Exhibit 2
---------
FIRST AMENDMENT TO RIGHTS AGREEMENT
-----------------------------------
This FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of March 12, 1998 (this
"Amendment"), to the Rights Agreement, dated as of December 18, 1996 (the
"Rights Agreement"), by and between Sterling Software, Inc., a Delaware
corporation (the "Company"), and BankBoston, N.A., a national banking
association, formerly known as The First National Bank of Boston (the "Rights
Agent"), is made and entered into by and between the Company and the Rights
Agent. Capitalized terms used herein but not defined herein shall have the
meanings assigned such terms in the Rights Agreement.
RECITALS
--------
WHEREAS, the Company and the Rights Agent have entered into the Rights
Agreement; and
WHEREAS, on March 11, 1998, the Company's Board of Directors authorized a
two-for-one stock split to be effected in the form of a stock dividend (the
"Stock Dividend") of one share of the Company's Common Stock, par value $0.10
per share (the "Common Stock"), payable in respect of each share of Common Stock
issued as of the close of business on March 20, 1998 (such date and time being
hereinafter referred to as the "Record Date") to the holder of record thereof as
of the Record Date; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, prior to the time
the Rights cease to be redeemable, the Company may, in its sole and absolute
discretion, supplement or amend any provision of the Rights Agreement in any
respect (other than to reduce the Redemption Price to an amount less than $0.01
per Right) without the approval of any holder of Rights or Common Shares, and
the Rights Agent will so supplement or amend if the Company so directs; and
WHEREAS, the Rights remain redeemable as of the date hereof, the Company
desires to amend the Rights Agreement to make certain technical amendments to
the Rights and the Rights Agreement as a result of the Stock Dividend as set
forth in this Amendment, and the Company has directed the Rights Agent to amend
the Rights Agreement as set forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual agreements herein set forth,
the parties hereto hereby agree as follows:
1. Adjustment to Number of Shares of Common Stock and Rights.
---------------------------------------------------------
Notwithstanding anything in the Rights Agreement to the contrary (including, but
not limited to, Section 11(n) thereof), (i) the provisions of Section 11(n) of
the Rights Agreement shall not be applicable to the payment of the Stock
Dividend and (ii) no adjustment on account of the Stock Dividend shall
be made to the number of Rights associated with any Common Shares outstanding as
of the date additional Common Shares are distributed pursuant to the Stock
Dividend.
2. Amendment to Section 1.
----------------------
(a) Section 1(q) of the Rights Agreement is amended in its entirety
to read as follows:
"(q) "Preferred Shares" means shares of Series A Junior
----------------
Participating Preferred Stock, par value $0.10 per share, of the
Company having the rights and preferences set forth in the form of the
Amended Certificate of Designations of Series A Junior Participating
Preferred Stock attached as Exhibit A."
---------
(b) Section 1 (r) of the Rights Agreement is amended in its entirety to
read as follows:
"(r) "Purchase Price" means initially $100 per one one-hundredth
--------------
of a Preferred Share, subject to adjustment from time to time as
provided in this Agreement."
3. Amendment to Exhibit A. Exhibit A to the Rights Agreement is deleted
----------------------
and replaced in its entirety with the Amended Certificate of Designations
attached as Exhibit A to this Amendment.
4. Amendment to Exhibit B. The first paragraph of Exhibit B to the Rights
----------------------
Agreement is amended in its entirety to read as follows:
"This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions, and conditions of the
Rights Agreement, dated as of December 18, 1996, as amended by the First
Amendment to Rights Agreement, dated as of March 12, 1998 (as amended, the
"Rights Agreement"), between Sterling Software, Inc., a Delaware corporation
(the "Company"), and BankBoston, N.A., a national banking association, as Rights
Agent (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M. (Eastern time) on the Expiration Date (as such term is defined in the
Rights Agreement) at the principal office or offices of the Rights Agent
designated for such purpose, one one-hundredth of a fully paid nonassessable
share of Series A Junior Participating Preferred Stock, par value $0.10 per
share (the "Preferred Shares"), of the Company, at a purchase price of $100 per
one one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
and related Certificate duly executed. If this Right Certificate is exercised
in part, the holder will be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred
2
Share which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of
____________________, based on the Preferred Shares as constituted at such
date."
5. Amendment to Exhibit C.
----------------------
(a) The first paragraph of Exhibit C to the Rights Agreement is
amended in its entirety to read as follows:
"The Board of Directors (the "Board") of Sterling Software, Inc.
(the "Company") has declared a dividend distribution of one right (a
"Right") for each outstanding share of Common Stock, par value $0.10 per
share (the "Common Shares"), of the Company. The distribution is payable on
December 31, 1996 (the "Record Date") to the stockholders of record as of
the close of business on the Record Date. Each Right entitles the
registered holder thereof to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock, par value $0.10
per share (the "Preferred Shares"), of the Company at a price (the
"Purchase Price") of $100 per one one-hundredth of a Preferred Share,
subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of December 18, 1996, as amended by
the First Amendment to Rights Agreement, dated as of March 12, 1998 (as
amended, the "Rights Agreement"), between Sterling Software, Inc., a
Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking association, as Rights Agent (the "Rights Agent")."
