<PAGE>
As filed with the Securities and Exchange Commission on December 1, 1994.
Registration No.33- ____________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
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
(Address of principal executive offices) (Zip Code)
--------------------
KNOWLEDGEWARE, INC. INCENTIVE STOCK OPTION PLAN OF 1984
KNOWLEDGEWARE, INC. SECOND INCENTIVE STOCK OPTION PLAN OF 1984
KNOWLEDGEWARE, INC. 1988 STOCK INCENTIVE PLAN
(Full title of the plans)
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 (214) 953-5850
(214) 891-8685
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Title of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Share/(1)/ Price /(1)/ Registration Fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 257,723 shares
par value $29.50 $7,602,829 $2,622
$.10 per share
- --------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rules 457(c) and 457(h), 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
November 23, 1994.
<PAGE>
PROSPECTUS
26,449 Shares
STERLING SOFTWARE, INC.
Common Stock
This Prospectus has been prepared by Sterling Software, Inc., a Delaware
corporation ("Sterling" or the "Company"), for use upon resale by a director of
the Company (the "Selling Stockholder") of up to 26,449 shares (the "Shares") of
Common Stock, par value $.10 per share ("Common Stock"), of the Company. In
November 1994, a subsidiary of the Company ("Merger Sub") was merged (the
"Merger") with and into KnowledgeWare, Inc., a Georgia corporation
("KnowledgeWare"), pursuant to which, among other things, (i) KnowledgeWare
became a wholly owned subsidiary of the Company and (ii) all options then
outstanding under KnowledgeWare's stock option plans were assumed by the Company
and thereafter became exercisable to purchase .1653 of a share of Common Stock.
The Selling Stockholder has acquired and/or may in the future acquire Shares
from the Company pursuant to the exercise of outstanding options (the "Options")
heretofore granted to the Selling Stockholder pursuant to the provisions of the
KnowledgeWare, Inc. 1988 Stock Incentive Plan (the "Plan").
The Shares may be sold from time to time by the Selling Stockholder, or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made on one or more exchanges, including the New York Stock Exchange (the
"NYSE"), or in the over the counter market, or in negotiated transactions, in
each case at prices and at terms then prevailing or at prices related to the
then current market price or at negotiated prices and terms. Upon any sale of
the Shares offered hereby, the Selling Stockholder or such successors in
interest 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. See "Plan of Distribution."
The Common Stock is listed for trading on the NYSE under the symbol "SSW."
On November 29, 1994, the closing price of the Common Stock on the NYSE was
$30.00.
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 THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 1, 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 materials 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 Common Stock is listed on the NYSE. Reports,
proxy statements and other information concerning the Company can also be
inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005.
The Company has filed with the Commission a Registration Statement on Form
S-8 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock to be
issued pursuant to the Plan and the following other plans of KnowledgeWare: the
KnowledgeWare, Inc. Incentive Stock Option Plan of 1984 and the KnowledgeWare,
Inc. Second Incentive Stock Option Plan of 1984. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain of the information
contained in the Registration Statement. Copies of the Registration Statement
are available from the Public Reference Section of the Commission at prescribed
rates. Statements contained herein concerning the provisions of documents filed
with the Registration Statement 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 the Company's 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) Annual Report on Form 10-K (File No. 1-8465) for the year ended
September 30, 1993, as amended by Form 10-K/A Amendment No. 1, filed
January 26, 1994;
(ii) Quarterly Report on Form 10-Q (File No. 1-8465) for the quarter
ended December 31, 1993;
-2-
<PAGE>
(iii) Quarterly Report on Form 10-Q (File No. 1-8465) for the quarter
ended March 31, 1994, as amended by Form 10-Q/A Amendment No. 1,
filed May 16, 1994;
(iv) Quarterly Report on Form 10-Q (File No. 1-8465) for the quarter
ended June 30, 1994;
(v) Current Report on Form 8-K (File No. 1-8465) dated November 15,
1993, filed November 16, 1993;
(vi) Current Report on Form 8-K (File No. 1-8465) dated July 31, 1994,
filed August 2, 1994;
(vii) Current Report on Form 8-K (File No. 1-8465) dated August 1, 1994,
filed August 2, 1994;
(viii) Current Report on Form 8-K (File No. 1-8465) dated August 31, 1994,
filed September 2, 1994;
(ix) Current Report on Form 8-K (File No. 1-8465) dated November 3, 1994,
filed November 3, 1994;
(x) Current Report on Form 8-K (File No. 1-8465) dated November 14,
1994, filed November 14, 1994;
(xi) Current Report on Form 8-K (File No. 1-8465) dated November 14,
1994, filed November 25, 1994; and
(xii) 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 Common Stock 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 herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that 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
-3-
<PAGE>
the documents incorporated herein by reference (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates). Written or telephone
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 pursuant to this Prospectus.
