<PAGE>
As filed with the Securities and Exchange Commission on August 5, 1994
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
STERLING SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1873956
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8080 North Central Expressway
Suite 1100
Dallas, Texas 75206
(214) 891-8600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------
JEANNETTE P. MEIER, ESQ. With a copy to:
Executive Vice President, CHARLES D. MAGUIRE, JR., ESQ.
Secretary and General Counsel Jackson & Walker, L.L.P.
Sterling Software, Inc. 901 Main Street
8080 North Central Expressway Suite 6000
Suite 1100 Dallas, Texas 75202
Dallas, Texas 75206
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
----------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered in connection with
dividend or interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================
Title of Each Class Amount Proposed Maximum Proposed Maximum
of Securities to to be Offering Price Aggregate Amount of
be Registered Registered Per Unit(1) Offering Price(1) Registration Fee
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.10 per share 306,513 shares $25.81 $7,911,100.50 $2,727.97
=====================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Common Stock as reported by the New York Stock Exchange on August 4,
1994.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
PROSPECTUS
306,513 Shares
STERLING SOFTWARE, INC.
Common Stock
This Prospectus relates to the offer and sale of 306,513 shares (the
"Shares") of common stock, par value $.10 per share ("Common Stock"), of
Sterling Software, Inc. (the "Company") by certain stockholders of the Company
(the "Selling Stockholders"). The Selling Stockholders directly, through agents
designated from time to time, or through dealers or underwriters also to be
designated, may sell the Shares from time to time on terms to be determined at
the time of sale. See "Plan of Distribution."
The Common Stock is listed for trading on the New York Stock Exchange and
the Shares may be sold from time to time by the Selling Stockholders either
directly in private transactions, or through one or more brokers or dealers on
such exchange, at such prices and upon such terms as may be obtainable.
Upon any sale of the Shares offered hereby, Selling Stockholders and
participating agents, brokers or dealers may be deemed to be underwriters as
that term is defined in the Securities Act of 1933, as amended (the "Securities
Act"), and commissions or discounts or any profit realized on the resale of such
securities may be deemed to be underwriting commissions or discounts under the
Securities Act. The Company, however, understands that the Selling Stockholders
do not admit that they are underwriters within the meaning of the Securities
Act. The Company will not receive any of the proceeds from the sales of the
securities offered hereby.
The Company will pay all expenses incurred in connection with this
offering, which are estimated to be approximately $14,000.00.
On August 4, 1994, the closing price of the Common Stock on the New York
Stock Exchange was $25 3/8.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is ___________________, 1994.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60611 and at 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Company's shares of Common Stock are listed on
the New York Stock Exchange. Reports, proxy statements and other information
concerning the Company can also be inspected at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005.
This Prospectus, which constitutes part of a Registration Statement filed
by the Company with the Commission under the Securities Act (the "Registration
Statement"), omits certain of the information contained in the Registration
Statement. Reference is made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the Common Stock
offered hereby. Copies of such Registration Statement are available from the
Commission. Statements contained herein concerning the provisions of documents
filed herewith as exhibits are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
The Company's principal executive offices are located at 8080 North Central
Expressway, Suite 1100, Dallas, Texas 75206, and its telephone number at such
address is (214) 891-8600.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission by the
Company, are incorporated herein by reference and made a part hereof:
(i) Current Report on Form 8-K dated November 15, 1993, filed November
16, 1993;
(ii) Annual Report on Form 10-K for the year ended September 30, 1993, as
amended by Form 10-K/A Amendment No. 1, filed January 26, 1994;
(iii) Quarterly Report on Form 10-Q for the quarter ended December 31,
1993;
-2-
<PAGE>
(iv) Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
as amended by Form 10-Q/A Amendment No. 1, filed May 16, 1994;
(v) Current Report on Form 8-K dated July 31, 1994, filed August 2,
1994;
(vi) Current Report on Form 8-K dated August 1, 1994, filed August 2,
1994; and
(vii) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A (No. 0-108465), filed
March 7, 1990.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of Shares to be made hereunder shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing thereof. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for all purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein or in the Registration
Statement by reference (other than exhibits and schedules thereto, unless such
exhibits or schedules are specifically incorporated by reference into the
information that this Prospectus incorporates). Written or telephonic requests
for copies should be directed to the Company's principal office: Sterling
Software, Inc., 8080 N. Central Expressway, Suite 1100, Dallas, Texas 75206,
Attention: Jeannette P. Meier, Executive Vice President, Secretary and General
Counsel (telephone: (214) 891-8600).
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered hereby.
SELLING STOCKHOLDERS
This Prospectus covers the offer and resale from time to time by each
Selling Stockholder of the Shares owned by each such Selling Stockholder. Set
forth below are the names of each Selling Stockholder, the number of shares of
Common Stock owned as of August 2, 1994 by each Selling Stockholder, the number
of Shares that may be offered by each Selling Stockholder pursuant to this
Prospectus, and the number of shares of Common Stock to be owned by each Selling
Stockholder upon completion of the offering if all Shares are sold. Any or all
of the Shares listed below may be offered for sale by the Selling
-3-
<PAGE>
Stockholders from time to time. Neither of the Selling Stockholders has, or
within the past three years has had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates, except
as noted below.
<TABLE>
<CAPTION>
COMMON STOCK
OFFERED FOR
OWNERSHIP OF SELLING AMOUNT AND
COMMON STOCKHOLDERS PERCENTAGE OF
STOCK PRIOR TO ACCOUNT UPON CLASS AFTER THE
NAME OFFERING EXERCISE OFFERING
- --------------------------- -------------- ------------ ---------------
<S> <C> <C> <C>
Patrick W. Davis(1) 137,931 137,931 - 0 -
Alfredo Kimba Vasquez(1) 168,582 168,582 - 0 -
</TABLE>
- -----------------------
(1) Former director, executive officer and shareholder of American Business
Computer Company.
Pursuant to that certain Agreement of Merger dated as of August 1, 1994
(the "Merger Agreement"), the Company acquired American Business Computer
Company, a Michigan corporation ("ABCC"), through the merger of a wholly owned
subsidiary of the Company with and into ABCC. Under the terms of the Merger
Agreement, each of the Selling Stockholders received the Shares listed in the
table above in exchange for shares of capital stock of ABCC owned by such
Selling Stockholder. The Company agreed to register such shares of Common Stock
pursuant to the Merger Agreement under the Securities Act for resale by the
Selling Stockholders. The Company will not receive any of the proceeds from the
sale of the Shares by the Selling Stockholders.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time to purchasers
directly by any of the Selling Stockholders. Alternatively, the Selling
Stockholders may from time to time offer the Shares through underwriters,
dealers or agents who may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom they may act as agent. The Selling
Stockholders and any underwriters, dealers or agents that participate in the
distribution of the Shares may be deemed to be underwriters, and any profit on
the sale of the Shares by them and any discounts, commissions or concessions
received by any such underwriters, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. The Company,
however, understands that the Selling Stockholders do not admit that they are
underwriters within the meaning of the Securities Act.
The Shares may be disposed of from time to time in one or more
transactions, by sales of the Shares or the rights thereto, by the writing
of options on the Shares,
-4-
<PAGE>
or the granting of pledges thereon, all at fixed offering prices, which may be
changed, or at varying prices determined at the time of sale or at negotiated
prices. The Selling Stockholders may effect these transactions by selling the
Shares to or through broker-dealers or by pledges of the Shares to broker-
dealers who themselves may effect, from time to time, distributions of the
Shares or interests therein. The Company will pay all of the expenses incident
to the offering and sale of the Shares to the public other than underwriting
discounts or commissions, brokers' fees and the fees and expenses of any counsel
to the Selling Stockholders related thereto.
LEGAL MATTERS
Certain legal matters in connection with the validity of the securities
offered hereby have been passed upon for the Company by Jackson & Walker,
L.L.P., Dallas, Texas. Michael C. French, a partner in Jackson & Walker,
L.L.P., is a director of the Company.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company appearing in the Company's Annual Report on Form 10-K for the year
ended September 30, 1993, as amended by Form 10-K/A Amendment No. 1, filed
January 26, 1994, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated by
reference herein which, as to the years 1992 and 1991, are based in part on the
report of Arthur Andersen & Co., independent public accountants. Such
consolidated financial statements and schedules are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
-5-
<PAGE>
No person has been authorized in connection with the offering made hereby to
give any information or to make any representation not contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any
securities other than registered securities to which it relates, or an offer to
or a solicitation of any person in any jurisdiction where such offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
the information contained herein is correct as of any date subsequent to the
date hereof.
----------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information.............................................. 2
Incorporation of Certain
Documents by Reference.......................................... 2
Use of Proceeds.................................................... 3
Selling Stockholders............................................... 3
Plan of Distribution............................................... 4
Legal Matters...................................................... 5
Experts............................................................ 5
</TABLE>
306,513 SHARES
STERLING SOFTWARE,
INC.
COMMON STOCK
--------------------------------
PROSPECTUS
---------------------------------
_________________, 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
-------------------------------------------
The estimated expenses to be incurred in connection with the issuance and
distribution of the Common Stock covered by this Registration Statement, all of
which will be paid by the Registrant, are as follows:
Registration Fee.................... $ 2,727.97
Printing and Engraving Expenses..... 300.00
Accounting Fees and Expenses........ 5,000.00
Legal Fees and Expenses............. 5,000.00
Miscellaneous....................... 972.03
Total............................... $14,000.00
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers or former directors or officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers. Such law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under a corporation's
Certificate of Incorporation, Bylaws, any agreement or otherwise.
Article IX of the Company's Certificate of Incorporation, as amended,
provides that, to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, a director of
the Company shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director. Article IX of the Company's
Restated Bylaws provides for indemnification of officers and directors. In
addition, the Company has entered into Indemnity Agreements with each of its
officers and directors pursuant to which such officers and directors may be
indemnified against losses arising from certain claims, including claims under
the Securities Act, which may be made by reason of their being officers or
directors.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
II-1
<PAGE>
ITEM 16. EXHIBITS.
--------
The following is a list of all exhibits filed as a part of this Registration
Statement on Form S-3, including those incorporated herein by reference.
Exhibit
Number Description of Exhibit
- -------- ----------------------
1 None.
2 None.
4.1 Certificate of Incorporation of the Registrant./(1)/
4.2 Certificate of Amendment of Certificate of Incorporation of the
Registrant./(2)/
4.3 Certificate of Amendment of Certificate of Incorporation of the
Registrant./(3)/
4.4 Restated Bylaws of the Registrant./(4)/
4.5 Form of Common Stock Certificate./(5)/
5 Opinion of Jackson & Walker, L.L.P./(6)/
8 None.
12 None.
15 None.
23.1 Consent of Ernst & Young LLP. /(6)/
23.2 Consent of Arthur Andersen & Co./(6)/
23.3 Consent of Jackson & Walker, L.L.P. (included in its opinion filed as
Exhibit 5 to this Registration Statement)./(6)/
24 Power of Attorney (appearing on Page II-6 of this Registration
Statement)./(6)/
25 None.
26 None.
II-2
<PAGE>
27 None.
28 None.
99 Agreement of Merger dated as of August 1, 1994, among the Registrant,
Sterling Acquisition, Inc., American Business Computer Company
("ABCC") and the Shareholders of ABCC.(6)
- ------------
(1) Previously filed as an exhibit to the Registrant's Registration Statement
No. 2-82506 on Form S-1 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-
K for the fiscal year ended September 30, 1993 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Registrant's Registration Statement
No. 33-69926 on Form S-8 and incorporated herein by reference.
(4) Previously filed as an exhibit to the Registrant's Registration Statement
No. 33-47131 on Form S-8 and incorporated herein by reference.
(5) Previously filed as an exhibit to the Registrant's Registration Statement
No. 2-86825 on Form S-1 and incorporated herein by reference.
(6) Filed herewith.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below authorizes Sterling L. Williams,
George H. Ellis and Jeannette P. Meier, and each of them, each of whom may act
without joinder of the others, to execute in the name of each such person who is
then an officer or director of the Registrant and to file any amendments to this
Registration Statement necessary or advisable to enable the Registrant to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in respect thereof, in
connection with the registration of the securities which are the subject of this
Registration Statement, which amendments may make such changes in the
Registration Statement as such attorney may deem appropriate.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dallas, State of Texas on the 5th day of August, 1994.
STERLING SOFTWARE, INC.
By:/s/ Jeannette P. Meier
----------------------------------
Name: Jeannette P. Meier
---------------------------
Title: Executive Vice President
--------------------------
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
President, Chief
Executive Officer
/s/ Sterling L. Williams and Director August 5, 1994
- --------------------------- (Principal Executive Officer)
Sterling L. Williams
Executive Vice President
and Chief
/s/ George H. Ellis Financial Officer August 5, 1994
- -------------------------- (Principal Financial and
George H. Ellis Accounting Officer)
/s/ Sam Wyly Chairman of the August 5, 1994
- -------------------------- Board of Directors
Sam Wyly
Vice Chairman of the
- -------------------------- Board of Directors
Charles J. Wyly, Jr.
/s/ Evan A. Wyly Director August 5, 1994
- --------------------------
Evan A. Wyly
/s/ Michael C. French Director August 5, 1994
- --------------------------
Michael C. French
/s/ Robert J. Donachie Chairman of the Audit August 5, 1994
- -------------------------- Committee and Director
Robert J. Donachie
Executive Vice President,
- -------------------------- Technology and Director
Phillip A. Moore
Director
- --------------------------
Robert E. Cook
/s/ Donald R. Miller, Jr. Director August 5, 1994
- --------------------------
Donald R. Miller, Jr.
