<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1998
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
SCHEDULE 14D-9/A
(Amendment No. 2)
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
______________________
STATE OF THE ART, INC.
(Name of Subject Company)
STATE OF THE ART, INC.
(Names of Person(s) Filing Statement)
Common Stock, no par value
(Title of Class of Securities)
______________________
85730710
(CUSIP Number of Class of Securities)
______________________
David W. Hanna
President and Chief Executive Officer
State Of The Art, Inc.
56 Technology Drive
Irvine, CA 92618
(714)753-1222
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
______________________
With a copy to:
John A. Fore, Esq.
Selim Day, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
(650)493-9300
================================================================================
<PAGE>
This Amendment No. 2 amends the Solicitation/Recommendation Statement on
Schedule 14D-9 (as amended, the "Schedule 14D-9") filed by State of the Art,
Inc., a California corporation (the "Company"), relating to the tender offer by
Rose Acquisition Corp., a Delaware corporation (the "Purchaser"), a direct and
indirect wholly owned subsidiary of The Sage Group plc, a company organized
under the laws of England ("Parent"), to purchase all of the outstanding shares
of Common Stock of the Company upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated February 2, 1998. Capitalized terms used
and not otherwise defined herein have the meanings ascribed to them in the
Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND
Item 3 of the Schedule 14D-9 is hereby amended as follows:
(a) Item 3(b) of the Schedule 14D-9 is hereby amended by adding the
following information:
On February 23, 1998, each of David W. Hanna, George Riviere, Jeffrey E.
Gold, W. Frank King and David R. Butler executed a letter agreement addressed to
Parent and the Purchaser, pursuant to which each such person agreed not to
exercise any of the options to purchase common stock of the Company held by such
person from the date thereof through the Effective Time (as defined in the
Merger Agreement).
(b) Item 3(b) of the Schedule 14D-9 is hereby amended by adding the
following information:
On February 23, 1998, the Company executed a letter agreement with
Parent and Purchaser, pursuant to which (i) Parent and Purchaser agreed to
waive, and the Company consented to the waiver of, the Minimum Condition
described in Annex I to the Merger Agreement to the extent at least 10,279,000
of the issued and outstanding shares of the Company are tendered and not
withdrawn as of any scheduled expiration date of the Offer which number of
Shares represents approximately 90% of the issued and outstanding Shares of the
Company on a fully diluted basis without giving effect to the exercise of the
Stock Option or to the exercise of options issued or granted pursuant to the
Stock Plans of the Company that (A) the holders thereof have agreed not to
exercise following the date hereof, or (B) cannot be exercised prior to April 1,
1998, and (ii) the Company represented and warranted that, (i) as of February
19, 1998, there are 11,178,085 Shares of the Company issued and outstanding, and
(ii) options to purchase no more than 898,233 Shares pursuant to Stock Plans of
the Company are or will be exercisable at any time between the date thereof
through April 1, 1998 (including pursuant to any accelerated vesting provisions
upon a change of control of the Company).
Item 4(b) of the Schedule 14D-9 is hereby amended by adding the
following sentence to the last paragraph of such section:
The Board of Directors believes that these factors warranted approval
of the transaction inasmuch as the Board of Directors believed that each
factor supported the fairness of the transaction to the holders of Shares.
Item 9. MATERIALS TO BE FILED AS EXHIBITS
Item 9 is hereby amended and supplemented by adding the following
Exhibits:
EXHIBIT
NUMBER DESCRIPTION
- -------
20 Letter Agreement, dated February 23, 1998, between David W.
Hanna and each of Parent and the Purchaser.
21 Letter Agreement, dated February 23, 1998, between George
Riviere and each of Parent and the Purchaser.
22 Letter Agreement, dated February 23, 1998, between Jeffrey E.
Gold and each of Parent and the Purchaser.
23 Letter Agreement, dated February 23, 1998, between W. Frank King
and each of Parent and the Purchaser.
24 Letter Agreement, dated February 23, 1998, between David R.
Butler and each of Parent and the Purchaser.