(b) The last sentence of Exhibit C to the Rights Agreement is amended
in its entirety to read as follows:
"This summary description of the Rights is as of March 12, 1998,
does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by this
reference.
6. Continuing Effectiveness. Except as specifically amended hereby, the
------------------------
Rights Agreement shall continue in full force and effect and is hereby ratified
and confirmed in all respects.
7. Governing Law. This Amendment, each Right and each Right Certificate
-------------
issued under the Rights Agreement, as amended hereby, will be deemed to be a
contract made under the internal substantive laws of the State of Delaware and
for all purposes will be governed by and construed in accordance with the
internal substantive laws of such State applicable to contracts to be made and
performed entirely within such State.
8. Counterparts. This Amendment may be executed in any number of
------------
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instruments.
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL]
Attest: STERLING SOFTWARE, INC.
/s/ Xxxx X. Xxxxxxxx By: /s/ Xxx X. XxXxxxxxx, Xx.
-------------------- -------------------------
Xxxx X. Xxxxxxxx, Xxx X. XxXxxxxxx, Xx.
Assistant Secretary Senior Vice President and General Counsel
[SEAL]
Attest: BANKBOSTON, N.A.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxxx X. Xxxxxxxx
---------------------- -------------------------
4
Exhibit A
---------
AMENDED CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
of
STERLING SOFTWARE, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Sterling Software, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Company"), DOES HEREBY CERTIFY:
1. That pursuant to authority vested in the Board of Directors of the
Company by its Certificate of Incorporation, and pursuant to the provisions of
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Company on December 26, 1996 created a series of 750,000
shares of Preferred Stock designated Series A Junior Participating Preferred
Stock, of which no shares have been issued.
2. That pursuant to authority vested in the Board of Directors of the
Company by its Certificate of Incorporation and the General Corporation Law of
the State of Delaware, the Board of Directors on March 11, 1998 adopted a
resolution providing for the amendment and restatement of the Certificate of
Designations of the Series A Junior Participating Preferred Stock solely to
effect an increase in the number of shares constituting such Series A Junior
Participating Preferred Stock as follows:
I. Designation and Amount
----------------------
The shares of such series will be designated as Series A Junior
Participating Preferred Stock (the "Series A Preferred") and the number of
shares constituting the Series A Preferred is 1,250,000. Such number of shares
may be increased or decreased by resolution of the Board of Directors of the
Company (the "Board"); provided, however, that no decrease will reduce the
-------- -------
number of shares of Series A Preferred to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Company convertible into shares of
Series A Preferred.
II. Dividends and Distributions
---------------------------
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior to the shares of Series A Preferred with respect
to dividends, the holders of shares of Series A Preferred, in preference to the
holders of Common Stock, par value $0.10 per share (the "Common Stock"), of the
Company, and of any other junior stock, will be entitled to receive, when, as
and if declared by the Board out of funds legally available for the purpose,
dividends payable in cash on such dates as are from time to time established for
the payment of cash dividends on the Common Stock (each such date being referred
to herein as a "Dividend Payment Date"), commencing on the first Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred (the "First Dividend Payment Date"), in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject
to the provision for adjustment hereinafter set forth, one hundred times the
aggregate per share amount of all cash dividends, and one hundred times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Dividend Payment Date or, with respect to the First Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A Preferred.
In the event that the Company at any time after the filing of this Amended
Certificate of Designations (this "Certificate") with the Secretary of State of
the State of Delaware (the "Delaware Secretary of State") (i) declares a
dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines
the outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues any shares of its capital stock in a reclassification of the outstanding
shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of
Series A Preferred are then issued or outstanding, the amount to which holders
of shares of Series A Preferred would otherwise be entitled immediately prior to
such event under clause (ii) of the preceding sentence will be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Dividends will accrue on outstanding shares of Series A Preferred from
the Dividend Payment Date next preceding the date of issue of such shares,
unless (i) the date of issue of such shares is prior to the record date for the
First Dividend Payment Date, in which case dividends on such shares will accrue
from the date of the first issuance of a share of Series A Preferred or (ii) the
date of issue is a Dividend Payment Date or is a date after the record date for
the determination of holders of shares of Series A Preferred entitled to receive
a dividend and before such Dividend Payment Date, in either of which events such
dividends will accrue from such Dividend Payment Date. Accrued but unpaid
dividends will cumulate from the applicable Dividend Payment Date but will not
bear interest. Dividends paid on the shares of Series A Preferred in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares will be allocated pro rata on a share-by-share basis among all such
A-2
shares at the time outstanding. The Board may fix a record date for the
determination of holders of shares of Series A Preferred entitled to receive
payment of a dividend or distribution declared thereon, which record date will
be not more than 60 calendar days prior to the date fixed for the payment
thereof.