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------- ---------------------- ----
<C> <S> <C>
1 None.
2 None.
4.1 Certificate of Incorporation of the Registrant./(1)/
4.2 Certificate of Amendment of Certificate of Incorporation of the
Registrant./(2)/
4.3 Certificate of Amendment of Certificate of Incorporation of the
Registrant./(3)/
4.4 Restated Bylaws of the Registrant./(4)/
4.5 Form of Common Stock Certificate./(5)/
5 Opinion of Jackson & Walker, L.L.P./(6)/
8 None.
12 None.
15 None.
23.1 Consent of Ernst & Young LLP./(6)/
23.2 Consent of Arthur Andersen & Co./(6)/
23.3 Consent of Jackson & Walker, L.L.P. (included in its opinion filed
as Exhibit 5 to this Registration Statement)./(6)/
24 Power of Attorney (appearing on Page II-6 of this Registration
Statement)./(6)/
25 None.
26 None.
27 None.
28 None.
99 Agreement of Merger dated as of August 1, 1994, among the Registrant,
Sterling Acquisition, Inc., American Business Computer Company ("ABCC")
and the Shareholders of ABCC./(6)/
- ------------
</TABLE>
II-8
<PAGE>
(1) Previously filed as an exhibit to the Registrant's Registration Statement
No. 2-82506 on Form S-1 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Annual Report on Form 10-
K for the fiscal year ended September 30, 1993 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Registrant's Registration Statement
No. 33-69926 on Form S-8 and incorporated herein by reference.
(4) Previously filed as an exhibit to the Registrant's Registration Statement
No. 33-47131 on Form S-8 and incorporated herein by reference.
(5) Previously filed as an exhibit to the Registrant's Registration Statement
No. 2-86825 on Form S-1 and incorporated herein by reference.
(6) Filed herewith.
349965.01/D
II-9
<PAGE>
Exhibit 5
[LETTERHEAD OF JACKSON & WALKER, L.L.P. APPEARS HERE]
August 5, 1994
Sterling Software, Inc.
8080 North Central Expressway
Suite No. 1100
Dallas, Texas 75206
Re: Registration Statement on Form S-3 of Sterling Software, Inc.
Ladies and Gentlemen:
We are acting as counsel for Sterling Software, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offer and sale of up to
306,513 shares of common stock, par value $.10 per share, of the Company (the
"Shares") by certain "Selling Stockholders" (as defined in the above-captioned
registration statement). A registration statement on Form S-3 covering the sale
of the Shares (the "Registration Statement") is expected to be filed under the
Act with the Securities and Exchange Commission (the "Commission") on or about
the date hereof.
In reaching the conclusions expressed in this opinion, we have examined and
relied upon the original or copies, certified to our satisfaction, of all
documents, certificates and instruments as we have deemed necessary for the
expression of the opinions expressed herein. In making the foregoing
examinations, we have assumed that all signatures on all documents submitted to
us are genuine, that all documents submitted to us as originals are accurate and
complete, and that all documents submitted to us as copies are true, correct
and complete copies of the originals thereof.
Based solely upon the foregoing and subject to the comments and exceptions
herein stated and limited in all respects to the laws of the State Texas, the
General Corporation Law of the State of Delaware, the laws of the United States
of America, and subject to the issuance by the Commission of an order declaring
the Registration Statement effective, we are of the opinion that the Shares
issued pursuant to the terms of the Agreement and Plan of Merger, dated as of
August 1, 1994 among the Company, Sterling Acquisition, Inc., American Business
Computer
<PAGE>
Sterling Software, Inc.
August 5, 1994
Page 2
Company ("ABCC") and the shareholders of ABCC, have been validly issued, and are
fully paid and nonassessable.
We express no opinion as to the laws of any jurisdiction other than the
State of Texas and, solely with respect to matters of corporate law, the State
of Delaware. You should be aware that we are not admitted to practice law in
the State of Delaware. Accordingly, any opinion herein as to the laws of the
State of Delaware is based solely upon the latest generally available
compilation of the statutes and case law of such state.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the reference to our firm therein
under the caption "Legal Matters". In giving this consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission
promulgated thereunder.
Very truly yours,
/s/ Jackson & Walker, L.L.P.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) pertaining to the registration of 306,513
shares of common stock of Sterling Software, Inc. and to the incorporation by
reference therein of our report dated November 15, 1993, with respect to the
consolidated financial statements and schedules of Sterling Software, Inc.
included in its Annual Report (Form 10-K) for the year ended September 30, 1993,
filed with the Securities and Exchange Commission.
Dallas, Texas
August 5, 1994
/s/ Ernst & Young LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated June 18, 1993
(except with respect to the matter discussed in Note 19 as to which the date is
July 1, 1993), included in Sterling Software, Inc.'s Annual Report on Form 10-K
for the year ended September 30, 1993, and to all references to our Firm
included in this registration statement.
Washington, D.C.
August 5, 1994
/s/ Arthur Andersen & Co.
<PAGE>
Exhibit 99
AGREEMENT OF MERGER
Dated as of August 1, 1994
by and among
STERLING SOFTWARE, INC.,
STERLING ACQUISITION, INC.,
AMERICAN BUSINESS COMPUTER COMPANY (THE "COMPANY")
and
THE SHAREHOLDERS OF THE COMPANY
<PAGE>
AGREEMENT OF MERGER
This AGREEMENT OF MERGER (this "Agreement") is dated as of the 1st day of
August, 1994 by and among STERLING SOFTWARE, INC., a Delaware corporation
("Sterling"), STERLING ACQUISITION, INC., a Michigan corporation ("Purchaser"),
AMERICAN BUSINESS COMPUTER COMPANY, a Michigan corporation (the "Company"), and
Alfredo Kimba Vasquez and Patrick W. Davis (Messrs Vasquez and Davis are
collectively referred to herein as the "Sellers" and individually as a
"Seller").
W I T N E S S E T H
WHEREAS, the Sellers own all of the issued and outstanding common stock, no
par value, of the Company (the "Company Common"), which shares constitute all
of the issued and outstanding capital stock of the Company;
WHEREAS, Sterling owns all of the issued and outstanding shares of common
stock of Purchaser;
WHEREAS, the respective boards of directors of Sterling, Purchaser and the
Company have deemed that a business combination between Purchaser and the
Company, upon the terms and subject to the conditions hereinafter set forth, is
advisable and in the best interests of their respective corporations;
WHEREAS, the Sellers, as the sole voting shareholders of the Company, and
Sterling, as the sole voting shareholder of Purchaser, have duly approved such
business combination; and
WHEREAS, it is intended that such business combination shall qualify as a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), for federal income tax purposes and shall be
accounted for as a "pooling of interests" for financial accounting purposes.
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants herein contained, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
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I. The Transaction.
---------------
1.1 The Merger. Subject to the terms and conditions of this Agreement,
----------
at the Effective Time (as defined in Section 1.2), Purchaser shall be merged
with and into the Company in accordance with this Agreement and the separate
corporate existence of Purchaser shall thereupon cease (the "Merger"). The
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be governed by
the laws of the State of Michigan; the separate corporate existence of the
Company with all its rights, privileges, powers, immunities, purposes and
franchises shall continue unaffected by the Merger, except as set forth herein.
The Merger shall have the effects specified in the Michigan Business Corporation
Act (the "MBCA").
1.2 Effective Time. If all the conditions to the Closing set forth in
--------------
Articles VIII, IX and X shall have been fulfilled or waived in accordance
herewith, the parties hereto shall cause a Certificate of Merger meeting the
requirements of Section 450.1707 of the MBCA to be properly executed and filed
in accordance with such Section on the Closing Date (as hereinafter defined).
The Merger shall become effective at the time of the filing of the Certificate
of Merger in accordance with the MBCA or at such later time which the parties
hereto have agreed upon and designated in such filing as the effective time of
the Merger (the "Effective Time").
1.3 Articles of Incorporation of Surviving Corporation. Effective at
--------------------------------------------------
the Effective Time, the Articles of Incorporation of the Company, as amended as
provided in the Certificate of Merger, shall be the Articles of Incorporation of
the Surviving Corporation.
1.4 Bylaws of Surviving Corporation. The Bylaws of Purchaser in effect
-------------------------------
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, until duly amended in accordance with their terms and the MBCA.
1.5. Directors of the Surviving Corporation. The persons who are
--------------------------------------
directors of Purchaser immediately prior to the Effective Time shall, from and
after the Effective Time, be and become directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Bylaws.
1.6 Officers of the Surviving Corporation. The officers of Purchaser
-------------------------------------
shall become the officers of the Surviving Corporation until their resignation
or removal.
1.7 Conversion of Shares. The manner of converting shares of the Company
--------------------
and Purchaser in the Merger shall be as follows:
(a) At the Effective Time, each share of Company Common issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without
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any action on the part of the holder thereof, be converted into the right to
receive such number of shares of Sterling common stock, par value $.01 per share
("Sterling Common Stock"), as set forth on Exhibit A attached hereto, provided
that no fractional shares shall be issued. The total number of shares of
Sterling Common Stock to be issued as a result of this Agreement is 306,513
shares (the "Sterling Shares").
(b) As a result of the Merger and without any action on the part of
the holder thereof, all shares of Company Common shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate (a "Certificate") representing any shares of Company Common shall
thereafter cease to have any rights with respect to such shares of Company
Common, except the right to receive, without interest, the Sterling Common Stock
in accordance with Section 1.7(a) upon the surrender of such Certificate.
(c) At the Effective Time and as a result of the Merger, each share
of common stock, $.01 par value per share, of Purchaser issued and outstanding
immediately prior to the Effective Time of the Merger shall be converted into
and exchanged for one newly and validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
1.8 Exchange of Certificates Representing Company Common.
----------------------------------------------------
(a) Prior to the Effective Time, Sterling shall issue and contribute
to Purchaser, in the amounts listed on Exhibit A, certificates representing a
sufficient number of shares of Sterling Common Stock necessary for Purchaser to
make deliveries pursuant to Section 1.8(b) hereof.
(b) Promptly after the Effective Time, Purchaser shall deliver to
the Sellers, in exchange for Certificates from such Sellers, accompanied by
stock powers duly endorsed in blank and a duly executed Form W-9, that number of
shares of Sterling Common Stock which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article I, after giving effect to any required tax withholdings, and the
Certificate so surrendered shall forthwith be cancelled.
(c) At or after the Effective Time, there shall be no transfers on
the stock transfer books of the Company of shares of Company Common that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged for certificates for shares of Sterling Common Stock in
accordance with the procedures set forth in this Article I.
1.9 Exchange of Certificates Representing Shares. In the event that
--------------------------------------------
between the date of this Agreement and the Effective Time, Sterling changes the
number of shares of Sterling Common Stock issued and outstanding as a result of
a stock split, reverse stock split,
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<PAGE>
stock dividend, recapitalization or other similar transaction, the exchange
amounts set forth in Exhibit A shall be appropriately adjusted.
1.10 Subsequent Actions. If, at any time after the Effective Time, the
------------------
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of any of the Company or Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, and to effect the cancellation
of all outstanding shares of Company Common in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of each of
the Company, each of the Sellers and Purchaser or otherwise, to carry out all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Company and Purchaser or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
II. Closing Date
------------
The closing of the transactions contemplated by Article I hereof (the
"Closing") shall take place at the offices of the Company, 24 Frank Lloyd Wright
Dr., Ann Arbor, MI 48106, on or about August 1, 1994, or such other place or
date as shall be agreed upon by the parties hereto. The date and time of such
closing are herein called the "Closing Date."
III. Representations and Warranties of the Company and Sellers
---------------------------------------------------------
The Company and each Seller jointly and severally represent and warrant to
Purchaser and Sterling as follows:
3.1 Organization, Power, Etc. of the Company; Subsidiaries.
------------------------------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of Michigan. Except as
provided in Schedule 3.1(a), the Company has all requisite power and
authority to own, operate and lease its properties and to carry on the
business of the Company as it is now being conducted. Except as specified
in Schedule 3.1(a), the Company is duly qualified or licensed to do
business and is in good standing in all jurisdictions in which the property
owned, leased or operated by the Company, or where the
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<PAGE>
nature of its business or presence of its employees, customers or agents,
makes such qualification or licensing necessary.
(b) Except as specified in Schedule 3.1(b), the Company has no
subsidiaries or other Company Affiliates (as hereinafter defined) and does
not own any securities issued by or have any interest in any other Person
(as hereinafter defined) and the Company is not a partner or participant in
any partnership or joint venture of any kind. Except as set forth on
Schedule 3.1(b), the business of the Company has been conducted solely by
the Company and has not been conducted through any subsidiary or other
Company Affiliate. "Company Affiliate" shall mean any Person that directly
or indirectly controls, is controlled by or is under common control with,
the Company. "Control" shall include the possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities,
by contract or otherwise. As used in this Agreement, the term "Person"
shall mean any individual, corporation, partnership, joint venture,
association, joint-stock company, trust or entity or government, public
authority or agency, department or administrative entity or division
thereof.
(c) The Company is an S corporation as such term is defined in Section
1361(a) of the Code.
3.2 Capitalization. The authorized capital stock of the Company consists
---------------
of 60,000 shares of common stock, no par value, of which one thousand (1,000)
shares are issued and outstanding, and 60,000 shares of preferred stock, no par
value, of which no shares are issued or outstanding. The Company Common
constitutes all of the issued and outstanding capital stock of the Company and
all of such shares are legally and validly issued, outstanding, fully paid and
nonassessable. Except as disclosed in Schedule 3.2, there are no outstanding
options, warrants, subscriptions or other rights of any kind for the issuance or
sale of, or outstanding securities convertible into or exchangeable for, any of
the authorized or outstanding shares of capital stock of the Company. Except as
disclosed in Schedule 3.2, the Sellers own, beneficially and of record, all of
the issued and outstanding shares of capital stock of the Company, free and
clear of any liens, restrictions, encumbrances or adverse claims of any nature
whatsoever. Except as disclosed in Schedule 3.2, the Sellers have full right,
capacity and authority to transfer the Company Common to Purchaser pursuant to
this Agreement and immediately prior to the Closing the Company Common will be
held of record and beneficially by the Sellers and will not be subject to any
restriction with respect to their transferability. Except as set forth in the
Shareholders Agreement (as hereinafter defined), the Sellers are not parties to
or bound by, nor do they have any knowledge of, any agreement, instrument,
arrangement, contract, obligation, commitment or understanding of any character,
whether written or oral, express or implied, relating to the sale, assignment,
conveyance, transfer or delivery of any authorized or outstanding capital stock
of the Company. No shares of
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<PAGE>
capital stock of the Company are owned by the Company in treasury. No shares of
capital stock of the Company have been issued or disposed of in violation of the
preemptive rights of any Person or applicable securities laws.