SELLING STOCKHOLDER
The following Director of the Company is eligible to receive Shares upon
exercise of Options granted under the Plan:
<TABLE>
<CAPTION>
COMMON
OWNERSHIP STOCK OFFERED
OF COMMON FOR SELLING AMOUNT AND
POSITION WITH STOCK PRIOR STOCKHOLDER'S PERCENTAGE OF
THE TO ACCOUNT UPON CLASS AFTER
NAME COMPANY OFFERING/(1)/ EXERCISE OFFERING/(1)//(2)/
- ---- ------- ------------- -------- ------------------
<S> <C> <C> <C> <C>
Francis A. Tarkenton/(3)/ Director 229,637/(4)/ 26,449 203,188/*/
</TABLE>
- ------------------------
/*/ Less than 1% of class.
/(1)/ Includes Shares to be acquired upon exercise of the Options. Includes
40,637 shares of Common Stock that were placed in escrow pursuant to the
terms of an escrow agreement (the "Escrow Agreement") entered into in
connection with the Merger. Such shares will be distributed to the
Selling Stockholder only if and to the extent that such shares are not
necessary to cover certain losses, claims, liabilities, judgments, costs
and expenses that may be incurred by the Company, Merger Sub or
KnowledgeWare in connection with any pending or threatened litigation,
action, claims, proceeding, dispute or investigation (including amounts
paid in settlement) to which Sterling, Merger Sub or KnowledgeWare is or
may become a party and with respect to which Sterling is entitled to
indemnification under the Merger Agreement.
/(2)/ Assumes the exercise of all Options and the sale of the Shares acquired
thereby.
/(3)/ Former Chairman of the Board and Chief Executive Officer of
KnowledgeWare.
/(4)/ Includes 5,734 shares owned by Tarkenton Group, Inc. (including 1,146
shares placed in escrow pursuant to the Escrow Agreement), which is
wholly owned by Mr. Tarkenton, and 26,449 Shares subject to Options.
Does not include 10,926 shares (including 2,185 shares placed in escrow
pursuant to the Escrow Agreement) held in irrevocable trusts for Mr.
Tarkenton's children of which Mr. Tarkenton is not trustee.
-4-
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Stockholder, or by pledgees, donees, transferees or other successors in
interest. The Shares may be disposed of from time to time in one or more
transactions through any one or more of the following: (i) to purchasers
directly, (ii) in ordinary brokerage transactions and transactions in which the
broker solicits purchasers, (iii) through underwriters or dealers who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholder or such successors in interest and/or
from the purchasers of the Shares for whom they may act as agent, (iv) the
writing of options on the Shares, (v) the pledge of the Shares as security for
any loan or obligation, including pledges to brokers or dealers who may, from
time to time, themselves effect distributions of the Shares or interests
therein, (vi) purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account pursuant to this Prospectus, (vii) a block
trade in which the broker or dealer so engaged will attempt to sell the Shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction and (viii) an exchange distribution in accordance
with the rules of such exchange, including the NYSE, or transactions in the over
the counter market. Such sales may be made at prices and at terms then
prevailing or at prices related to the then current market price or at
negotiated prices and terms. In effecting sales, brokers or dealers may arrange
for other brokers or dealers to participate. The Selling Stockholder or such
successors in interest, and any underwriters, brokers, dealers or agents that
participate in the distribution of the Shares, may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Shares by them and any discounts, commissions or concessions
received by any such underwriters, brokers, dealers or agents may be deemed to
be underwriting commissions or discounts under the Securities Act.
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
Stockholder related thereto.
In the event of a material change in the plan of distribution disclosed in
this Prospectus, the Selling Stockholder will not be able to effect transactions
in the Shares pursuant to this Prospectus until such time as a post-effective
amendment to the Registration Statement is filed with, and declared effective
by, the Commission.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Common Stock
offered hereby have been passed upon 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.
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<PAGE>
EXPERTS
The consolidated financial statements and financial statement schedules
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 LLP, 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.
The consolidated financial statements of KnowledgeWare, Inc. and
subsidiaries as of June 30, 1994 and 1993 and for each of the three years in the
period ending June 30, 1994 incorporated by reference in this Prospectus have
been incorporated herein on the report, which includes an explanatory paragraph
about KnowledgeWare, Inc.'s ability to continue as a going concern, of Coopers &
Lybrand L.L.P., independent certified public accountants, given upon authority
of that firm as experts in accounting and auditing.
INDEMNIFICATION
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.
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<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 26,449 SHARES
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 to any person
or by anyone 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 any implication that STERLING SOFTWARE,
the information contained herein is correct INC.
as of any date subsequent to the date
hereof.