III. Voting Rights
-------------
The holders of shares of Series A Preferred will have the following voting
rights:
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred will entitle the holder thereof to one
hundred votes on all matters submitted to a vote of the stockholders of the
Company. In the event the Company at any time after the filing of this
Certificate with the Delaware Secretary of State (i) declares a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues any shares of its capital stock in a reclassification of the
outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such case and
regardless of whether any shares of Series A Preferred are then issued or
outstanding, the number of votes per share to which holders of shares of
Series A Preferred would otherwise be entitled immediately prior to such
event will be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein, in any other Preferred Stock
Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred and the holders of
shares of Common Stock and any other capital stock of the Company having
general voting rights will vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(c) Except as set forth in the Certificate of Incorporation or
herein, or as otherwise provided by law, holders of shares of Series A
Preferred will have no voting rights.
IV. Certain Restrictions
--------------------
(a) Whenever dividends or other distributions payable on the Series A
Preferred are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Preferred
outstanding have been paid in full, the Company will not:
A-3
(i) Declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the shares of Series A
Preferred;
(ii) Declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution, or winding up) with the shares of Series A
Preferred, except dividends paid ratably on the shares of Series A
Preferred and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) Redeem, purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the shares of Series A
Preferred; provided, however, that the Company may at any time redeem,
-------- -------
purchase or otherwise acquire shares of any such junior stock solely in
exchange for shares of any stock of the Company ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the shares
of Series A Preferred; or
(iv) Redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred, or any shares of stock ranking on a parity
with the shares of Series A Preferred, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board, after consideration of
the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, may determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Company will not permit any majority-owned subsidiary of the
Company to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (a) of this Article IV,
purchase or otherwise acquire such shares at such time and in such manner.
V. Reacquired Shares
-----------------
Any shares of Series A Preferred purchased or otherwise acquired by the
Company in any manner whatsoever will be retired and canceled promptly after the
acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation of the Company,
or in any other Preferred Stock Designation creating a series of Preferred Stock
or any similar stock or as otherwise required by law.
A-4
VI. Liquidation, Dissolution or Winding Up
--------------------------------------
Upon any liquidation, dissolution or winding up of the Company, no
distribution will be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution, or winding up) to the
shares of Series A Preferred unless, prior thereto, the holders of shares of
Series A Preferred have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided, however, that the holders of shares of Series A
-------- -------
Preferred will be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to one hundred times
the aggregate amount to be distributed per share to holders of shares of Common
Stock or (b) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution, or winding up) with the shares of
Series A Preferred, except distributions made ratably on the shares of Series A
Preferred and all such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation, dissolution,
or winding up. In the event the Company at any time after the filing of this
Certificate with the Delaware Secretary of State (i) declares a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues any shares of its capital stock in a reclassification of the outstanding
shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of
Series A Preferred are then issued or outstanding, the aggregate amount to which
each holder of shares of Series A Preferred would otherwise be entitled
immediately prior to such event under the proviso in clause (a) of the preceding
sentence will be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
A-5
VIII. Consolidation, Merger, Etc.
---------------------------
In the event that the Company enters into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then, in each such case, each share of Series A Preferred will at the
same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
hundred times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Company at any
time after the filing of this Certificate with the Delaware Secretary of State
(a) declares a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (b) subdivides the outstanding shares of Common Stock,
(c) combines the outstanding shares of Common Stock in a smaller number of
shares, or (d) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such case and regardless of whether any
shares of Series A Preferred are then issued or outstanding, the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Preferred will be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VIII. Redemption
----------
The shares of Series A Preferred are not redeemable.
IX. Rank
----
The shares of Series A Preferred rank, with respect to the payment of
dividends and the distribution of assets, junior to all other series of the
Company's Preferred Stock.
X. Amendment
---------
Notwithstanding anything contained in the Certificate of Incorporation of
the Company to the contrary and in addition to any other vote required by
applicable law, the Certificate of Incorporation of the Company may not be
amended in any manner that would materially alter or change the powers,
preferences or special rights of the Series A Preferred so as to affect them
adversely without the affirmative vote of the holders of at least 80% of the
outstanding shares of Series A Preferred, voting together as a single series.
A-6
IN WITNESS WHEREOF, this Amended Certificate of Designations is executed on
behalf of the Company by its Senior Vice President and General Counsel attested
by its Assistant Secretary this 12th day of March, 1998.
--------------------------------------
Xxx X. XxXxxxxxx, Xx.
Senior Vice President and
General Counsel
Attest:
----------------------------
Xxxx X. Xxxxxxxx,
Assistant Secretary
A-7