3.3 Corporate Records. The copy of the articles of incorporation of the
-----------------
Company, certified by the office of the Michigan Secretary of State and the copy
of its by-laws, as amended to date, certified by its Secretary, which have
previously been delivered to Purchaser, are true, complete and correct. The
Company's minute books and stock transfer books, copies of which have been
presented to Purchaser for review, (a) contain accurate minutes of all meetings
of, and accurate consents to all actions taken without meetings by, the Board of
Directors (and any committees thereof) and the shareholders of the Company in
all material respects and (b) record all issuances and transfers of record of
the capital stock of the Company since the formation of the Company.
3.4 Authorization. Each of the Company and each Seller has all requisite
-------------
legal capacity, power and authority to enter into this Agreement, to perform its
own obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Company's
shareholders and Board of Directors and no other corporate proceedings on the
part of the Company are necessary to authorize the execution and delivery of
this Agreement and the transactions contemplated hereby. This Agreement
constitutes a legal, valid and binding obligation of the Company and each
Seller, enforceable against each of them in accordance with its terms, except as
(a) the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) the availability of equitable remedies may
be limited by equitable principles of general applicability.
3.5 No Violation. Except as set forth in Schedule 3.5, the execution,
------------
delivery and performance of this Agreement by the Company and the Sellers and
the consummation by them of the transactions contemplated hereby do not and will
not require the consent, waiver, approval, license or authorization of any
Person; do not and will not violate, with or without the giving of notice or the
passage of time, any provision of law applicable to the Company or the Company's
charter or by-laws; do not and will not, with or without the giving of notice or
the passage of time, conflict with or result in a breach or termination of any
provision of, or constitute a default under, or result in the creation of any
lien, claim or encumbrance upon any of the property or assets of the Company or
the Company Common pursuant to any mortgage, deed of trust, indenture, note,
security interest, bond, license, pledge, encumbrance, claim, right, option,
contract or other agreement or instrument; and do not or will not conflict with
or violate any order, injunction, judgment, decree, statute, rule, regulation or
any other restriction of any kind
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<PAGE>
or character, to which the Company or any Seller is a party or by which any of
the Company's assets may be bound.
3.6 Financial Statements and Undisclosed Liabilities. Schedule 3.6
------------------------------------------------
includes true and complete copies of the Company's (i) audited balance sheet at
June 30, 1993 (together with the attachments thereto, the "Audited Balance
Sheet"), and the related statements of operations, retained earnings and cash
flows for the year then ended, (ii) audited balance sheet at June 30, 1992, and
the related audited statements of operations, retained earnings and cash flows
for the four (4) months then ended and (iii) unaudited balance sheet at June 30,
1994 and related statement of operations for the twelve (12) months then ended.
Except as set forth in Schedule 3.6, such financial statements are true,
complete and correct, were prepared in accordance with generally accepted
accounting principles applied on a consistent basis, have been prepared from and
are in accord with the books and records of the Company, reflect and provide
adequate reserves and, in accordance with generally accepted accounting
principles, adequate disclosures in respect of all liabilities of the Company
(including without limitation contingent liabilities) and present fairly and
accurately the consolidated financial position and results of operations of the
Company as of the dates and for the periods indicated. In each of the foregoing
financial statements, except as disclosed in Schedule 3.6, all expenses for
administration, overhead and other charges have been properly reflected. The
Company has no liabilities or obligations of any kind, whether accrued,
absolute, contingent or otherwise and whether due or to become due, except (a)
as disclosed in the Company's balance sheet at June 30, 1994 (such balance
sheet, together with the attachments thereto, being hereinafter referred to as
the "Latest Balance Sheet"), (b) obligations or liabilities incurred in the
ordinary course of business since June 30, 1994, consistent with past practice,
none of which is materially adverse or (c) fixed and determinable liabilities as
set forth in any Schedule delivered pursuant to this Agreement to the extent
that such liability or obligation need not also be set forth in the Latest
Balance Sheet in accordance with generally accepted accounting principles. The
Company has not been subject to any audits conducted by the Defense Contract
Audit Agency or other authorized government auditor.
3.7 Absence of Certain Changes or Events. Since March 31, 1994, the
------------------------------------
Company has used its reasonable efforts to preserve its business organization
intact and the goodwill of the suppliers, customers, employees and others having
business relations with the Company. Since June 30, 1993, except as disclosed
in Schedule 3.7, the Company has not either for itself or on behalf of any other
Person:
(a) incurred any obligation or liability (fixed or contingent), except
normal trade or business obligations incurred in the ordinary course of
business, none of which is materially adverse;
-8-
<PAGE>
(b) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (fixed or contingent), except (i) current
liabilities included in the Audited Balance Sheet or Latest Balance Sheet,
(ii) current liabilities incurred since the date of the Latest Balance
Sheet in the ordinary course of business, none of which is materially
adverse and (iii) scheduled payments pursuant to obligations under
contracts, agreements, notes, loans and leases described in the Schedules
referred to in Sections 3.10 or 3.13 hereof;
(c) mortgaged, pledged or subjected to lien, charge, security interest
or to any other encumbrance any of its assets or the assets of any other
Person;
(d) sold, assigned, transferred, leased or otherwise disposed of or
agreed to sell, assign, transfer, lease or otherwise dispose of any of its
assets or the assets of any other Person, except for fair consideration in
the ordinary course of business, or acquired or leased any assets or
properties, except for fair consideration in the ordinary course of
business;
(e) cancelled or compromised any claim or liability other than in the
ordinary course of business;
(f) other than acceptance of returns in the ordinary course of
business, waived or released any rights of value which exceed $3,000
individually in value or $10,000 in the aggregate in value or modified in a
materially adverse manner any material agreement, whether or not in the
ordinary course of business;
(g) transferred or granted any rights to any other Person under any
lease, license, agreement, option, patent, invention, trademark, trade
name, service mark, brand mark, brand name or copyright or with respect to
any know-how, other than in the ordinary course of business;
(h) made, agreed to make or announced any change in wages, salaries,
compensation or employee benefits, or granted any wage, salary,
compensation, bonus or employee benefits increase, for any of its
employees;
(i) entered into any transaction, contract, agreement or commitment
other than in the ordinary course of business;
(j) to the extent material, suffered any casualty loss or damage
(whether or not such loss or damage shall have been covered by insurance);
(k) suffered any material adverse change in, or become aware of any
event or condition (other than changes in general business conditions)
which is likely to, individually or in the aggregate, result in a material
adverse change in, the
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<PAGE>
business or the condition (financial or otherwise), assets, liabilities,
properties, results of operations, employee relations, management, customer
relations or prospects of the Company;
(l) terminated, discontinued, closed or disposed of any plant,
facility or operation of the business of the Company;
(m) had any supplier or suppliers terminate or adversely modify, or
threaten to terminate or adversely modify, their relationship with the
Company;
(n) introduced any material change with respect to the operation of
the business of the Company, including without limitation any accounting
methods or practices;
(o) made any material change in the terms of any contract with any of
its sales agents; other than returns in the ordinary course of business,
had any Customer (as hereinafter defined) communicate to the Company the
termination of or a threat to terminate its relationship or contract with
the Company or to make a substantial reduction in the services or products
it purchases from the Company, either directly or indirectly; and, to the
knowledge of the Company and the Sellers, none of the Customers or
suppliers of the Company has expressed to the Company dissatisfaction with
the methods by which the Company conducts its business or the quality of
the products or services of its business or indicated its intention not to
deal directly with Purchaser or Sterling Affiliates after the Closing Date.
(For purposes of this Agreement, "Sterling Affiliate" shall mean any Person
that directly or indirectly controls, is controlled by or is under common
control with, Sterling.);
(p) revalued any of its assets (whether tangible or intangible);
(q) suffered any material interference with the operation of the
business of the Company;
(r) suffered any extraordinary loss relating to the business of the
Company;
(s) made any loan to any shareholder or Seller Affiliate, or declared,
set aside or paid to any shareholder any dividend or other distribution in
respect of its capital stock; redeemed or purchased any of its capital
stock; reclassified, issued, sold, transferred, pledged, encumbered or
delivered any stock, bond, debenture, option, warrant or other security of
the Company; effected any stock split, exchange, or combination or other
capital reorganization; or agreed to do any of the foregoing; or
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<PAGE>
(t) changed or amended its charter or bylaws.
3.8 Tax Matters. Except as provided in Schedule 3.8 or as reflected on
-----------
the Latest Balance Sheet, the Company has duly and timely filed with the
appropriate foreign, federal, state, provincial, municipal and local
governmental agencies all income, excise, sales, use and other tax returns and
reports which are required to be filed by it or with respect to its business or
assets, and has paid in full all taxes, whether or not shown on such returns or
reports, all assessments, deficiencies and all other taxes, assessments,
governmental charges, penalties, interest, fines, reassessments and estimated
taxes relating to the Company or its business or its assets due on or before the
Closing Date or claimed to be due on or before the Closing Date by any such
taxing authority. Except as provided in Schedule 3.8, the Company has properly
accrued all taxes, assessments, governmental charges, penalties, interest, fines
and reassessments payable by the Company or on behalf or relating to the
business or the assets of the Company for the period up to and including the
Closing Date, but not yet due. There are no agreements, waivers or other
arrangements providing for the extension of time with respect to the filing of
any tax return or report by, or the payment of any taxes, governmental charge or
deficiency against, the Company. Except as provided in Schedule 3.8, the
Company is not a party to any pending action, suit, proceeding, investigation,
audit, examination or claim nor, to the best knowledge of the Company and the
Sellers, has any such action, suit, proceeding, investigation, audit,
examination or claim been threatened by or come under discussion with any
governmental authority (domestic or foreign), for assessment or collection of
taxes, and no claim for assessment or collection of taxes has been asserted
relating in whole or in part to the formation or reorganization of the Company
or the business or the assets of the Company. Neither the Company nor any
Seller is a foreign person, as such term is referred to in Section 1445(b)(2) of
the Code.
For the purposes of this Section 3.8, "taxes" or "tax" means all net
income, capital gains, gross income, gross receipts, sales, use, value added, ad
valorem, franchise, stamp, profits, license, withholding, payroll, employment,
excise, severance, occupation, property, business, branch, unemployment, social
security, medical taxes, customs duty, or any other taxes, fees, assessments, or
charges of any kind whatsoever, together with any interest and penalty,
additions to tax or additional amounts imposed by any taxing authority.
3.9 Title to Properties, Absence of Liens and Encumbrances.
------------------------------------------------------
(a) Except as set forth on Schedule 3.9, the Company has good and
marketable title to all of its properties and assets (other than leased or
licensed properties), in each case including but not limited to all
properties reflected in the Latest Balance Sheet (except as since sold or
otherwise disposed of in the ordinary course of business), tangible or
intangible, free and clear of all liens, pledges, claims, charges, security
interests or encumbrances, agreements, rights, options,
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<PAGE>
warranties, equities or restrictions of any nature (collectively "Liens"),
except Liens for current taxes and assessments not yet due. The Company
does not own any real property and is not in violation in any material
respect of any applicable law, ordinance, regulation, order or requirement
relating to its business or assets.
(b) All leases pursuant to which the Company leases as lessor or
lessee any real or personal property are in good standing in all material
respects and are valid and binding in accordance with their respective
terms, and there is not under any of such leases an existing default, event
of default or event which with notice or lapse of time or both would
constitute a default, on the part of the Company, or to the Company's
knowledge, on the part of any other party to such leases. None of the
rights of the Company under any such leases is subject to termination or
modification as the result of the transactions contemplated by this
Agreement, except as specifically disclosed on Schedule 3.9.