_________________________
TABLE OF CONTENTS COMMON STOCK
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information....................... 2
Incorporation of Certain Documents _______________
by Reference............................... 2
Use of Proceeds............................. 4
Selling Stockholder......................... 4 PROSPECTUS
Plan of Distribution........................ 5
Legal Matters............................... 5 _______________
Experts..................................... 6
Indemnification............................. 6 December 1, 1994
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 1. INCORPORATION OF 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) Annual Report on Form 10-K (File No. 1-8465) for the year ended
September 30, 1993, as amended by Form 10-K/A Amendment No. 1, filed
January 26, 1994;
(ii) Quarterly Report on Form 10-Q (File No. 1-8465) for the quarter
ended December 31, 1993;
(iii) Quarterly Report on Form 10-Q (File No. 1-8465) for the quarter
ended March 31, 1994, as amended by Form 10-Q/A Amendment No. 1,
filed May 16, 1994;
(iv) Quarterly Report on Form 10-Q (File No. 1-8465) for the quarter
ended June 30, 1994;
(v) Current Report on Form 8-K (File No. 1-8465) dated November 15,
1993, filed November 16, 1993;
(vi) Current Report on Form 8-K (File No. 1-8465) dated July 31, 1994,
filed August 2, 1994;
(vii) Current Report on Form 8-K (File No. 1-8465) dated August 1, 1994,
filed August 2, 1994;
(viii) Current Report on Form 8-K (File No. 1-8465) dated August 31, 1994,
filed September 2, 1994;
(ix) Current Report on Form 8-K (File No. 1-8465) dated November 3, 1994,
filed November 3, 1994;
(x) Current Report on Form 8-K (File No. 1-8465) dated November 14,
1994, filed November 14, 1994;
(xi) Current Report on Form 8-K (File No. 1-8465) dated November 14,
1994, filed November 25, 1994; and
II-1
<PAGE>
(xii) 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 Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all of the Common Stock offered hereunder has been sold or which
deregisters all of such Common Stock then remaining unsold, shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement 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
Registration Statement.
ITEM 2. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 3. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Certain legal matters in connection with the validity of the Common Stock
to be offered hereby have been passed upon 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.
ITEM 4. 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 and 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.
II-2
<PAGE>
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.
ITEM 5. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 6. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-8, including those incorporated herein by
reference.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
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)/
15 None.
23.1 Consent of Ernst & Young LLP./(6)/
23.2 Consent of Arthur Andersen LLP./(6)/
23.3 Consent of Coopers & Lybrand L.L.P./(6)/
23.4 Consent of Jackson & Walker, L.L.P. (included in its opinion filed as
Exhibit 5 to this Registration Statement)./(6)/
25 Power of Attorney (appearing on page II-6 of this Registration
Statement)./(6)/
26 None.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
27 None.
28 None.
99.1 KnowledgeWare, Inc. Incentive Stock Option Plan of 1984./(6)/
99.2 KnowledgeWare, Inc. Second Incentive Stock Option Plan of 1984./(6)/
99.3 KnowledgeWare, Inc. 1988 Stock Incentive Plan./(6)/
</TABLE>
____________
/(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.
ITEM 7. 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;
II-4
<PAGE>
(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 Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the 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 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.
(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-8 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 30th day of
November, 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 Amendment to 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
/s/ Sterling L. Williams Executive Officer
- -------------------------- and Director November 30, 1994
Sterling L. Williams (Principal Executive Officer)
Executive Vice President
and Chief
/s/ George H. Ellis Financial Officer
- -------------------------- (Principal Financial and November 30, 1994
George H. Ellis Accounting Officer)
/s/ Sam Wyly Chairman of the
- -------------------------- Board of Directors November 30, 1994
Sam Wyly
/s/ Charles J. Wyly, Jr. Vice Chairman of the
- -------------------------- Board of Directors November 30, 1994
Charles J. Wyly, Jr.
/s/ Evan A. Wyly Director
- -------------------------- November 30, 1994
Evan A. Wyly
/s/ Michael C. French Director
- -------------------------- November 30, 1994
Michael C. French
/s/ Robert J. Donachie Chairman of the
- -------------------------- Audit Committee November 30, 1994
Robert J. Donachie and Director
/s/ Phillip A. Moore Executive Vice President,
- -------------------------- Technology and November 30, 1994
Phillip A. Moore Director
/s/ Robert E. Cook Director
- -------------------------- November 30, 1994
Robert E. Cook
/s/ Donald R. Miller Director
- -------------------------- November 30, 1994
Donald R. Miller, Jr.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
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)/
15 None.
23.1 Consent of Ernst & Young LLP./(6)/
23.2 Consent of Arthur Andersen LLP./(6)/
23.3 Consent of Coopers & Lybrand L.L.P./(6)/
23.4 Consent of Jackson & Walker, L.L.P. (included in its opinion filed as
Exhibit 5 to this Registration Statement)./(6)/
25 Power of Attorney (appearing on page II-6 of this Registration
Statement)./(6)/
26 None.
27 None.
28 None.
99.1 KnowledgeWare, Inc. Incentive Stock Option Plan of 1984./(6)/
99.2 KnowledgeWare, Inc. Second Incentive Stock Option Plan of 1984./(6)/
99.3 KnowledgeWare, Inc. 1988 Stock Incentive Plan./(6)/
</TABLE>
- ------------
/(1)/ Previously filed as an exhibit to the Registrant's Registration Statement
No. 2-82506 on Form S-1 and incorporated herein by reference.