25 Letter Agreement, dated February 23, 1998, between the Company
and each of Parent and the Purchaser.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
By: /s/ David W. Hanna
-------------------------------
David W. Hanna
President and Chief Executive Officer
Dated: February 25, 1998
<PAGE>
Exhibit 20
DAVID W. HANNA
c/o State Of The Art, Inc.
56 Technology Drive
Irvine, California 92618
February 23, 1998
The Sage Group plc
Rose Acquisition Corp.
Sage House
Benton Park Road
Newcastle Upon Tyne, NE7 7LZ
England
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated
January 27, 1998 (the "Merger Agreement"), by and among The Sage Group plc, a
corporation organized under the laws of England, Rose Acquisition Corp., a Dela
ware corporation (the "Purchaser"), and State Of The Art, Inc., a California
corporation (the "Company"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Merger Agreement.
The undersigned represents and warrants that the undersigned is the
holder of options (the "Options") to purchase 513,541 Shares of the Company,
which Options are currently exercisable or will be exercisable by April 1,
1998.
As an inducement for you to waive the Minimum Condition described in
Annex I to the Merger Agreement and consummate the Offer in accordance with the
terms set forth in the Merger Agreement, the undersigned hereby agrees not to
exercise any of the Options from the date hereof through the Effective Time.
The undersigned does not, and nothing in this letter shall be construed to,
waive any
<PAGE>
benefits intended to be conferred on the undersigned pursuant to Section 2.4 of
the Merger Agreement.
The agreement set forth herein shall terminate upon the earlier of the
Effective time and the termination of the Merger Agreement in accordance with
its terms.
2
<PAGE>
Very truly yours,
/s/ DAVID W. HANNA
-----------------------------------
David W. Hanna
ACKNOWLEDGED AND AGREED:
THE SAGE GROUP PLC
By: /s/ PAUL WALKER
----------------------------------
Name: Paul Walker
Title: Chief Executive Officer
ROSE ACQUISITION CORP.
By: /s/ PAUL WALKER
-------------------------------
Name: Paul Walker
Title: Vice President and Secretary
3
<PAGE>
Exhibit 21
GEORGE RIVIERE
c/o State Of The Art, Inc.
56 Technology Drive
Irvine, California 92618
February 23, 1998
The Sage Group plc
Rose Acquisition Corp.
Sage House
Benton Park Road
Newcastle Upon Tyne, NE7 7LZ
England
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated
January 27, 1998 (the "Merger Agreement"), by and among The Sage Group plc, a
corporation organized under the laws of England, Rose Acquisition Corp., a Dela
ware corporation (the "Purchaser"), and State Of The Art, Inc., a California
corporation (the "Company"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Merger Agreement.
The undersigned represents and warrants that the undersigned is the
holder of options (the "Options") to purchase 23,958 Shares of the Company,
which Options are currently exercisable or will be exercisable by April 1,
1998.
As an inducement for you to waive the Minimum Condition described in
Annex I to the Merger Agreement and consummate the Offer in accordance with the
terms set forth in the Merger Agreement, the undersigned hereby agrees not to
exercise any of the Options from the date hereof through the Effective Time.
The undersigned does not, and nothing in this letter shall be construed to,
waive any
<PAGE>
benefits intended to be conferred on the undersigned pursuant to Section 2.4 of
the Merger Agreement.
The agreement set forth herein shall terminate upon the earlier of the
Effective time and the termination of the Merger Agreement in accordance with
its terms.
2
<PAGE>
Very truly yours,
/s/ GEORGE RIVIERE
-------------------------------------
George Riviere
ACKNOWLEDGED AND AGREED:
THE SAGE GROUP PLC
By: /s/ PAUL WALKER
---------------------------------
Name: Paul Walker
Title: Chief Executive Officer
ROSE ACQUISITION CORP.
By: /s/ PAUL WALKER
------------------------------
Name: Paul Walker
Title: Vice President and Secretary
3
<PAGE>
Exhibit 22
JEFFREY E. GOLD
c/o State Of The Art, Inc.