3.10 List of Properties, Contracts and Other Data. Schedules 3.10(a) to
--------------------------------------------
3.10(t) are complete and correct and set forth the following with respect to the
Company:
(a) Schedule 3.10(a) lists all leases of real property to which the
Company is a party, with a brief description of the property to which each
such lease relates;
(b) Schedule 3.10(b) lists all licenses, leases and other agreements
providing for rights to software, computer programs, trade secrets,
inventions, secret processes and other personal property (other than with
respect to personal property of an immaterial nature) to which the Company
is a party (other than those listed in other Schedules required by this
Section 3.10);
(c) Schedule 3.10(c) lists all tangible personal property of a
material nature as of the date hereof owned by the Company;
(d) Schedule 3.10(d) lists all contracts, agreements, understandings
and commitments, whether oral or written and whether foreign or domestic,
to which the Company is a party or with respect to which the Company may
have acted as agent for any Company Affiliates (i) which grant the other
party thereto the exclusive right to provide any services or products to
the Company or (ii) the performance of which in accordance with its terms
by the Company will result in a loss to the Company;
(e) Schedule 3.10(e) lists, by category, all contracts, agreements,
understandings and commitments, whether oral or written and whether foreign
or domestic and whether executory, conditional or contingent, including
without limitation service or maintenance contracts and guarantees, and all
mortgages,
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<PAGE>
indentures, loan agreements, guarantees and indemnification agreements, to
which the Company is a party or with respect to which the Company may have
acted as agent for any Company Affiliates, or to which it or any of its
assets or properties are subject, except such contracts, agreements,
understandings and commitments which are listed on other Schedules required
by this Agreement;
(f) Schedule 3.10(f) lists all (i) collective bargaining agreements,
confidentiality and non-competition agreements, employment contracts and
consulting agreements (including but not limited to advisory sales agency
arrangements) and (ii) executive compensation plans, bonus plans or other
incentive compensation plans, deferred compensation agreements, severance
pay arrangements, employee pension plans or retirement plans (whether
funded or unfunded), employee profit sharing plans, any other "employee
pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA")), group life insurance,
disability, medical reimbursement, hospitalization insurance, any other
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA),
employee stock purchase and stock option plan or other plans or
arrangements (whether formal or informal) (collectively, "Employee Benefit
Plans") providing for benefits for any current or former employees of the
Company, whether any of the above are written or oral, and the general
policies, procedures and work related rules in effect with respect to
employees of the Company, whether written or oral, including without
limitation the policies with respect to holidays, sick leave, vacation,
disability or death benefits, termination pay, automobile allowances or
rights to Company provided automobiles, computers or other perquisites;
(g) Schedule 3.10(g) lists the names, titles, date of employment,
current annual compensation rates, accrued vacation time and sick leave
(either in dollars or days) of all employees of the Company as of the
Closing Date, all rights, benefits or arrangements with such employees
which are different from or additional to the policies and plans listed on
Schedule 3.10(f) and the amount of the bonus paid to all such employees by
the Company or any current or former Company Affiliates during the years
ended June 30, 1993 and 1994;
(h) Schedule 3.10(h) lists all policies of fire, liability and other
forms of insurance held by the Company, including the insurer, the amount
of coverage, the type of coverage, the expiration date, the annual premium,
the policy number and the pending claims thereunder and all such insurance
shall be outstanding and duly in force without interruption up to and
including the Closing Date;
(i) Schedule 3.10(i) lists the name of each bank in which the Company
has an account or safe deposit box, and the numbers of such accounts or
boxes;
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<PAGE>
(j) Schedule 3.10(j) lists each outstanding order to a supplier for
the future purchase of materials, supplies or services which involves the
expenditure of more than $2,000 for any one transaction or $5,000 in the
aggregate and all agreements or contracts with any supplier or vendor under
which the Company has a right to buy (e.g., "original equipment
manufacturer" agreements) goods, supplies or services relating to its
business;
(k) Schedule 3.10(k) lists all automobiles, trucks or other vehicles
owned by or leased to the Company as of the date hereof;
(l) Schedule 3.10(l) lists each of the largest twenty-five customers
of the Company and its business based upon the dollar amount of products
and services purchased from the Company by each such customer during the
twelve (12) months ended June 30, 1994;
(m) Schedule 3.10(m) lists the ten largest suppliers to the Company
and its business based upon the dollar amount of items sold or provided to
the Company by each such supplier for the six (6) months ended June 30,
1994;
(n) Schedule 3.10(n) lists all arrangements respecting loans, or
guarantees of loans, to any employees of the Company made or assumed by the
Company on or before the Closing Date (excluding advances for travel and
related expenses made to such employees in the ordinary course of
business);
(o) Schedule 3.10(o) lists all outstanding commitments made by the
Company either on its own behalf or on behalf of any Company Affiliates as
of the Closing Date to make a capital expenditure, capital addition or
capital improvement, including without limitation any product investment,
together with a description of any proposal by the Company to make or
commit to make any capital expenditure, capital addition or capital
improvement, including without limitation any product investment,
subsequent to the date hereof and which individually exceed $2,000 or
exceed $5,000 in the aggregate;
(p) Schedule 3.10(p) lists all patents, trademarks, service marks,
trade names, brand names and copyrights, and all registrations or pending
applications for any of the foregoing, owned or used by or licensed to the
Company (together with the designation thereof);
(q) Schedule 3.10(q) lists all computer software programs, licensed to
or owned or used by the Company, together with an identification of the
licensor and the agreement or agreements, including all amendments and
supplements thereto, pursuant to which the Company claims rights therein;
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<PAGE>
(r) Schedule 3.10(r) lists all contracts, agreements or other
arrangements under which the Company has granted, or is obligated to grant,
rights to others to use, market or exploit any trademark, service mark,
trade name, brand name, patent, copyright, invention, trade secret, secret
process or know-how;
(s) Schedule 3.10(s) lists, with the exceptions specified therein, all
contracts and agreements between the Company and any third parties (the
"Customers") relating to its business, including without limitation any
contracts or agreements entered into by the Company on behalf of any
Company Affiliates or by any Company Affiliates on behalf of the Company,
whether oral or in writing, pursuant to which the Company has agreed to
provide software or other products or maintenance, support or other
services. Schedule 3.10(s) correctly identifies as of the Closing Date open
and back orders. The Company's current standard forms of contract and
contract policies are attached to Schedule 3.10(s). Except as disclosed in
Schedule 3.10(s), none of the contracts with Customers deviate in any
material respect from such forms and policies; and
(t) Schedule 3.10(t) lists all other material assets and properties
used by the Company in its business and not disclosed in Schedules 3.10(a)
through 3.10(s).
One true and complete copy of each document referred to in Schedule 3.10(a)
through 3.10(t) has been provided or made readily available to Purchaser or its
counsel. Except as otherwise provided in any Schedule hereto, all documents,
rights, obligations and commitments referred to in such Schedules are valid, and
there is not under any of them any amendment, modification or termination or any
existing default or event of default or any event that has occurred which with
notice or lapse of time would constitute a default.
3.11 Litigation. Except as disclosed in Schedules 3.8 and 3.11, there have
----------
not been during the past five (5) years nor are there now any actions, suits,
proceedings, investigations, audits, examinations or claims pending, or to the
knowledge of the Company and the Sellers, threatened against the Company or its
predecessors or affecting or with respect to the business of the Company or any
assets owned, leased, licensed or used by the Company, at law or in equity, or
before or by any federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, nor do the
Sellers know of any facts which would clearly provide a basis for any such
action, suit or proceeding. There are no orders, judgments, writs, injunctions
or decrees of any foreign, federal, state, provincial or local court or
governmental authority or agency which apply to the Company, relating to the
Company, the business of the Company or any of the assets owned, leased,
licensed or used by the Company or which could adversely affect the business,
financial condition, assets or the prospects of
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<PAGE>
the Company. The Company is not in default with respect to any order, judgment,
writ, injunction or decree of any court or foreign, federal, state, provincial,
municipal or other governmental authority relating to the transactions
contemplated by this Agreement.
3.12 Labor Controversies; Benefit Plans. Except as disclosed in Schedules
----------------------------------
3.11, 3.12 and 3.18, there are no suits, claims, controversies or proceedings
pending or, to the best knowledge of the Company and the Sellers, threatened
against the Company or any Employee Benefit Plan, and there are no complaints or
organizational efforts in progress or, to the best knowledge of the Company and
the Sellers, threatened involving any of the current or former employees of the
Company, any of the employment practices of or attributable to the Company or
its business or assets (including without limitation any hiring practices) or
any of the Employee Benefit Plans. Except as described in Schedule 3.18, the
Company has complied in all material respects with all laws, rules, regulations,
orders and ordinances (including without limitation executive orders) applicable
to it relating to the employment of labor and the Employee Benefit Plans,
including without limitation ERISA and the Code and any provisions of such laws,
rules, regulations or orders relating to wages, hours, collective bargaining and
the payment of withholding tax, unemployment insurance, and similar taxes, and
is not liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. There is no unfunded deficiency in any
Employee Benefit Plan. There are no collective bargaining agreements relating
to any of the Company's employees and to the best knowledge of the Sellers the
employees of the Company have no intentions to and have not threatened to
organize or join a union, labor organization or collective bargaining unit.
Without limiting the foregoing:
(a) Except as set forth in Schedule 3.12(a),
(i) To the knowledge of the Sellers, the Company has no
employees who are party to any contract, commitment or arrangement,
either directly or by operation of law, with any trade union,
association which might qualify as a trade union or other
representative of employees. The Company and the Sellers are not
aware of any outstanding labor or employment proceedings of any kind
involving any of its current or former employees, including without
limitation any proceeding which would result in certification of
bargaining unit of employees, nor have there been any such proceedings
involving persons employed by the Company or its predecessors within
the past five (5) years. There are no outstanding, pending or, to the
knowledge of the Company and the Sellers, threatened or anticipated
assessments, actions, causes of actions, claims, complaints, demands,
orders, prosecutions or suits against the Company pursuant to any
rules, regulations, orders or laws governing health insurance,
unemployment insurance, income tax, employment standards, labor
relations, occupational health and safety, human rights, workers'
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<PAGE>
compensation, pay equity or the Employee Benefit Plans. No Employee
Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state,
provincial or federal agency and each such plan has been maintained in
compliance with all applicable laws, rules and regulations;
(ii) Except as provided for on the Latest Balance Sheet or
in Schedule 3.10(g), the Company is not liable for any arrears of
wages or penalties for failure to comply with any of the foregoing.
All obligations of the Company, whether arising by operation of law,
contract, understanding, past custom or otherwise, for unemployment
compensation benefits, pension benefits, equity participation
(including without limitation, any stock option, profit sharing,
phantom stock, restricted stock, stock bonus or similar benefit),
salaries, bonuses, sick leave, severance, disability, unemployment,
vacation and other forms of compensation payable to the officers,
directors and other employees and independent contractors of the
Company in respect of the services, employment or other consideration
rendered by any of them have been paid or adequate accruals therefor
have been made on the Latest Balance Sheet. All contributions
required to be made to any Employee Benefit Plan have been timely
contributed when due. No accumulated funding deficiency (within the
meaning of Section 412 of the Code), whether waived or unwaived,
exists with respect to any Employee Benefit Plan. With respect to
each Employee Benefit Plan subject to Title IV of ERISA, the assets of
each such plan are at least equal in value to the present value of
accrued benefits determined on an ongoing basis as of the date hereof.
With respect to each Employee Benefit Plan described in Section
501(c)(9) of the Code, the assets of each such plan are at least equal
in value to the present value of accrued benefits as of the date
hereof. The Company does not have any liability to pay excise taxes
with respect to any Employee Benefit Plan under applicable provisions
of the Code or ERISA;
(iii) Neither the Company nor any Company Affiliate has
engaged in any unfair labor practice or employee harassment or
discriminated on the basis of race, color, ancestry, place of origin,
ethnic origin, citizenship, creed, sex, sexual orientation, record of
offenses, marital status, family status, age or handicap in its
employment conditions or practices and there are no grievances,
controversies, unfair labor practice charges or complaints against or
attributable to the Company or its business of which the Company or
the Seller are aware relating to the same, nor do the Sellers know of
any facts which would provide a basis for any of the foregoing. No
prohibited transactions (within the meaning
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<PAGE>
of Section 4975 of the Code) have occurred with respect to any
Employee Benefit Plan; and
(iv) The Company is not and has not been obligated to
contribute to a multi-employer plan within the meaning of Section
3(37) of ERISA. No facts or circumstances exist that would result in
the imposition of liability against Sterling or Purchaser or a lien on
any assets of the Company by the Pension Benefit Guaranty Corporation
as a result of any act or omission by the Company or its predecessors.
No reportable event (within the meaning of Section 4043 of ERISA) has
occurred with respect to any Employee Benefit Plan subject to the
requirements of Title IV of ERISA.
(b) All employees of the Company are citizens of, or are
authorized to be employed or working in, the U.S.
(c) The Company has no obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees or inactive employees who may retire or any former employees who
have retired from employment with the Company or any current or former
Company Affiliates.
3.13 Intellectual Property Rights. Except as set forth on Schedules
----------------------------
3.10(p), 3.10(q) and 3.13, the Company owns the following: (a) all trade names,
service marks and registrations and applications therefor, brand names,
trademarks, trademark applications and registrations, copyrights, copyright
applications and registrations, rights to renew copyrights and copyright
renewals, and any patents and patent applications and registrations, (b) all
technologies, trade secrets, methods, know-how, data bases, licenses, processes,
formulae, inventions, discoveries, improvements, proprietary or technical
information, data, plans, specifications, and other intellectual property, and
(c) all computer software including but not limited to documentation and the
latest revisions of both related object and source codes, in each case used in
or necessary to conduct the business of the Company (hereinafter, collectively
referred to as "Intellectual Property Rights"). Except as provided in Schedules
3.10(b) and 3.10(p), all Intellectual Property Rights are held free and clear of
any Liens and, except as set forth in Schedules 3.10(e), 3.10(p) and 3.10(q), no
royalty is payable under any of them; all rights of the Company in and to the
Intellectual Property Rights are freely transferable. Except for those listed
in Schedule 3.13, no other intellectual property rights are necessary for the
conduct of the business of the Company substantially as now conducted. Neither
the Company nor the Sellers have knowledge of, or have received any complaint,
assertion, threat or allegation or otherwise have any notice of any claim or
potential claim to the effect that the use of any Intellectual Property Rights
infringes on any patent, trademark, copyright or other right of any third party,
violates any trade secret, know-how, process, proprietary information or other
right of any third party or that a third party claims any interest in, or
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<PAGE>
right to compensation from the Company by reason of, the use, exploitation or
sale of any Intellectual Property Rights except as described in Schedule 3.13,
nor do the Sellers know of any facts which would clearly provide a basis for any
of the foregoing. Except as set forth in Schedule 3.13, there are no
restrictions on the ability of the Company or any successor or assign of the
Company to use or otherwise exploit any Intellectual Property Rights, and such
use or exploitation does not and will not obligate Purchaser, the Company or any
successor or assign of the Company to pay any royalty, fee or other compensation
to any Person. Except as described in Schedules 3.10(b), 3.10(p) and 3.10(q),
the Company owns full, exclusive, irrevocable rights worldwide to and under all
Intellectual Property Rights and neither the Company nor the Sellers know of any
claim or basis for a claim that the Intellectual Property Rights are not
worldwide. Each of the trademarks and tradenames contained in the Intellectual
Property Rights is in use except as noted in Schedule 3.10(p), and all
registrations and applications therein are valid and uncanceled. No copyright is
subject to termination, reversion or renewal prior to five years from the date
hereof. Except as otherwise specified in Schedule 3.10(b), all agreements with
respect to copyrights referred to therein are noncancellable by the other party
during the period of the copyright. The Company is not, nor has it or any
Company Affiliate been, in violation of any intellectual property rights of any
third party with respect to the operations of the business of the Company. None
of the rights of the Company to any Intellectual Property Rights and any
licenses relating thereto will be impaired in any way by the transactions
contemplated by this Agreement. Except as disclosed on Schedule 3.13, no
director, officer, employee or Company Affiliate nor any Seller owns, directly
or indirectly, in whole or in part, any intellectual property rights or interest
therein which the Company has used or is using or the use of which is necessary
for the operation of the business of the Company as now conducted.