II-8
<PAGE>
/(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-9
<PAGE>
[JACKSON & WALKER, L.L.P. LETTERHEAD]
EXHIBIT 5
November 30, 1994
Sterling Software, Inc.
8080 N. Central Expressway
Suite 1100
Dallas, Texas 75206
Re: Registration Statement on Form S-8 of Sterling Software, Inc.
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, of the offering and sale of up to
257,723 shares of the Company's Common Stock, par value $0.10 per share
(the "Shares"). The Company has authorized the issuance of such number of Shares
as may from time to time be required to be issued upon the exercise of options
outstanding as of November 30, 1994 under the (i) KnowledgeWare, Inc. Incentive
Stock Option Plan of 1984, (ii) KnowledgeWare, Inc. Second Incentive Stock
Option Plan of 1984 and (iii) KnowledgeWare, Inc. 1988 Stock Incentive Plan
(collectively the "Plans"). A Registration Statement on Form S-8 covering the
Shares (the "Registration Statement") is expected to be filed 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 originals or certified copies of all documents, certificates and
instruments as we have deemed necessary to the opinions expressed herein,
including the Certificate of Incorporation, as amended, and the Restated Bylaws
of the Company and copies of the Plans. In making the foregoing examinations, we
have assumed the genuineness of all signatures on original documents, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all copies submitted to us.
Based solely upon the foregoing, subject to the comments hereinafter
stated, and limited in all respects to the laws of the State of Texas, the
General Corporation Law of the State of Delaware and the federal laws of the
United States of America, it is our opinion that the Shares, when issued and
sold in accordance with the terms of the Plans and any applicable option
agreement, will be validly issued, fully paid and nonassessable.
<PAGE>
Sterling Software, Inc.
November 30, 1994
Page 2
You should be aware that we are not admitted to the practice of 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 use of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not 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-8) pertaining to the registration of 257,723
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 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, filed
with the Securities and Exchange Commission.
/s/Ernst & Young LLP
Dallas, Texas
November 30, 1994
<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.
November 30, 1994
/s/ ARTHUR ANDERSEN LLP
<PAGE>
Exhibit 23.3
Consent of Independent Accountants
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report, which includes an explanatory paragraph about
KnowledgeWare, Inc.'s ability to continue as a going concern, dated August 31,
1994, on our audit of the financial statements of KnowledgeWare, Inc. and
Subsidiaries. We also consent to the reference to our firm under the caption
"Experts".
Atlanta, Georgia
November 30, 1994
/s/ Coopers & Lybrand L.L.P.
<PAGE>
EXHIBIT 99.1
KNOWLEDGEWARE INC.
INCENTIVE STOCK OPTION PLAN
(Approved by Shareholders May 2, 1984, and
Amended and Restated February 24, 1989)
______________________________________
1. Purpose. The purpose of the Plan will be to secure for the
-------
Corporation and its stockholders the benefits which flow from providing
corporate employees with the incentive inherent in common stock ownership by
means of the grant of Incentive Stock Options (within the meaning of Section
422A of the Internal Revenue Code) and Nonstatutory Stock Options to such
employees.
2. Amount of Stock. The total number of shares of the Corporation's
---------------
Class A common stock to be subject to options granted pursuant to the Plan shall
be 1,725,000 shares (adjusted for the 10 for one (1) stock split effective
November 1. 1984). A maximum of 1,725,000 shares may be issued as Incentive
Stock Options. The shares subject to the Plan shall consist of unissued shares
or previously issued shares reacquired and held by the Corporation, and such
amount of shares shall be and is hereby reserved for sale for such purpose. To
the extent any options granted hereunder terminate, are cancelled or expire
unexercised, in whole or in part, the shares with respect to which such options
were not exercised shall again become available for options to be granted under
this Plan. Any of such shares which remain unsold and which are not subject to
outstanding options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan; but until termination of the Plan, the Corporation
shall at all times reserve a sufficient number of shares to meet the
requirements of the Plan.
3. Stock Option Committee. The Board of Directors shall, on a yearly
----------------------
basis, appoint a stock option committee (the "Committee") to serve under this
Plan. Unless otherwise appointed, the Committee shall be the Board of
Directors. The Committee shall have full power and authority to designate
participants, to determine the terms and provisions of respective option
agreements (which need not be identical) and to interpret the provisions and
supervise the administration of the Plan.