56 Technology Drive
Irvine, California 92618
February 23, 1998
The Sage Group plc
Rose Acquisition Corp.
Sage House
Benton Park Road
Newcastle Upon Tyne, NE7 7LZ
England
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated
January 27, 1998 (the "Merger Agreement"), by and among The Sage Group plc, a
corporation organized under the laws of England, Rose Acquisition Corp., a Dela
ware corporation (the "Purchaser"), and State Of The Art, Inc., a California
corpora tion (the "Company"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Merger Agreement.
The undersigned represents and warrants that the undersigned is the
holder of options (the "Options") to purchase 52,672 Shares of the Company,
which Options are currently exercisable or will be exercisable by April 1,
1998.
As an inducement for you to waive the Minimum Condition described in
Annex I to the Merger Agreement and consummate the Offer in accordance with the
terms set forth in the Merger Agreement, the undersigned hereby agrees not to
exercise any of the Options from the date hereof through the Effective Time.
The undersigned does not, and nothing in this letter shall be construed to,
waive any
<PAGE>
benefits intended to be conferred on the undersigned pursuant to Section 2.4 of
the Merger Agreement.
The agreement set forth herein shall terminate upon the earlier of the
Effective time and the termination of the Merger Agreement in accordance with
its terms.
2
<PAGE>
Very truly yours,
/s/ JEFFREY E. GOLD
----------------------------------------------
Jeffrey E. Gold
ACKNOWLEDGED AND AGREED:
THE SAGE GROUP PLC
By: /s/ PAUL WALKER
----------------------------------
Name: Paul Walker
Title: Chief Executive Officer
ROSE ACQUISITION CORP.
By: /s/ PAUL WALKER
------------------------------
Name: Paul Walker
Title: Vice President and Secretary
3
<PAGE>
Exhibit 23
W. FRANK KING
c/o State Of The Art, Inc.
56 Technology Drive
Irvine, California 92618
February 23, 1998
The Sage Group plc
Rose Acquisition Corp.
Sage House
Benton Park Road
Newcastle Upon Tyne, NE7 7LZ
England
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated
January 27, 1998 (the "Merger Agreement"), by and among The Sage Group plc, a
corporation organized under the laws of England, Rose Acquisition Corp., a
Delaware corporation (the "Purchaser"), and State Of The Art, Inc., a California
corporation (the "Company"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Merger Agreement.
The undersigned represents and warrants that the undersigned is the
holder of options (the "Options") to purchase 35,000 Shares of the Company,
which Options are currently exercisable or will be exercisable by April 1,
1998.
As an inducement for you to waive the Minimum Condition described in
Annex I to the Merger Agreement and consummate the Offer in accordance with the
terms set forth in the Merger Agreement, the undersigned hereby agrees not to
exercise any of the Options from the date hereof through the Effective Time. The
undersigned does not, and nothing in this letter shall be construed to, waive
any
<PAGE>
benefits intended to be conferred on the undersigned pursuant to Section 2.4 of
the Merger Agreement.
The agreement set forth herein shall terminate upon the earlier of the
Effective time and the termination of the Merger Agreement in accordance with
its terms.
2
<PAGE>
Very truly yours,
/s/ W. FRANK KING
--------------------------
W. Frank King
ACKNOWLEDGED AND AGREED:
THE SAGE GROUP PLC
By: /s/ PAUL WALKER
--------------------------------
Name: Paul Walker
Title: Chief Executive Officer
ROSE ACQUISITION CORP.
By: /s/ PAUL WALKER
--------------------------------
Name: Paul Walker
Title: Vice President and Secretary
3
<PAGE>
Exhibit 24
DAVID R. BUTLER
c/o State Of The Art, Inc.
56 Technology Drive
Irvine, California 92618
February 23, 1998
The Sage Group plc
Rose Acquisition Corp.