3.14 Software.
--------
(a) Except as disclosed on Schedule 3.10(r) hereto, the Company has
good and marketable right, title and interest in and to all versions or
releases of the software listed on Schedule 3.10(q) hereto, free and clear
of any liens, charges and encumbrances or rights of any third party. Except
with respect to programs licensed to the Company and set forth on Schedule
3.10(q) hereto, the Company is in actual possession of the source code of
each software program listed on Schedule 3.10(q) hereto, and the Company is
in possession of all other documentation necessary for the effective use of
each such software. Schedule 3.14(a) hereto lists, by program, all third
parties which have been provided with the source code to any of the
software listed on Schedule 3.10(q) hereto. Schedule 3.14(a) hereto also
lists, by program, all source code escrow agreements with escrow agents and
all third parties who are actual or potential beneficiaries of such escrow
agreements.
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<PAGE>
(b) There are no defects in any of the software offered by the Company
in connection with its business which would in any material and adverse
respect affect the functioning of any such software in accordance with the
specifications therefor published by the Company or provided to Customers
or prospective customers, and each piece of such software, together with
all know-how and processes used in connection therewith, functions as
intended, is in machine readable form, conforms to all applicable standards
(including without limitation VCS, VICS, ANSI x.12, TDCC, AIAG, EDIFACT,
WINS, ODETTE III and TRADACOMS as provided in the attached matrix),
contains all current revisions of such software and includes all computer
programs, materials, tapes, know-how, object and source codes and
procedures used by the Company in the conduct of its business. A list of
all software fixes in progress for Customers under the Company's agreements
is attached hereto as Schedule 3.14(b).
(c) Except for rights of Customers under contracts or as disclosed on
Schedule 3.10(q) hereto, no other Person has (i) any interest of any kind
or nature in or with respect to any software program or portion thereof
listed on Schedule 3.10(q) hereto, or (ii) any rights to use, market or
exploit any such software program or portion thereof.
(d) Neither the existence, licensing, marketing, distribution nor use
of any version or release of any software program listed on Schedule
3.10(q) hereto infringes on any patent, trademark or copyright, violates
any trade secret, know-how, process or proprietary information of any third
party or, except as provided in Schedule 3.10(q) hereto, entitles any third
party to any interest in, or right to compensation from the Company by
reason of, the use, exploitation or sale of any software programs listed.
Except as set forth in the agreements listed on Schedule 3.10(q) hereto,
there are no restrictions on the ability of the Company, or any successor
or assign of the Company, to use or otherwise exploit any software listed
on Schedule 3.10(q) hereto.
(e) Except as disclosed on Schedule 3.10(q), the use, licensing,
marketing or distribution by the Company or any successor or assign of the
Company of any version or release of any software listed on Schedule
3.10(q) does not and will not obligate Purchaser or any successor or assign
of the Company to pay any royalty, fee or other compensation to any Person.
3.15 Condition of Assets. Except as disclosed on Schedule 3.15, the
-------------------
properties and assets (whether real or personal, tangible or intangible) owned,
leased or licensed by the Company, including without limitation all properties
reflected in the Latest Balance Sheet, the Intellectual Property Rights and the
assets and properties listed in Schedules 3.10(a), (b), (c), (h), (k), (p), (q),
(s) and (t) and 3.19, constitute all of the assets and property (a) used by the
Company in the conduct of its business and (b) necessary for the
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<PAGE>
conduct of the business by the Company. All of the assets which constitute
personal property and are used by the Company in its business are in good
condition and repair for their intended use in the ordinary course of business,
except for such minor defects that do not interfere with the overall operations
of the Company and the assets conform in all material respects with all
applicable ordinances, regulations and other laws and there are no latent
defects therein known to the Company or the Sellers.
3.16 Accounts and Notes Receivables. The accounts and notes receivable of
------------------------------
the Company reflected on the Latest Balance Sheet, and all accounts and notes
receivable arising since June 30, 1994 arose from bona fide transactions in the
ordinary course of business and except as set forth in Schedule 3.16, are or at
the Closing will be valid and enforceable claims, fully collectible and subject
to no setoff or counterclaim. Except as set forth in Schedule 3.16, the
accounts payable reflected in the Latest Balance Sheet, and all accounts payable
arising since June 30, 1994, arose from bona fide transactions in the ordinary
course of business and have been paid or are not yet due and payable without
penalty or increase in amount other than immaterial penalties or increases in
amount.
3.17 Books and Records. The books and records of the Company are complete
-----------------
and correct records of all of the transactions to which the Company was a party,
have been maintained in accordance with good business practices and accurately
reflect, in accordance with generally accepted accounting principles
consistently applied, the basis for the respective financial positions and
results of operations of the Company in the financial statements referred to in
Section 3.6 hereof.
3.18 Compliance with Laws. The Company has complied in all material
--------------------
respects with, and is not in violation of in any material respect, any laws,
rules, regulations, orders or decrees applicable to the Company or its business,
contracts or assets. Except as described in Schedule 3.18, neither the Company
nor the Sellers have received notice or know of any violation by the Company of
any applicable material foreign, federal, state, provincial, municipal, local or
foreign law, rule, regulation, order or decree, and the Company and the Sellers,
after due inquiry, are not aware of any threatened claim of such a violation
(including any investigations relating thereto). There is no pending or, to the
knowledge of Sellers or the Company, threatened action, suit, claim, proceeding,
inquiry or investigation before or by any arbitrator, court or governmental
department, commission, board, bureau, instrumentality, body or agency, domestic
or foreign, involving or to restrain or prevent the consummation of the
transactions contemplated by this Agreement or that might reasonably be expected
to affect the right of Sterling to own the Company or the right of the Company
or any Sterling Affiliates to operate the business of the Company after the
Closing Date in substantially the manner in which it currently is operated.
3.19 Licenses, Permits, Authorizations, Etc. Except as set forth on
--------------------------------------
Schedule 3.19, the Company has all approvals, authorizations, consents,
licenses, orders, franchises,
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<PAGE>
rights and registrations and permits of all governmental agencies, whether
foreign, federal, state, provincial, municipal, or local, required to permit the
operation of the business of the Company from time to time. The Company has not
engaged in any activity which would cause the revocation or suspension of any
such approvals, authorizations, consents, licenses, orders, franchises, rights,
registrations and permits, and no action or proceeding looking to or
contemplating the revocation or suspension of any thereof is pending or, to the
best knowledge of the Company or the Sellers, threatened.
3.20 Products and Services.
---------------------
(a) Except as disclosed on Schedule 3.20(a), each of the contracts
with Customers is valid and binding on the respective Customers and is in
full force and effect.
(b) Except as specifically noted on Schedule 3.20(b), none of the
Customers, to the knowledge of the Company, is presently in default.
(c) Except as disclosed in Schedule 3.20(c), the Company is current in
all material respects in the performance of all service, installation,
warranty, maintenance and other material obligations under its contracts
with Customers and has duly performed each and every other material
obligation required to be performed by it under any such contract through
the date hereof.
(d) Except as noted on Schedule 3.20(d), the Company has no
responsibility or obligation to pay or have paid on its behalf any sales
commission, royalty or similar payment to any Person as a result of the
receipt of monies under any contract on or after the Closing Date.
(e) Except as provided in the contracts listed in any Schedule hereto,
(i) the Company has no outstanding obligation to do or provide
any software development, warranty, maintenance or professional
services or support to any Customer, nor
(ii) are there any outstanding commitments to provide any
software or services, or any products, supplies or goods to any
Customer, which the Company is unable, at present, to provide in the
ordinary course of business.
(f) Except as listed on Schedule 3.20(f), there are no outstanding
proposals, written or otherwise, by the Company to enter into any contracts
which have by the terms of such proposals not expired, which proposals if
accepted would constitute legally binding obligations of the Company.
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<PAGE>
(g) Except as listed on Schedule 3.20(g), the Company has properly
billed the Customers and there are no deposits, advances or prepayments by
any Customer held by the Company which the Company is, or may be under any
circumstances, under any obligation to return or refund to such Customer.
3.21 Burdensome Agreements. To the best knowledge of the Company and the
---------------------
Sellers, the Company is not a party to any agreement the performance of which by
it in accordance with its terms would have a material adverse effect on the
Company's business or the condition (financial or otherwise), assets,
liabilities, properties, results of operations or property of the Company.
3.22 Environmental Matters. The Company in its processes and undertakings,
---------------------
and its use, maintenance and operation of its property and the assets utilized
in the operation of its business, has been and is in compliance with all
Environmental Laws (as hereinafter defined). The Company has any and all
permits or certificates or approvals required under any Environmental Laws for
the operation of its business. Neither the Company nor the Sellers have
received any notice of non-compliance with any Environmental Laws, nor knows of
any facts which could give rise to a notice of non-compliance. There are no
actions, suits or proceedings pending or, to the knowledge of the Sellers,
threatened against the Company or the Sellers by or before any federal,
provincial, municipal, local or foreign court or governmental authority or
agency or commission concerning any non-compliance, or alleged non-compliance,
with any Environmental Laws, and neither the Company nor the Sellers have ever
been convicted of any offense for non-compliance with any Environmental Laws, or
fined, or been otherwise sentenced or a party to a settlement of such
prosecution short of conviction. Neither the Company nor the Sellers have
caused or permitted the release of any Hazardous Substances (as hereinafter
defined) on or off the property used in the Company's business, nor disposed of,
or allowed or permitted the disposal of, or treated or stored, or allowed or
permitted treatment or storage of material amounts of Hazardous Substances,
except in compliance with all Environmental Laws. Neither the Company nor the
Sellers have ever conducted or had conducted an environmental audit, or
assessment or study with respect to the Company's business resulting in the
production or preparation of documents or records being produced, or resulting
in the delivery of oral or verbal conclusions or advice, the results of which or
documents which have not been released to Purchaser. Neither the Company nor
the Sellers have at any time leased, owned or operated any facility which has
ever been or is now a treatment, storage or deposit facility requiring a permit
or interim status under any Environmental Law. To the best knowledge of
Sellers, no asbestos in any form is constructed, placed, deposited, stored,
disposed of or located on any real property or fixtures or improvements thereon
utilized by the Company.
For the purposes of this Agreement, "Environmental Laws" shall mean any
law, statute, ordinance, regulation, guideline, rule, judgment, order, decree,
permit, license,
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<PAGE>
operating authorization or variance of any federal, provincial, state,
municipal, local or foreign government relating to the protection of health or
environment or the management of chemical substances, raw materials, products or
wastes or pollution, protection or cleanup of the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata). For
purposes of this Agreement, the term "Hazardous Substance" shall mean (i) any
"hazardous waste" or "hazardous material" within the meaning of any
Environmental Law, (ii) any "pollutant or contaminant" within the meaning of any
Environmental Law and (iii) petroleum, including crude oil or any fraction
thereof, natural gas, liquified natural gas and synthetic gas and any other
substance that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous to health or the
environment.
3.23 Compliance With Contracts, Agreements, Etc. Except as otherwise
------------------------------------------
disclosed on Schedule 3.20 or Schedule 3.23, the Company is in compliance, in
all material respects, with all terms and provisions of all contracts,
agreements, indentures, leases, policies, instruments and licenses to which the
Company is a party or by which any of its assets may be bound or affected, and
all such contracts, agreements, indentures, leases, policies, instruments and
licenses are valid and binding in accordance with their terms and in full force
and effect, and no breach or default by the Company or event which, with notice
or lapse of time or both, could constitute a breach or default by the Company,
exists with respect thereto.
3.24 Consents. Except as set forth in Schedule 3.5, no authorization,
--------
consent, approval, permit or license of, or filing with, any Person is required
to authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the agreements contemplated hereby on the part
of the Company or the Sellers.
3.25 Disclosure. All facts material to the Company's business and the
----------
financial condition, assets and prospects of the Company have been disclosed (or
with respect to facts arising hereafter will be promptly disclosed prior to the
Closing Date) to the Purchaser in writing. No representation or warranty
contained in this Agreement, and no statement, certificate, schedule, list or
other information furnished by or on behalf of the Company or the Sellers to
Purchaser or Sterling in connection with this Agreement, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
3.26 Certain Payments. Neither the Sellers nor the Company nor any officer
----------------
or employee of the Company or current or former Company Affiliates has paid or
caused to be paid, directly or indirectly, in connection with the Company's
business:
(a) to any government or agency thereof or agent of any supplier or
customer any bribe, kick-back or other similar payment; or
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(b) any contribution to any political party or candidate (other than
from personal funds of officers and employees not reimbursed by their
respective employers or as otherwise permitted by applicable law).
3.27 Transactions with Related Parties. Except as set forth in Schedule
---------------------------------
3.27 or disclosed in the Latest Balance Sheet, (a) there are no outstanding
notes payable to, accounts receivable from or advances by the Company to, and
the Company is not otherwise a creditor of, and (b) since August 18, 1992, the
Company has not purchased, transferred or leased any real or personal property
from or for the benefit of, paid any commission, salary or bonus to or for the
benefit of, or purchased any product or service from or for the benefit of, or
otherwise incurred any obligation or liability to or entered into or agreed to
enter into any transaction with or for the benefit of, in the case of either
clause (a) or (b) above, any current or former Seller Affiliate. "Seller
Affiliate" shall mean any Person that directly or indirectly controls, is
controlled by or is under common control with, a Seller. Except for the
Company, Sellers currently have no other Seller Affiliates.
3.28 Sellers Holdings. There is no plan or intention by the Sellers to
----------------
sell, exchange, or otherwise dispose of a number of shares of Sterling Common
Stock received pursuant to the Merger that would reduce the Sellers' ownership
of Sterling Common Stock to a number of shares having a value, as of the date of
the Merger, of less than fifty percent (50%) of the value of all of the Company
Common as of the same date. For purposes of this representation, shares of
Company Common and shares of Sterling Common Stock held by holders of Company
Common and otherwise sold, redeemed or disposed of prior or subsequent to the
transaction are considered in measuring such fifty percent (50%).
IV. Representations, Warranties and Covenants of the Sellers.
---------------------------------------------------------
Each Seller additionally, jointly and severally represents and warrants
that the following are true and correct as of the date hereof and will be true
and correct through the Closing Date as if made on that date and agrees as
follows:
4.1 Ownership of the Stock. Each Seller owns, beneficially and of record,
----------------------
good and marketable title to the Company Common shown opposite his name on
Exhibit A free and clear of all Liens, proxies, or sellers' agreements. At the
Closing, each Seller will convey to Sterling good and marketable title to all of
the Company Common shown opposite his name on Exhibit A, free and clear of any
Liens, proxies, sellers' agreements or restrictions.
