
of the Company's lines of businesses.
(c) (i) The Executive shall not, without the written consent of the
Company, disclose to any other person or use, whether directly or
indirectly, any Confidential Information (as hereinafter defined) relating
to or used by the Company, whether in written, oral or other form.
"Confidential Information" shall mean information about the Company, and
its clients and customers that is not disclosed by the Company for
financial reporting purposes and that was learned by the Executive in the
course of employment with the Company, 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 Company employees relating to their
education, experience, skills, abilities, compensation and benefits, and
inter-personal relationships with suppliers to and customers of Company,
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 contracts, supplier contacts and other contact information,
pricing policies, supplies, agents, risk analyses, engineering information
and computer screen designs and computer input and output specifications,
inclusive of any pertinent documentation, techniques, processes, technical
information and know how. The Executive acknowledges that such Confidential
Information is specialized, unique in nature and of great value to the
Company, and that such information gives the Company a competitive
advantage. The Executive's obligations under this Section 10(c) shall
survive the termination of the Continuation Period.
(ii) Confidential Information does not include information which
(A) is or becomes part of the public domain other than as a result of the
Executive's disclosure; or (B) becomes available to the Executive on a
non-confidential 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.
(iii) If the Executive is requested or (in the opinion of
Executive's counsel) required by law or judicial order to disclose any
Confidential Information, the Executive 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 Executive's
compliance with the provisions of this Section 10(c). The Executive 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 Executive is, in the opinion of Executive's counsel,
compelled by law to disclose a portion of the Confidential Information, the
Executive may disclose to the relevant tribunal without liability hereunder
that portion of the Confidential Information which counsel advises the
Executive 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 10 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 or 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 a valid and enforceable term or
provision, and this Section 10 shall be enforceable as so modified.
(e) In the event of a breach or threatened breach by the Executive of
the provisions of this Section 10, the Company's remedies in respect of
such breach or threatened breach shall be limited to injunctive relief (and
the Executive acknowledges that the Company may not have an adequate remedy
at law and may seek injunctive relief without the requirement of posting
security) and the recovery of actual damages suffered by the Company as a
result of a breach of this Section 10 by the Executive. Notwithstanding the
foregoing, in no case shall any portion of the lump sum payment set forth
in Section 4(a)(i) or any Gross Up Payment hereunder (or any other payments
made hereunder) be recoverable by the Parent or the Company (or subject to
any set-off, counterclaim or recoupment) in respect of damages resulting
from a breach of this Section 10.
(f) For the purposes of this Section 10, the term "Company" includes
not only Sterling Software, Inc., but also any subsidiary or affiliated
corporation of Sterling Software, Inc.
8. Parent shall guarantee the Company's obligations pursuant to the
Agreement, including without limitation, Sections 5 and 7
thereof. The Parent and the Company hereby acknowledge that the
obligations set forth in such Sections will survive any
termination or expiration of this Agreement or termination of
Executive's employment for any reason. Each party will notify the
other in writing of any claim by the Internal Revenue Service or
any other taxing authority that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten (10)
business days after such party is informed in writing of such a
claim and such party shall apprise the other party of the nature
of such claim and the date on which such claim is requested to be
paid. The Parent and the Company shall bear and pay directly all
costs and expenses (including legal fees and any interest and
penalties) incurred in connection with any such claim or
proceeding, and shall indemnify and hold the Executive harmless,
on an after-tax basis, as provided in Section 5(a), for any
Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and
payment of costs and expenses. The Company and the Parent also
shall pay to the Executive all legal fees and expenses incurred
by the Executive in connection with any tax audit or proceeding
to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder. Such
payments shall be made within five (5) business days after
delivery of the Executive's written requests for payment
accompanied with evidence of fees and expenses incurred. The
Company's and Parent's obligation with respect to the Gross Up
Payment and reimbursement of related legal fees and expenses
shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the
Company or the Parent may have against the Executive or anyone
else. Except where provided herein to the contrary, all amounts
payable by the Company or the Parent hereunder shall be paid
without notice or demand. Each and every payment made hereunder
by the Company or the Parent shall be final, and the Company and
the Parent will not seek to recover all or any part of such
payment from the Executive, or from whomsoever may be entitled
thereto, for any reason whatsoever.
9. Except as amended hereby, all other provisions of the Agreement
shall remain in full force and effect.
10. The validity, interpretation, construction and performance of
this Amendment will be governed by and construed in accordance
with the substantive laws of Delaware, without giving effect to
the conflict of laws principles of such State.
11. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed and delivered as of the first date first written above.
STERLING SOFTWARE, INC.
By /s/ Don J. McDermett, Jr.
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Name: Don J. McDermett, Jr.
Title: Senior Vice President &
General Counsel
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
By /s/ Steven M. Woghin
---------------------------------
Name: Steven M. Woghin
Title: Senior Vice President &
General Counsel
/s/ Sam Wyly
---------------------------------
Sam Wyly