Sage House
Benton Park Road
Newcastle Upon Tyne, NE7 7LZ
England
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated
January 27, 1998 (the "Merger Agreement"), by and among The Sage Group plc, a
corporation organized under the laws of England, Rose Acquisition Corp., a
Delaware corporation (the "Purchaser"), and State Of The Art, Inc., a California
corporation (the "Company"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Merger Agreement.
The undersigned represents and warrants that the undersigned is the
holder of options (the "Options") to purchase 30,208 of the Company,
which Options are currently exercisable or will be exercisable by April 1,
1998.
As an inducement for you to waive the Minimum Condition described in
Annex I to the Merger Agreement and consummate the Offer in accordance with the
terms set forth in the Merger Agreement, the undersigned hereby agrees not to
exercise any of the Options from the date hereof through the Effective Time. The
undersigned does not, and nothing in this letter shall be construed to, waive
any
<PAGE>
benefits intended to be conferred on the undersigned pursuant to Section 2.4 of
the Merger Agreement.
The agreement set forth herein shall terminate upon the earlier of the
Effective time and the termination of the Merger Agreement in accordance with
its terms.
2
<PAGE>
Very truly yours,
/s/ DAVID R. BUTLER
----------------------------------
David R. Butler
ACKNOWLEDGED AND AGREED:
THE SAGE GROUP PLC
By: /s/ Paul Walker
-------------------------------
Name: Paul Walker
Titled: Chief Executive Officer
ROSE ACQUISITION CORP.
By: /s/ Paul Walker
-------------------------------
Name: Paul Walker
Title: Vice President and Secretary
3
<PAGE>
Exhibit 25
STATE OF THE ART, INC.
56 Technology Drive
Irvine, California 92618
February 23, 1998
The Sage Group plc
Rose Acquisition Corp.
Sage House
Benton Park Road
Newcastle Upon Tyne, NE7 7LZ
England
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated
January 27, 1998 (the "Merger Agreement"), by and among The Sage Group plc, a
corporation organized under the laws of England ("Parent"), Rose Acquisition
Corp., a Delaware corporation (the "Purchaser"), and State Of The Art, Inc., a
California corporation (the "Company"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Merger
Agreement.
In order to permit the Purchaser to consummate the Offer in accor
dance with the terms set forth in the Merger Agreement in the event that greater
than ninety percent (90%) of the issued and outstanding Shares of the Company
are tendered and not withdrawn as of any scheduled expiration date of the Offer,
but less than ninety percent (90%) of the issued and outstanding Shares on a
fully diluted basis are tendered and not withdrawn as of such expiration date,
in the event that at least 10,279,000 of the issued and outstanding Shares
of the Company are tendered and not withdrawn as of such expiration date, Parent
and the Purchaser agree to waive, and the Company hereby consents to the waiver
by the Purchaser of, the Minimum Condition described in Annex I to the Merger
Agreement to such extent. The Company hereby represents and warrants that, (i)
as of February 19, 1998,
<PAGE>
there are 11,178,085 Shares of the Company issued and outstanding, and (ii)
options to purchase no more than 898,233 Shares pursuant to Stock Plans of the
Company are or will be exercisable at any time between the date hereof through
April 1, 1998 (including pursuant to any accelerated vesting provisions upon a
change of control of the Company).
Each of Parent, Purchaser and the Company hereby agrees that the terms of
this letter shall remain effective from the date hereof until the earlier of (i)
March 12, 1998, and (ii) the date upon which the Purchaser accepts for payment
the Shares of the Company pursuant to the terms of the Offer.
2
<PAGE>
Very truly yours,
STATE OF THE ART, INC.
By: /s/ DAVID W. HANNA
--------------------------------
Name: David W. Hanna
Title: President, Chief Executive
Officer and Chairman of the
Board
ACKNOWLEDGED AND AGREED:
THE SAGE GROUP PLC
By: /s/ PAUL WALKER
---------------------------------
Name: Paul Walker
Title: Chief Executive Officer
ROSE ACQUISITION CORP.
By: /s/ PAUL WALKER
-------------------
Name: Paul Walker
Title: Vice President and Secretary
3