4.2 Sellers' Capacity. Each Seller has the legal capacity to enter into
-----------------
and perform this Agreement.
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<PAGE>
4.3 Investment Representations and Covenants. The Sterling Shares to be
----------------------------------------
acquired by the Sellers are being acquired by each of them for his own account
for investment and not with a view to, or for resale in connection with, any
distribution and no other person has or will have any right to acquire any
beneficial interest therein. Each Seller fully understands and agrees that he
must bear the economic risk of the acquisition of the Sterling Shares for an
indefinite period of time because the Sterling Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or under
the securities laws of any state or other jurisdiction and, therefore, cannot be
resold, pledged, assigned or otherwise disposed of unless the Sterling Shares
are subsequently registered for sale under the Securities Act and the applicable
securities laws of such states or unless an exemption from registration is
available. Each of the Sellers has received a copy of the Sterling Annual
Report on Form 10-K for the fiscal year ended September 30, 1993, and all other
documents filed subsequent to September 30, 1993 under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act (including without limitation, its Form 10-Q for
the quarters ended December 31, 1993 and March 31, 1994 and its Proxy Statement
dated February 8, 1994), each in the form (excluding exhibits) filed with the
SEC (collectively, the "Reports"). Each of the Sellers agrees that (i) a
restrictive legend as provided in the form of Affiliate's Letter attached hereto
as Exhibit J will be placed on each certificate representing the Sterling Shares
and a notation shall be made in the appropriate records of Sterling indicating
that such shares are subject to restrictions on transfer, and (ii) each of the
Sellers has received and reviewed this Agreement and the Reports and other
documents referred to herein and has been given the opportunity to obtain any
additional information or documents and to ask questions and receive answers
about such documents. Each of the Sellers has carefully reviewed and fully
understands the nature and risks of, and other considerations relating to, the
issuance of the Sterling Shares. Each of the Sellers has received only the
Reports and the documents attached as exhibits hereto, and the other documents
that Sterling may have provided at the specific request of any of the Sellers,
and has received no other literature from Sterling. Except as set forth in this
Agreement and the exhibits hereto, no representations or warranties have been
made to the Sellers by Sterling or by any person acting on behalf of Sterling
with respect to the business or financial condition of Sterling.
4.4 Control of Related Businesses. No Seller controls another business
-----------------------------
that is in the same or similar line of business as the Company or that has or is
engaged in transactions with the Company except transactions in the ordinary
course of business, and, since September 30, 1993, involving transactions of
less than $10,000 in the aggregate.
4.5 Ownership of Sterling Shares. No Seller, directly or indirectly,
----------------------------
beneficially or of record, owns or has any ownership interest in Sterling Common
Stock (other than indirectly, through registered mutual funds over which the
Seller has no control or influence and which ownership interest constitutes less
than 1/2 of 1% of the total funds under management).
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<PAGE>
4.6 Transfers of Company Common. There have been no transfers of the
---------------------------
Company Common since inception of the Company.
V. Representations and Warranties of Sterling and Purchaser.
--------------------------------------------------------
Sterling and Purchaser represent and warrant to the Company and the Sellers
that:
5.1 Organization, Power. Sterling and Purchaser are corporations duly
-------------------
organized, validly existing and in good standing under the laws of the States of
Delaware and Michigan, respectively. Each of Sterling and Purchaser has all
requisite corporate power and authority to enter into this Agreement and perform
its obligations hereunder.
5.2 Authorization. Each of Sterling and Purchaser has all requisite power
-------------
and authority to enter into this Agreement, to perform the obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of Sterling and the
sole shareholder and Board of Directors of Purchaser and no other corporate
proceedings on the part of either of them are necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby. This Agreement constitutes the legal, valid and binding obligation of
Sterling and Purchaser enforceable in accordance with its terms, except as (a)
enforceability hereof may be limited by bankruptcy, insolvency, reorganization
or moratorium or other similar laws affecting the enforcement of creditors'
rights generally and (b) the availability of equitable remedies may be limited
by equitable principles of general applicability.
5.3 No Violation. The execution, delivery and performance of this
------------
Agreement by Sterling and Purchaser and the consummation by it of the
transactions contemplated hereby do not require the consent, waiver, approval,
license or authorization of any Person which is not provided for in this
Agreement, do not violate, with or without the giving of notice or the passage
of time, any provision of law applicable to it or the corporate charter or by-
laws of Sterling or Purchaser and do not conflict with or result in a breach or
termination of any provision of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any of the property, assets or
capital stock of Sterling or Purchaser pursuant to, any mortgage, deed of trust,
indenture or other agreement, contract, commitment or instrument or any order,
judgment, decree, statute, regulation or any other restriction of any kind or
character to which Sterling or Purchaser is a party or by which Sterling or
Purchaser or any of its assets may be bound.
5.4 Compliance with Laws. Sterling has complied in all material respects
--------------------
with, and is not in violation of in any material respect, any laws, rules,
regulations, orders or decrees applicable to Sterling or its business, contracts
or assets the noncompliance
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<PAGE>
with or violation of which would have a material adverse effect on the business
and operations of Sterling and its subsidiaries taken as a whole. Sterling has
not received notice and has no knowledge of any violation by Sterling of any
applicable material foreign, federal, state, provincial, municipal, local or
foreign law, rule, regulation, order or decree, and is not aware of any
threatened claim of such a violation (including any investigations relating
thereto), the violation of which would have a material adverse effect on the
business and operations of Sterling and its subsidiaries taken as a whole.
5.5 Sterling Shares. When issued and delivered to Sellers pursuant to
---------------
this Agreement, the Sterling Shares will be validly issued, fully paid and
nonassessable. The rights provided for under the Sterling Shares are identical
to those rights provided for under the other outstanding shares of the Sterling
Common Stock.
5.6 Continuity. Following the Merger, the Surviving Corporation, directly
-----------
or through its subsidiaries, will continue the Company's historic business or
use a significant portion of the Company's historic business assets in its
business.
VI. S Corporation Issues
--------------------
6.1 S Corporation. The Company and the Sellers jointly and severally
-------------
represent and warrant that the Company is now an S corporation under the Code
and has been an S corporation continuously since July 1, 1993. The closing of
the transactions contemplated hereby will terminate the S status of the Company
effective with the Closing and require the filing of a tax return for the period
beginning January 1, 1994, and ending the day before the Closing Date (the
"Short Tax Period"). The Company shall close its books as of the end of the
Short Tax Period pursuant to Section 1362(e)(6)(D) of the Code and compute
taxable income or taxable loss for the Short Tax Period on the basis of the
permanent books and records (including workpapers) of the Company. The Company
shall prepare the necessary tax return information, in accordance with its
customary accounting procedures, for the Short Tax Period in accordance with the
Subchapter S requirements of the Code and provide such information to the
Sellers. The Sellers shall pay the federal and state income tax, if any, for
the Short Tax Period, including but not limited to any such taxes payable by the
Company for the Short Tax Period. Notwithstanding the termination of the
Shareholders Agreement contemplated by Section 10.10 hereof, as contemplated by
such agreement, the Company shall distribute cash to the Sellers in an amount
equal all of their federal, state and local income taxes for the Short Tax
Period on the income that passes through to the Sellers as a result of the
Company's status as an S corporation, reduced by any tax benefits produced by
losses, deductions and credits that pass through to the Sellers as a result of
the Company's status as an S corporation. Such distribution shall be in the
form of a dividend from the Company to the Sellers, declared prior to the
Closing, and shall be made on or after the Closing Date
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<PAGE>
promptly following the Company's determination of the amount of such taxes and
in any event within sixty (60) days of the date it is declared.
6.2 Amendment of Returns. If the Sellers become aware that the returns of
--------------------
the Company for any period when the Company was an S corporation may be amended
to provide a tax refund to the Sellers, the Company, at the expense of the
Sellers, shall prepare and file such amendments to the return as may be
necessary, provided, however, that the Company shall not be required to file any
such amendment that would, as determined by Sterling in its sole and absolute
discretion, have an adverse tax effect on the Company for periods prior to or
subsequent to the Closing. The Company has no obligation with respect to
pursuing such refund other than to prepare and file amendments to such returns
pursuant to this Section 6.2.
6.3 Audits. In the event of any audit by the Internal Revenue Service
------
(the "IRS") or other taxing authority of the tax liability of the Company or the
Sellers for the periods during which the Company was an S corporation, the
Company shall notify the Sellers immediately of such audit or threatened audit.
The Company at the expense of the Sellers shall respond to the audit and shall
keep the Sellers informed of any issues raised by the taxing authority involved.
The Sellers shall have the sole right to settle or contest any deficiency
proposed by the IRS or such other authority; provided, however, that the Sellers
shall not settle any deficiency without the consent of the Company if such
settlement would have an adverse tax effect on the Company for periods
subsequent to the Closing. The Company shall provide each Seller with access to
its books and records, and cooperate with the Sellers, to enable them to contest
any such deficiency. In the event that the settlement or other determination of
any dispute results (i) in a tax benefit to the Company for a taxable period
other than the period when the Company was an S corporation by reducing the tax
liability of the Company or a corporation in its affiliated group and (ii) a
tax detriment to the Sellers, the amount of such reduction in tax liability
shall be deducted from any liability of the Sellers under Section 11.1 hereof
arising out of claims for the breach by the Sellers of the representations set
forth in Section 3.8 hereof. Any refunds of income taxes paid by the Sellers
for the periods when the Company was an S corporation shall belong to the
Sellers.
VII. Covenants.
---------
7.1 Certain Covenants of the Company and the Sellers.
------------------------------------------------
(a) Prior to the Closing, the Company shall operate its business in
the ordinary course, will not introduce any new method of management or
operation and shall use its reasonable best efforts to preserve the
business of the Company intact, to retain its present customers, suppliers,
employees and consultants so that they will be available to the Company
after the Closing and to cause the
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<PAGE>
consummation of the transactions contemplated by this Agreement in
accordance with its terms and conditions. Neither the Company nor any
Seller shall take any action that might impair the business or the assets
of the Company.
(b) Prior to the Closing Date, the Company and the Sellers shall give
all required notices and before and after the Closing will use all
reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications, novations and orders of governmental
authorities and parties to contracts, agreements, licenses or other
instruments relating to the business as may be required in order to enable
the Company and the Sellers to perform their obligations hereunder, except
as set forth on Schedule 7.1(b); provided, however, that no contract shall
be amended to increase the amount payable by the Company or decrease the
amount paid to the Company thereunder in order to obtain any such license,
permit, consent, approval, authorization, novation or otherwise without
first obtaining the approval of Purchaser.
(c) The Company shall permit, during normal business hours prior to
the Closing Date, Purchaser's employees, agents and representatives to make
or cause to be made a detailed review of the business and financial
condition of the Company and its assets, and to make or cause to be made
such investigation as Purchaser deems reasonably necessary or advisable of
the properties, assets, businesses, books and records of the Company. The
Company will assist Purchaser in conducting such review and investigation
and will provide, and will cause its accountants to provide, Purchaser and
its employees, agents and representatives full access to all books and
records (including tax returns filed or in preparation), personnel and
premises of the Company and the records of the Company's accountants, and
will provide to Purchaser such other information as Purchaser shall
request. With the consent of the Company, not to be unreasonably withheld,
Purchaser will interview such customers, distributors and personnel of the
Company as Purchaser shall reasonably request.
(d) Prior to the Closing the Sellers shall not sell or otherwise
transfer, or agree to sell or otherwise transfer, any of the Company
Common, or permit to exist any Lien on any of the Company Common.
(e) On or before the Closing, each Seller shall transfer to the
Company the life insurance policies covering the other Seller.
(f) On or before the Closing, the Company will pay all amounts due
under the Promissory Note, assumed by the Company, dated August 18, 1992 in
the original principal amount of $893,090.00 executed by Vasquez Davis,
Inc. and payable to Thomas S. Monaghan, Inc. and will obtain a release from
Thomas S. Monaghan, Inc. in the form attached hereto as Exhibit B and a
release of all
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<PAGE>
security interests, including but not limited to the termination of all
UCC-1's and other evidences of such security interests.
7.2 Additional Covenants and Agreements.
-----------------------------------
(a) Purchaser, Sterling, the Company and the Sellers each agree to
cooperate with the other in determining whether any filings are required to
be made or consents are required to be obtained in any jurisdiction in
connection with the consummation of the transactions contemplated hereby
and in making or causing to be made any such filings promptly and in
seeking to obtain timely any such consents. Purchaser, Sterling, the
Company and the Sellers shall furnish to each other and to their respective
counsel all such information as may be reasonably required to order to
effectuate the foregoing actions.
(b) The Company and the Sellers promptly shall give notice to Sterling
and Purchaser of (i) the occurrence of any event or the failure of any
event to occur known to the Company or any of the Sellers that results in a
material breach or material inaccuracy of any representation or warranty by
the Company or the Sellers or (ii) a failure by the Company or the Sellers
to comply with any covenant or condition contained herein.
(c) The Company and the Sellers (i) shall take all reasonable action
necessary to render accurate as of the Closing Date their representations
and warranties contained herein, (ii) shall refrain from taking any action
that would render any such representation or warranty inaccurate as of such
time and (iii) shall perform or cause to be satisfied each covenant or
condition to be performed or satisfied by or on behalf of them as
contemplated by this Agreement.
(d) Sterling or Purchaser promptly shall give notice to the Company
and the Sellers of (i) the occurrence of any event or the failure of any
event to occur known to Sterling or Purchaser that results in a material
breach or material inaccuracy of any representation or warranty by Sterling
or Purchaser or (ii) a failure by Sterling or Purchaser to comply with any
covenant or condition contained herein.
(e) Sterling and Purchaser (i) shall take all reasonable action
necessary to render accurate as of the Closing Date their representations
and warranties contained herein, (ii) shall refrain from taking any action
that would render any such representation or warranty inaccurate as of such
time and (iii) shall perform or cause to be satisfied each covenant or
condition to be performed or satisfied by or on behalf of them as
contemplated by this Agreement.