4. Eligibility and Participation. Options may be granted pursuant to the
-----------------------------
Plan to any employee. Provided, however, that if options granted hereunder are
Incentive Stock Options, they shall be granted only to key employees. The
Committee shall from time to time select the employees to whom options may be
granted and shall determine the number of shares to be covered by each option so
granted to each individual.
5. Duration of Plan. Options may be issued pursuant to the Plan for up
----------------
to ten (10) years from the earlier of the date of adoption of the Plan by the
Board of Directors or approval of the Plan by the shareholders of the
Corporation.
<PAGE>
6. Duration of Options.
-------------------
(a) The options under the Plan may have a duration as may be set by
the Committee; provided, however, any Incentive Stock Option must be exercised
only within 10 years of the date it is granted, except as otherwise provided in
paragraph 13.
(b) Notwithstanding any other provisions of the Plan, each option
agreement may contain such provisions as the Committee shall determine to be
appropriate for the adjustment of the number and class of shares subject to such
option and the option price in the event of changes in the outstanding Class A
common stock by reason of any stock dividend, split-up, recapitalization,
combination or exchange of shares, merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation and the like, and,
in the event of any such change in the outstanding Class A common stock, the
aggregate number and class of shares available under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
7. Option Price. The purchase price of Class A common stock purchasable
------------
under the options granted pursuant to the Plan shall be set by the Committee;
provided, however, that the exercise price of an Incentive Stock Option shall
not be less than one hundred percent (100%) of the fair market value of the
stock at the time the options are granted. Such fair market value shall be
determined by the Board of Directors or, if so authorized and directed by the
Board of Directors, by the Committee.
8. Payment of Option Price. The purchase price of Class A common stock
-----------------------
purchasable under option shall be paid with cash, with shares of the
Corporation's Class A common stock previously acquired by the optionee or with a
combination thereof in accordance with terms provided in the option agreement,
which shall be determined by the Committee at the time of the grant of the
option.
9. Option Agreements.
-----------------
(a) Each option under the Plan shall be evidenced by a written option
agreement. which shall be signed by the President of the Corporation or by a
member of the Committee and by the employee and which shall contain such
provisions as may be approved by the Committee.
(b) The option agreements shall constitute binding contracts between
the Corporation and the optionee and every optionee, upon acceptance of such
option agreement, shall be bound by the terms and restrictions of the Plan and
of the option agreement.
- 2 -
<PAGE>
(c) In the discretion of the Committee, an option agreement entered
into under the Plan may provide that all shares of stock issued pursuant to the
exercise of an option shall be subject to a right of first refusal in favor of
the Corporation in the event the owner of such shares desires to transfer them.
(d) The terms of each option agreement shall be in accordance with the
Plan, but may include additional provisions and restrictions (including, but not
limited to, provisions for the vesting of the right to purchase shares under the
option based upon duration of employment), provided that such additional
provisions and restrictions are not inconsistent with the terms of the Plan, and
in the case of Incentive Stock Options, are not inconsistent with Section 422A
of the Internal Revenue Code.
(e) In the discretion of the Committee, an option agreement may
provide that for a period of sixty (60) days following termination of
employment, the Corporation shall have the right to repurchase shares purchased
by an employee pursuant to an exercised option under the terms set forth in the
option agreement.
(f) In the discretion of the Committee, an option agreement may grant
the Corporation the right to repurchase shares purchased by an employee pursuant
to an exercised option in the event the Corporation registers its common stock
for sale to the public or in the event the principal shareholders of the
Corporation contract for the sale of their stock in the Corporation.
(g) Except as otherwise determined by the Committee, options granted
under this Plan shall only be exercisable prior to termination of employment
with the Corporation; provided, however, Incentive Stock Options may not be
exercised more than three (3) months after termination of the optionee's
employment with the Corporation.
(h) If applicable, the option agreement shall provide that prior to
the issuance of shares upon exercise of an option, the optionee shall pay or
make adequate provision for any federal or state withholding obligations of the
Corporation.
10. Assignability. No option granted under the Plan shall be transferable
-------------
or assignable by the employee otherwise than by will or by the laws of descent
and distribution and during the lifetime of the employee shall be exercisable
only by him.
11. Sequential Exercise. Any Incentive Stock Option granted hereunder
-------------------
before February 24, 1989, is not exercisable while there is outstanding any
Incentive Stock Option which was granted to the optionee of such Incentive Stock
Option at an earlier time.
- 3 -
<PAGE>
12. Maximum Value.
-------------
(a) The aggregate fair market value (determined at the time the option
is granted) of stock subject to incentive Stock Options which may be granted to
any individual employee before February 24, 1989, may not exceed One Hundred
Thousand Dollars ($100,000.00) in any calendar year plus any unused limit carry-
over (determined in accordance with Section 422A(c)(4) of the Internal Revenue
Code of 1954) available for such year.