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<PAGE>
(f) Except as otherwise provided herein, each party hereto shall pay
all of its own fees and expenses incident to the negotiation, preparation,
execution and performance of this Agreement, including the fees and
expenses of their respective counsel, accountants, investment bankers and
other experts, provided that any such fees and expenses of the Company in
excess of $25,000 shall be paid by the Sellers. The Sellers shall pay any
sales, real estate or other transfer, stamp or similar taxes incurred with
respect to the Agreement and the transactions contemplated hereby (e.g.,
the Merger). Sterling and Purchaser shall each be responsible for their own
gains and income taxes and Sellers shall be responsible for the Company's
and their own gains and income taxes incurred in connection with the
transactions contemplated hereby. Anything in this Agreement to the
contrary notwithstanding, Sellers shall not be liable for payment of any
built in gain tax pursuant to Section 1374 of the Code payable by the
Company or Purchaser as a result of actions occurring on or after the
Closing Date.
(g) Sterling and Purchaser shall take all actions necessary to (i)
permit the adoption of the Sterling Software, Inc. Savings and Security
Plan (the "Sterling Plan") by Purchaser for the benefit of the Company's
employees effective as of or after the Closing Date; (ii) provide for the
immediate participation in the Sterling Plan by all of the Company's
employees who currently participate in the Company's retirement savings
plan (the "Company Plan"); (iii) recognize for participation and vesting
purposes under the Sterling Plan the service with the Company prior to the
Closing of each of the Company's employees; and (iv) provide for the
transfer of the assets and obligations of the Company Plan into the
Sterling Plan as soon as is reasonably practicable after the Closing Date.
The Company and the Sellers shall take all actions necessary to (i)
discontinue all contributions to the Company Plan effective as of the
Closing Date; (ii) assist Purchaser and the Company in the enrollment of
the Company's eligible employees in the Sterling Plan; (iii) cause the
transfer of the assets and obligations of the Company Plan into the
Sterling Plan; and (iv) reasonably cooperate in the timely transfer of all
plan administration records concerning the Company Plan to Purchaser or
such other person as may be designated by Purchaser. The parties agree that
the foregoing actions shall be taken in a manner consistent with the
continued favorable tax qualification of the Sterling Plan and the Company
Plan.
(h) No news release or other public announcement pertaining in any way
to the transactions contemplated by this Agreement shall be made by
Purchaser without the prior consent of the Sellers, or by the Company or
the Sellers, without the prior consent of Sterling, unless in the opinion
of counsel to either Sterling and Purchaser or the Sellers and the Company,
as the case may be, such release or announcement is required by law
(including federal securities laws) or the rules of the New York Stock
Exchange; provided that the obligations of
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<PAGE>
Sterling and Purchaser under this Section 7.2 (h) shall expire one (1)
month after the Closing Date.
7.3 Registration Rights.
-------------------
(a) Sterling will use reasonable efforts to file a "shelf"
registration statement with the Securities and Exchange Commission (the
"SEC"), as soon as practicable after the Closing, covering the registration
of the sale of the Sterling Shares by the Sellers from time to time in the
open market, and will use reasonable efforts to cause such registration
statement to be declared effective by the SEC. Sterling currently believes
that its reasonable efforts will result in such registration statement
being declared effective by the SEC. Sterling shall bear all expenses
related to such registration statement.
(b) In connection with the disposition of the Sterling Shares under
the registration statement, in order for the Sellers to dispose of Sterling
Shares with a prospectus that is part of the registration statement, the
Sellers must give Sterling written notice of their intention to sell any of
the Sterling Shares at least two (2) but not more than twenty (20) business
days prior to the date of the proposed sales which notice shall include the
number of shares proposed to be disposed, whether the shares are to be sold
in an underwritten offering and the time period during the thirty (30) days
following the date of such notice during which the shares may be disposed
(the "Sale Period"), and the Sellers agree that, during each Sale Period,
they shall not deliver any prospectus that is part of the registration
statement in connection with any disposition of Sterling Shares during any
period of time when, but only so long as, Sterling, after receipt of the
notice set forth above, notifies the Sellers (a "Delay Notice") that
Sterling is in possession of material non-public information that, in the
exercise of its reasonable judgment, would be required to be disclosed in
the registration statement (or in the amendment, or post-effective
amendment thereto) in order to comply with SEC requirements, which material
information may relate, including, without limitation, to a financing
project or a pending acquisition, merger or other material corporate
reorganization or transaction to which Sterling is or is expected to be a
party; provided that Sterling shall advise the Sellers in writing as soon
as any such delay is no longer applicable; provided, further, that the
Sellers shall only be prevented from disposing of Sterling Shares with a
prospectus under the registration statement for up to 90 consecutive days
(a "Delay Period") following the receipt of a Delay Notice and any two
Delay Periods must be at least fifteen (15) days apart during which time
the Sellers shall be permitted to dispose of Sterling Shares with a
prospectus under the registration statement.
(c) Sterling will:
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<PAGE>
(i) use reasonable efforts to keep such registration statement
effective until the second anniversary of the Closing Date; provided,
however, Sterling may delay or suspend such registration at any time
for so long as, in the reasonable business judgment of Sterling, the
financial statements or other information necessary to keep such
registration statement effective cannot be produced without undue
expense or burden or otherwise are not available;
(ii) furnish to each Seller a conformed copy of such registration
statement and of each amendment or supplement thereto, and such number
of copies of the prospectus contained in such registration statement
and any other prospectus filed under Rule 424 under the Securities Act
as the Sellers may reasonably request in order to facilitate the
distribution of the Sterling Shares, in conformity with the
requirements of the Securities Act;
(iii) use reasonable efforts to register or qualify the Sterling
Shares covered by such registration statement under such other
securities or blue sky laws of such states as shall be reasonably
appropriate for the distribution of securities covered by such
registration, except that Sterling shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this Section 7.3(c)(iii) be obligated to be so qualified or to consent
to general service of process in any such jurisdiction;
(iv) notify each Seller at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances under which they were made, and at the request of any
Seller promptly prepare and furnish to such Seller a reasonable number
of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made; and
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<PAGE>
(v) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the SEC.
Each Seller shall, upon receipt of any notice from Sterling of the
happening of any event of the kind described in Section 7.3(c)(i) or
7.3(c)(iv), forthwith discontinue such person's disposition of Sterling
Shares pursuant to the registration statement until such holder's receipt
of the copies of the supplemented or amended prospectus contemplated by
Section 7.3(c)(i) or 7.3(c)(iv) and, if so directed by Sterling, shall
deliver to Sterling all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Seller
Securities current at the time of receipt of such notice.
(d) If so requested in writing by a managing underwriter in an
offering by Sterling, neither Seller shall effect any sale or other
disposition of any Sterling Common during the seven days prior to and the
90 days after any registration related to such offering.
(e) It shall be a condition precedent to the obligations of Sterling
to file or keep effective any registration pursuant to this Section 7.3
that each Seller shall furnish to Sterling such information regarding
itself, the Sterling Shares held by it and its proposed disposition thereof
as Sterling shall reasonably request.
(f) To the extent permitted by law, each Seller requesting or joining
in a registration pursuant to this Section 7.3 shall indemnify Sterling and
its officers and directors and its legal counsel, and each Person if any,
who controls any thereof within the meaning of Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act of 1934, as amended, and
their respective successors against all claims, losses, damages and
liabilities, joint or several, or actions in respect thereof, arising out
of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
document incident to any registration, qualification or compliance (or in
any related registration statement, notification or the like) or any
omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances in which they were made and
will reimburse Sterling and each other Person indemnified pursuant to this
Section 7.3 (f) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that this Section 7.3 (f) shall
apply only if (and only to the extent that) such statement or omission was
made in reliance upon and in conformity with information (including,
without limitation, negative responses to inquiries) furnished to Sterling
by the Sellers and designated to be specifically for use therein.
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<PAGE>
(g) Following the Closing, Sterling shall prepare and submit to the
New York Stock Exchange ("NYSE") a listing application covering the
Sterling Shares and shall use reasonable efforts to obtain approval for the
listing of such shares at or around such time as the registration statement
contemplated under this Section 7.3 becomes effective.
7.4 Requirements to Effect Merger. Subject to the terms and conditions
-----------------------------
of this Agreement, the Company and the Sellers shall use all reasonable efforts
to take, or cause to be taken, all actions necessary to effect the Merger under
the MBCA, including without limitation the filing with the Secretary of State of
Michigan of a Certificate of Merger in a form approved by counsel for the
parties to this Agreement.
7.5 Requirements to Effect Merger. Subject to the terms and conditions
-----------------------------
of this Agreement, Sterling and Purchaser will use all reasonable efforts to
take, or cause to be taken, all actions necessary to effect the Merger under the
MBCA, including without limitation the filing with the Secretary of State of the
State of Michigan of a Certificate of Merger, in a form approved by counsel for
the parties to this Agreement.
VIII. Joint Condition Precedent to Closing Obligations.
------------------------------------------------
8.1 Absence of Litigation. Except as may be waived by all of Purchaser,
---------------------
Sterling, the Sellers and the Company, the obligations of the parties hereto to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, on or before the Closing Date, of the condition that no
order, judgment or decree by any court or governmental agency or authority shall
be in effect or threatened that enjoins, restrains or prohibits or seeks to
enjoin, restrain or prohibit the consummation of the transactions contemplated
by this Agreement.
IX. Conditions Precedent to Obligations of the Company and the Sellers.
------------------------------------------------------------------
Except as may be waived by the Company and the Sellers, the obligations of
the Company and the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or before the Closing Date of
each of the following conditions:
9.1 Compliance. Sterling and Purchaser shall have, or shall have caused
----------
to be, satisfied or complied with and performed in all material respects all
terms, covenants and conditions of this Agreement required to be complied with
or performed by or on behalf of Sterling or Purchaser on or before the Closing
Date.
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<PAGE>
9.2 Representations and Warranties. All of the representations and
------------------------------
warranties made by Purchaser in this Agreement shall have been true and correct
in all material respects as of the date hereof, and shall be true and correct in
all material respects at the Closing Date with the same force and effect as if
such representations and warranties had been made at and as of the Closing Date,
except as otherwise expressly permitted by this Agreement.
9.3 Opinion of Counsel for Purchaser. On the Closing Date, Purchaser
--------------------------------
will deliver to the Company the opinion of counsel to Sterling dated the Closing
Date, substantially in the form of Exhibit C hereto.
9.4 Certified Resolutions. Certified resolutions of the shareholder and
---------------------
the Board of Directors of Purchaser approving the Agreement and the Merger shall
have been delivered to Sellers.
9.5 New Shareholders' Agreement. On the Closing Date, the Sellers shall
---------------------------
execute and deliver to one another a shareholder's agreement in the form of
Exhibit D attached hereto.
X. Conditions Precedent to Obligations of Purchaser and Sterling.
-------------------------------------------------------------
Except as may be waived by Purchaser and Sterling, the obligations of
Purchaser and Sterling to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing Date,
of each of the following conditions:
10.1 Compliance. Each of the Company and the Sellers shall have, or shall
----------
have caused to be, satisfied or complied with and performed in all material
respects all terms, covenants and conditions of this Agreement to be complied
with or performed by or on behalf of the Company or the Sellers on or before the
Closing Date.
10.2 Representations and Warranties. All of the representations and
------------------------------
warranties made by the Company and the Sellers in this Agreement shall have been
true and correct in all material respects as of the date hereof and shall be
true and correct in all material respects as of the Closing Date with the same
force and effect as if such representations and warranties had been made at and
as of the Closing Date, except as otherwise expressly permitted by this
Agreement.
10.3 Opinion of Counsel for the Company. On the Closing Date, the Company
----------------------------------
and the Sellers will deliver to Sterling and Purchaser the opinion of counsel
for the Company and the Sellers reasonably acceptable to Sterling, dated the
Closing Date,
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substantially in the form of Exhibit E-1 hereto and Sterling shall have received
from Jackson & Walker a legal opinion in the form of Exhibit E-2 hereto.
10.4 Approvals and Consents. All approvals of or applications or notices
----------------------
to public authorities, foreign, federal, state, provincial, or local, and all
consents or approvals of any Persons who are parties to contracts or other
agreements to which the Company is a party, the granting, making or acceptance
of which is necessary for the consummation of the transactions contemplated
hereby or for preventing the termination of any right or agreements of the
Company or necessary for preventing any loss or disadvantage to Purchaser or its
Affiliates or the Company, by reason of the transactions contemplated hereby,
shall have been made, given or obtained, as the case may be; no such consents or
approvals shall have imposed a condition to such consent or approval which
materially and adversely affects the Company, its assets or its business.
10.5 Non-Competition. Each of the Sellers shall have duly executed and
---------------
delivered to the Company a confidentiality and non-competition agreement with
Sterling and Purchaser in the form attached hereto as Exhibit F (the "Non-
Competition Agreement").
10.6 Releases. Each of the Sellers shall have duly executed and delivered
--------
to Purchaser a General Release in the form of Exhibit G attached hereto.
10.7 [DELETED]
10.8 No Material, Adverse Change. Except as disclosed in Schedule 3.7, no
---------------------------
material, adverse change in the business or the assets, operations, prospects or
financial condition of the Company shall have occurred after March 31, 1994 and
prior to the Closing.
10.9 Acknowledgment. Thomas S. Monaghan, Inc. shall have executed and
--------------
delivered to Purchaser an acknowledgment substantially in the form of Exhibit B
hereto.
10.10 Shareholders Agreement. Sellers shall have delivered to Purchaser
----------------------
evidence satisfactory to counsel for Purchaser that the Shareholders Agreement,
dated August 18, 1992, between the Sellers (the "Shareholders Agreement") has
been terminated and the Sellers shall have waived all rights thereunder.
10.11 401(K). The Company shall have delivered to Purchaser evidence
-------
that the Company shall have (i) discontinued all future contributions to the
Company Plan; (ii) distributed enrollment information with respect to the
Sterling Plan to the Company's eligible employees; and (iii) authorized the
transfer of all assets and obligations of the Company Plan to the Sterling Plan.
Purchaser shall have delivered to the Company and Sellers evidence that
Purchaser shall have (i) adopted the Sterling Plan for the benefit of
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eligible employees of the Company; (ii) provided for the recognition under the
Sterling Plan of service with the Company prior to the Closing by the Company's
employees; and (iii) authorized the assumption of the assets and obligations of
the Company Plan by the Sterling Plan.
10.12 [DELETED].
10.13 Director and Officer Resignations. The directors and officers of
---------------------------------
the Company shall have resigned from their respective positions.
10.14 Certain Documents, Etc. The Company and the Sellers shall have
----------------------
furnished Purchaser with the following documents:
(a) the articles of incorporation of the Company and all amendments
thereto, duly certified by the Michigan Secretary of State;
(b) certificates as to the good standing of the Company, executed by
the appropriate officials of the states in which the Company is required to
be incorporated or qualified as a foreign corporation;
(c) the by-laws of the Company, duly certified by the Secretary of
the Company as being in full force and effect on the Closing Date and at
all times subsequent to June 30, 1992;
(d) the complete and correct corporate minute book, stock ledgers
and transfer records, cancelled stock certificates and corporate seal of
the Company; and
(e) such other documents relating to the Company and the Sellers as
Purchaser reasonably may request.
10.15 Delivery of the Company Common. The Sellers shall have delivered to
------------------------------
Purchaser certificates for the Company Common in proper form for cancellation,
with duly executed stock powers attached thereto, together with evidence
satisfactory to Purchaser and its counsel that any liens or encumbrances on the
Company Common have been fully released and discharged.
10.16 Accountants Reports. Ernst & Young and Wright, Griffin, Davis &
-------------------
Company shall have delivered to Sterling the opinions, dated as of the Closing
Date, substantially in the form of Exhibit I hereto.
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<PAGE>
10.17 Certified Resolutions. Certified resolutions of the shareholders
---------------------
and Board of Directors of the Company approving this Agreement and the Merger
shall have been delivered to Purchaser.
10.18 Affiliates Letter. The Sellers shall have executed and delivered to
-----------------
Sterling and Purchaser an Affiliates Letter in the form of Exhibit J hereto (an
"Affiliates Letter").
XI. Indemnification; Claims.
-----------------------
11.1 Indemnification or Claims of Purchaser. Each Seller jointly and
--------------------------------------
severally agrees to indemnify and hold Purchaser, Sterling and any Sterling
Affiliates, officers, directors and employees harmless against and in respect of
(a) any loss, liability, damage, payment or claim (a "Loss") arising from or as
a result of any breach by the Company or the Sellers of this Agreement or any
other agreement entered into in connection herewith, including without
limitation the representations, warranties and covenants contained herein or in
certificates or other documents delivered hereunder or pursuant hereto; (b) any
obligations to employees of the Company or current or former Company Affiliates
arising prior to the Closing (other than amounts for accrued vacation sick days,
holiday pay, salary, commissions or any other employee benefits quantified in
the Schedules hereto); (c) subject to Sections 6.1 and 7.2(f) hereof, any
federal, state or local taxes (including any penalties and interest) incurred by
them as a result of the transactions contemplated hereby; (d) any Losses arising
from not obtaining an unqualified or unconditional consent, waiver or novation
required in connection with the consummation of the transactions contemplated
hereby under any contract, agreement, note, bond, license, lease indenture or
instrument to which the Company is a party or any assets or properties of the
Company are bound; (e) any Loss arising from the Company's issuance, sale or
repurchase of any of its capital stock, or of any option, warrant, subscription
or other rights of any kind for the issuance, sale or repurchase of its capital
stock; and (f) all reasonable costs and expenses (including reasonable legal
fees) incurred by Purchaser, Sterling or any Sterling Affiliates, officers,
directors and employees in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters indemnified against in
this Article IX.
11.2 Indemnification of the Sellers. Purchaser agrees to indemnify and
------------------------------
hold the Sellers harmless against and in respect of (a) any Loss as a result of
any breach by Purchaser or Sterling of this Agreement or any other agreement
entered into in connection herewith, including any of its representations,
warranties and covenants contained herein or in certificates or other documents
delivered hereunder or pursuant hereto and (b) all reasonable costs and expenses
(including reasonable legal fees) incurred by the Sellers in connection with any
suit, action, proceeding, demand, assessment or judgment incident to any of the
matters indemnified against in this Article XI.
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<PAGE>
11.3 Limitation on Indemnification. The Sellers shall not be liable for
-----------------------------
any amounts for which Purchaser, Sterling or any Sterling Affiliate, officer,
director and employee of them are otherwise entitled to indemnification as a
result of a breach of a representation or warranty set forth in Article III
hereof unless and until the aggregate amount for which Purchaser, Sterling or
any Sterling Affiliate, officer, director or employee of them is otherwise
entitled to indemnification in respect of such representations and warranties
exceeds $25,000, at which time the Sellers shall be liable for all amounts in
excess of $25,000 for which Purchaser, Sterling or any Sterling Affiliates,
officers, directors and employees are entitled to indemnification in respect of
such representations and warranties; provided, however, that the above
limitations shall not apply to any claim relating to taxes (including without
limitation the representations and warranties contained in Section 3.8) or
representations or warranties contained in Sections 3.2, 3.4, 3.6, 3.9, 3.11,
3.12, 3.18, 3.22 and 3.26. Purchaser and Sterling shall not be liable for any
amounts for which the Sellers are otherwise entitled to indemnification as a
result of a breach of a representation or warranty set forth in Article V
hereof, unless and until the aggregate amount for which the Sellers are
otherwise entitled to indemnification pursuant to such representations and
warranties exceeds $25,000, at which time Purchaser shall be liable for all
amounts in excess of $25,000 for which the Sellers are entitled to
indemnification under such clauses.
11.4 Expiration of Representation and Warranties. The representations and
-------------------------------------------
warranties and covenants of the parties contained herein or in certificates or
other documents delivered hereunder or pursuant hereto shall expire one (1) year
after the Closing Date; provided, however, that if Sterling shall notify the
Sellers or if the Sellers shall notify Sterling on or before the expiration of
such one (1) year period of any asserted inaccuracy or other breach of any such
representations and warranties or covenants, the right of such party with
respect to such asserted claim shall survive until the final disposition of such
claim by a court of competent jurisdiction or otherwise. Notwithstanding
anything to the contrary contained herein, the covenants contained in Sections
1.10, 6.1, 7.2(f), 7.3, 7.4, 7.5, 12.1, 12.2 and 12.3 shall survive in
perpetuity.
11.5 Notices. Promptly after receipt by an indemnified party under this
-------
Article XI of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Article XI, notify the indemnifying party in
writing of the claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to the indemnified party except for fees or expenses
unreasonably incurred in connection with such claim prior to such notice or to
the extent such failure directly prejudices the indemnifying party with respect
to such claim. If any such claim shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein, and to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party, and to settle and
compromise any such claim or action; provided, however, that
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<PAGE>
such settlement or compromise shall be effected only with the consent of the
indemnified party, which consent shall not be unreasonably withheld (it being
understood that in considering whether or not to give such consent, the
indemnified party is entitled to assess the implications of such settlement or
compromise on the future conduct of its or its Affiliates' business activities).
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Article XI for any legal
or other expense subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the indemnified party shall have the right to employ counsel to
represent it if, in the indemnified party's reasonable judgment, it is advisable
for the indemnified party to be represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
indemnifying party. Purchaser and the Sellers each agree to render to each other
such assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such claim or proceeding.
11.6 Certain Limitations. Notwithstanding any other provision of this
-------------------
Article XI, (a) the Sellers shall not be required to indemnify Purchaser or
Sterling or any other indemnitee for any loss or liability to the extent the
Sellers are entitled to indemnification from the Purchaser or Sterling hereunder
with respect to such loss or liability and (b) Purchaser or Sterling shall not
be required to indemnify the Sellers or any other indemnitee for any loss or
liability to the extent the Purchaser or Sterling are entitled to
indemnification from the Sellers hereunder with respect to such loss or
liability or related interest.
XII. Transactions Subsequent to Closing; Termination.
-----------------------------------------------
12.1 Accounting and Tax Cooperation. After the Closing Date, (a) the
------------------------------
Sellers shall (i) provide Purchaser, at Purchaser's expense, in the normal and
customary manner, with financial, accounting, tax, employee benefit plan and
other information requested by Purchaser covering periods of operation of the
Company up to the Closing Date and (ii) promptly transfer to the Company all
original financial, accounting and tax records of the Company maintained or held
by the Sellers and (b) Purchaser and Sterling shall provide the Sellers, at the
Sellers' expense, in the normal and customary manner, with financial,
accounting, tax, employee benefit plan and other information of the Company
requested by Sellers covering periods of operation of the Company's business up
to the Closing Date.
12.2 Cooperation in Litigation. Purchaser shall provide all the
-------------------------
cooperation which the Sellers may reasonably request, at the Sellers' expense,
in connection with the defense of any litigation whether existing on the Closing
Date or arising thereafter out of, or relating to, an occurrence or event
happening before the Closing Date, including,
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without limitation, by making available all books and records relating thereto
and all employees of Purchaser having knowledge of the matters in controversy.
12.3 Further Instruments of Transfer. Following the Closing, at the
-------------------------------
request of Sterling, the Company and the Sellers shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to (i) consummate the Merger and (ii) carry out more effectively the
provisions of this Agreement and to establish and protect the rights created in
favor of the parties hereunder.
XIII. General.
-------
13.1 No Brokerage. Each party represents and warrants to the other party
------------
that it has not incurred any obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agent's commissions or other like payment in
connection with this Agreement or the transactions contemplated hereby. Each
party agrees to indemnify and hold the other party harmless against and in
respect of any such obligation or understandings claimed to have been made by
such party with any third party and not disclosed herein.
13.2 Execution in Counterparts. This Agreement may be executed in one or
-------------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
13.3 Notices. Any notice which is required or may be given pursuant to the
-------
terms of this Agreement shall be in writing and shall be deemed validly given,
made or served (i) on the date on which it is hand delivered with receipt
acknowledged, (ii) three business days after it is mailed by registered or
certified mail postage prepaid, or (iii) two business day after it is sent by
overnight courier, as follows:
If to Purchaser:
J. Brad Sharp, President
Interchange Software Division
Sterling Software, Inc.
4600 Lakehurst Court
P. O. Box 7160
Dublin, Ohio 43017
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<PAGE>
Copy to:
Jeannette P. Meier
Executive Vice President and General Counsel
Sterling Software, Inc.
8080 North Central Expressway, Suite 1100
Dallas, Texas 75206-1895
Clark Woodford
Electronic Commerce Group
Sterling Software
4600 Lakehurst Court
P. O. Box 7160
Dublin, Ohio 43017
If to Sterling:
Edward J. Lott, Executive Vice President
Sterling Software, Inc.
8080 North Central Expressway, Suite 1100
Dallas, Texas 75206-1895
Copy to:
Jeannette P. Meier
Executive Vice President and General Counsel
Sterling Software, Inc.
8080 North Central Expressway, Suite 1100
Dallas, Texas 75206-1895
If to the Company:
American Business Computer Company
24 Frank Lloyd Wright Dr.
Lobby B
Ann Arbor, MI 48106
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<PAGE>
If to the Sellers or the Company:
Alfredo Kimba Vasquez
11214 E. Sorrel Ln.
Scottsdale, AZ 85259
Patrick W. Davis
5727 Winslow Ct.
Ypsilanti, MI 48197
Copy to:
Gary Hahn, P. C.
226 West Liberty
Suite 200
Ann Arbor, MI 48104
or such other address or individuals as any party shall have designated by
notice in writing to the other party.
13.4 Waivers. The Company and the Sellers, on the one hand, or Purchaser
-------
and Sterling, on the other hand, may, by written notice to the other parties
signed on its behalf, (a) extend the time for the performance of any of the
obligations or other actions of the other under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other contained in this
Agreement or in any document delivered pursuant to this Agreement; (c) waive
compliance with any of the conditions or covenants of the other contained in
this Agreement; or (d) waive or modify performance of any of the obligations of
the other under this Agreement.
Except as provided in the foregoing sentences, no action taken pursuant to
this Agreement, including without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
13.5 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of each of the parties hereto.
13.6 Severability. If any provision of this Agreement shall be declared by
------------
any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
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<PAGE>
13.7 Applicable Law. THIS AGREEMENT AND THE LEGAL RELATIONS AMONG THE
--------------
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS.
13.8 Binding Effect, Benefits. This Agreement shall inure to the benefit
------------------------
of and be binding upon the parties hereto and their respective administrators,
executors, successors, legal representatives and assigns; nothing in this
Agreement, express or implied, is intended to confer on any person other than
the parties hereto or their respective administrators, executors, successors,
legal representatives or permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
13.9 Headings. The headings contained in this Agreement are inserted for
--------
convenience only and do not constitute a part of this Agreement.
13.10 Entire Agreement. This Agreement (including the Exhibits, Schedules,
----------------
documents and instruments referred to herein) constitutes the entire agreement
among the parties hereto and supersedes all other prior representations,
warranties, agreements and understandings, both written and oral, among the
parties hereto, with respect to the subject matter hereof. This Agreement has
been jointly prepared by the parties and the provisions of this Agreement shall
not be construed more strictly against any party hereto than against any other
party hereto.
13.11 Assignability. Neither this Agreement nor any of the parties' rights
-------------
hereunder shall be assignable by any party hereto without the prior written
consent of the other parties hereto, except that this Agreement may be assigned
by Purchaser to any of its directly or indirectly wholly owned subsidiaries or
to a directly or indirectly owned subsidiary of Sterling. Any attempted
assignment of this Agreement in breach of this provision shall be void and of no
effect.
46
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto as of the date first above written.
STERLING SOFTWARE, INC.
By:
-----------------------------
Title:
--------------------------
STERLING ACQUISITION, INC.
By:
-----------------------------
Title: --------------------------
AMERICAN BUSINESS COMPUTER COMPANY
By:
-----------------------------
Title: --------------------------
SELLERS:
----------------------------------
Alfredo Kimba Vasquez
----------------------------------
Patrick W. Davis
ACQ-AGR
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