(b) In the case of Incentive Stock Options granted after February 24,
1989, the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by the optionee during any calendar year (under
all plans of the Corporation or its subsidiaries) shall not exceed One Hundred
Thousand Dollars ($100,000.00).
13. Existing Shareholders. In the event that any eligible participant is,
---------------------
at the time that any Incentive Stock Options are granted to him under the Plan,
the owner of stock of the Corporation possessing more than ten (10) percent of
the total combined voting power of all classes of stock of the Corporation,
then, (i) the purchase price of Class A common stock purchasable under the
Incentive Stock Options granted to such individual shall not be less than one
hundred ten (110) percent of the fair market value of the stock at the time the
Incentive Stock Options are granted, determined in accordance with paragraph 7,
above, and, (ii) the duration of such Incentive Stock Options shall not exceed
five (5) years.
14. Investment Purpose. Each option under the Plan shall be granted on
------------------
the condition that the purchases of stock thereunder shall be for investment
purposes, and not with a view to resale or distribute except that in the event
the stock subject to such option is registered under the Securities Act of 1933,
as amended, or in the event a resale of such stock without such registration
would otherwise be permissible, said condition shall be inoperative if in the
opinion of counsel for the Corporation such condition is not required under the
Securities Act of 1933 or any other applicable law, regulation or rule of any
governmental agency.
15. Indemnification of Committee. In addition so such other rights of
----------------------------
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement
- 4 -
<PAGE>
thereof (provided such settlement is approved by independent legal counsel
selected by the Corporation) or paid by them in satisfaction of a judgment in
any such action, suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such Committee
member is liable for negligence or misconduct in the performance of his duties;
provided that within sixty (60) days after institution of any such action, suit
or proceeding a Committee member shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
16. Amendment of the Plan. This Plan may be amended at any time by the
---------------------
Board of Directors of the Corporation, provided that without the approval of the
Stockholders of the Corporation, no such amendment shall become effective if it
would (a) materially increase the benefits accruing to participants under the
Plan, (b) materially increase the number of shares of Class A common stock which
may be sold under the Plan, or (c) materially modify the requirements as to
eligibility for participation in the Plan. Any amendment to the Plan shall not,
without the written consent of the participant, affect such participant's rights
under any option agreement entered into prior to such amendment.
17. Effective Date. The amendment and restatement of the Plan shall
--------------
become effective upon approval by the Corporation's Stockholders.
18. Government Regulations. The Plan, and the granting and exercise of
----------------------
options thereunder, and the obligation of the Corporation to sell and deliver
shares under such options, shall be subject to all applicable laws, rules and
regulations and to such approvals by any governmental agencies or national
securities exchanges as may be required.
Date Amended and Restated Plan Approved by Stockholders: February 24, 1989
- 5 -
<PAGE>
EXHIBIT 99.2
KNOWLEDGEWARE, INC.
SECOND INCENTIVE STOCK OPTION PLAN
(Approved by Shareholders October 4, 1984, and
Amended and Restated February 24, 1989)
____________________________________________________
1. Purpose. The purpose of the Plan will be to secure for the
-------
Corporation and its stockholders the benefits which flow from providing
corporate employees with the incentive inherent in common stock ownership by
means of the grant of Incentive Stock Options (within the meaning of Section
422A of the Internal Revenue Code) and Nonstatutory Stock Options to such
employees.
2. Amount of Stock. The total number of shares of the Corporation's
---------------
Class A common stock to be subject to options granted pursuant to the Plan shall
be 600,000 shares (adjusted for the 10 for one (1) stock split effective
November 1, 1984). A maximum of 600,000 shares may be issued as Incentive Stock
Options. The shares subject to the Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Corporation, and such amount
of shares shall be and is hereby reserved for sale for such purpose. To the
extent any options granted hereunder terminate, are cancelled or expire
unexercised, in whole or in part, the shares with respect to which such options
were not exercised shall again become available for options to be granted under
this Plan. Any of such shares which remain unsold and which are not subject to
outstanding options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan; but until termination of the Plan, the Corporation
shall at all times reserve a sufficient number of shares to meet the
requirements of the Plan.
3. Stock Option Committee. The Board of Directors shall, on a yearly
----------------------
basis, appoint a stock option committee (the "Committee") to serve under this
Plan. Unless otherwise appointed, the Committee shall be the Board of Directors.
The Committee shall have full power and authority to designate participants, to
determine the terms and provisions of respective option agreements (which need
not be identical) and to interpret the provisions and supervise the
administration of the Plan.
4. Eligibility and Participation. Options may be granted pursuant to the
-----------------------------
Plan to any employee. Provided, however, that if options granted hereunder are
Incentive Stock Options, they shall be granted only to key employees. The
Committee shall from time to time select the employees to whom options may be
granted and shall determine the number of shares to be covered by each option so
granted to each individual.
5. Duration of Plan. Options may be issued pursuant to the Plan for up
----------------
to ten (10) years from the earlier of the date of adoption of the Plan by the
Board of Directors or approval of the Plan by the shareholders of the
Corporation.
<PAGE>
6. Duration of Options.
-------------------
(a) The options under the Plan may have a duration as may be set by
the Committee; provided, however, any Incentive Stock Option must be exercised
only within 10 years of the date it is granted, except as otherwise provided in
paragraph 13.
(b) Notwithstanding any other provisions of the Plan, each option
agreement may contain such provisions as the Committee shall determine to be
appropriate for the adjustment of the number and class of shares subject to such
option and the option price in the event of changes in the outstanding Class A
common stock by reason of any stock dividend, split-up, recapitalization,
combination or exchange of shares, merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation and the like, and,
in the event of any such change in the outstanding Class A common stock, the
aggregate number and class of shares available under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
7. Option Price. The purchase price of Class A common stock purchasable
------------
under the options granted pursuant to the Plan shall be set by the Committee;
provided, however, that the exercise price of an Incentive Stock Option shall
not be less than one hundred percent (100%) of the fair market value of the
stock at the time the options are granted. Such fair market value shall be
determined by the Board of Directors or, if so authorized and directed by the
Board of Directors, by the Committee.
8. Payment of Option Price. The purchase price of Class A common stock
-----------------------
purchasable under option shall be paid with cash, with shares of the
Corporation's Class A common stock previously acquired by the optionee or with a
combination thereof in accordance with terms provided in the option agreement,
which shall be determined by the Committee at the time of the grant of the
option.
9. Option Agreements.
-----------------
(a) Each option under the Plan shall be evidenced by a written option
agreement, which shall be signed by the President of the Corporation or by a
member of the Committee and by the employee and which shall contain such
provisions as may be approved by the Committee.
(b) The option agreements shall constitute binding contracts between
the Corporation and the optionee and every optionee, upon acceptance of such
option agreement, shall be bound by the terms and restrictions of the Plan and
of the option agreement.
(c) In the discretion of the Committee, an option agreement entered
into under the Plan may provide that all shares of stock issued pursuant to the
exercise of an option shall be
- 2 -
<PAGE>
subject to a right of first refusal in favor of the Corporation in the event the
owner of such shares desires to transfer them.
(d) The terms of each option agreement shall be in accordance with the
Plan, but may include additional provisions and restrictions (including, but not
limited to, provisions for the vesting of the right to purchase shares under the
option based upon duration of employment), provided that such additional
provisions and restrictions are not inconsistent with the terms of the Plan, and
in the case of Incentive Stock Options, are not inconsistent with Section 422A
of the Internal Revenue Code.
(e) In the discretion of the Committee, an option agreement may
provide that for a period of sixty (60) days following termination of
employment, the Corporation shall have the right to repurchase shares purchased
by an employee pursuant to an exercised option under the terms set forth in the
option agreement.
(f) In the discretion of the Committee, an option agreement may grant
the Corporation the right to repurchase shares purchased by an employee pursuant
to an exercised option in the event the Corporation registers its common stock
for sale to the public or in the event the principal shareholders of the
Corporation contract for the sale of their stock in the Corporation.
(g) Except as otherwise determined by the Committee, options granted
under this Plan shall only be exercisable prior to termination of employment
with the Corporation; provided, however, Incentive Stock Options may not be
exercised more than three (3) months after termination of the optionee's
employment with the Corporation.
(h) If applicable, the option agreement shall provide that prior to
the issuance of shares upon exercise of an option, the optionee shall pay or
make adequate provision for any federal or state withholding obligations of the
Corporation.
10. Assignability. No option granted under the Plan shall be transferable
-------------
or assignable by the employee otherwise than by will or by the laws of descent
and distribution and during the lifetime of the employee shall be exercisable
only by him.
11. Sequential Exercise. Any Incentive Stock Option granted hereunder
-------------------
before February 24, 1989, is not exercisable while there is outstanding any
incentive Stock Option which was granted to the optionee of such Incentive Stock
Option at an earlier time.
12. Maximum Value.
-------------
(a) The aggregate fair market value (determined at the time the option
is granted) of stock subject to Incentive Stock Options which may be granted to
any individual employee before February 24, 1989, may not exceed One Hundred
Thousand Dollars ($100,000.00), in any calendar year plus any unused limit
carry-
- 3 -
<PAGE>
over (determined in accordance with Section 422A(c)(4) of the Internal Revenue
Code of 1954) available for such year.
(b) In the case of Incentive Stock Options granted after February 24,
1989, the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by the optionee during any calendar year (under
all plans of the Corporation or its subsidiaries) shall not exceed One Hundred
Thousand Dollars ($100,000.00).
13. Existing Shareholders. In the event that any eligible participant is,
---------------------
at the time that any Incentive Stock Options are granted to him under the Plan,
the owner of stock of the Corporation possessing more than ten (10) percent of
the total combined voting power of all classes of stock of the Corporation,
then, (i) the purchase price of Class A common stock purchasable under the
Incentive Stock Options granted to such individual shall not be less than one
hundred ten (110) percent of the fair market value of the stock at the time the
Incentive Stock Options are granted, determined in accordance with paragraph 7,
above, and, (ii) the duration of such Incentive Stock Options shall not exceed
five (5) years.
14. Investment Purpose. Each option under the Plan shall be granted on
------------------
the condition that the purchases of stock thereunder shall be for investment
purposes, and not with a view to resale or distribute except that in the event
the stock subject to such option is registered under the Securities Act of 1933,
as amended, or in the event a resale of such stock without such registration
would otherwise be permissible, said condition shall be inoperative if in the
opinion of counsel for the Corporation such condition is not required under the
Securities Act of 1933 or any other applicable law, regulation or rule of any
governmental agency.
15. Indemnification of Committee. In addition to such other rights of
----------------------------
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the
Corporation the opportunity, at its own expense, to handle and defend the same.
- 4 -
<PAGE>
16. Amendment of the Plan. This Plan may be amended at any time by the
---------------------
Board of Directors of the Corporation, provided that without the approval of the
Stockholders of the Corporation, no such amendment shall become effective if it
would (a) materially increase the benefits accruing to participants under the
Plan, (b) materially increase the number of shares of Class A common stock which
may be sold under the Plan, or (c) materially modify the requirements as to
eligibility for participation in the Plan. Any amendment to the Plan shall not,
without the written consent of the participant, affect such participant's rights
under any option agreement entered into prior to such amendment.
17. Effective Date. The amendment and restatement of the Plan shall
--------------
become effective upon approval by the Corporation's Stockholders.
18. Government Regulations. The Plan, and the granting and exercise of
----------------------
options thereunder, and the obligation of the Corporation to sell and deliver
shares under such options, shall be subject to all applicable laws, rules and
regulations and to such approvals by any governmental agencies or national
securities exchanges as may be required.
Date Amended and Restated Plan Approved by Stockholders: February 24, 1989
- 5 -
<PAGE>
EXHIBIT 99.3
KNOWLEDGEWARE, INC.
1988 STOCK INCENTIVE PLAN
(APPROVED BY THE SHAREHOLDERS DECEMBER 2, 1988,
AND AMENDED AND RESTATED AUGUST 29, 1989,
AUGUST 13, 1990, AUGUST 14, 1991 AND OCTOBER 7, 1993)
The 1988 Stock Incentive Plan (the "Plan") is hereby adopted as follows:
1. PURPOSE OF PLAN. The purpose of the Plan is to provide corporate
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officers and key employees who remain in the employ KnowledgeWare, Inc.
("KnowledgeWare"), and its Subsidiaries (collectively the "Company"), as the
Administrator hereinafter referred to shall designate, with a strong incentive
for individual creativity and contribution to insure the future growth of the
Company. The Plan is designed to reward those who are deeply committed to a
career with the Company and whose ability and diligence permit such persons to
make important contributions to the success of the Company by enabling such
persons to acquire shares of KnowledgeWare Common Stock in the manner
contemplated by the Plan. KnowledgeWare believes that the Plan will also aid
the Company in attracting and retaining outstanding key employees and in
stimulating the efforts of such employees to work for the success of the
Company. This Plan covers the sale of shares which may or may not be subject to
restrictions ("Restricted Stock"), the award of bonus shares which may be
granted with or without restrictions ("Bonus Stock") and the grant of options
[including nonstatutory stock options and options intended to qualify as
incentive stock options under Section 422A of the Code ("Incentive Options")] to
acquire shares which may or may not be subject to restrictions ("Option Stock").
2. DEFINITIONS. For purposes of this Plan, the following terms where
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appearing with initial capitalization shall be applicable:
(a) "Administrator" means either the Board of Directors or the
Committee, whichever is so designated by the Board of Directors to administer
the Plan.
(b) "Board of Directors" means the Board of Directors of
KnowledgeWare.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means a committee appointed by the Board of Directors
and which shall consist of not less than three persons, all of whom shall be
"disinterested persons" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended from time to time, or any law, rule, regulation
or other provision that may hereafter replace such Rule. If the Plan is
administered by a Committee, the members of the Committee shall serve at the
pleasure of the Board of Directors. Sixty percent of the Committee members
shall constitute a quorum, and the action of a majority of the members of the
Committee present at any meeting
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at which a quorum is present, or acts unanimously adopted in writing without
holding a meeting, shall be the acts of the Committee. The Committee shall
report all actions taken by it to the Board of Directors.
(e) "Common Stock" means KnowledgeWare's Common Stock (formerly
designated Class A common stock).
(f) "Retirement" shall mean the discontinuance of employment of a
participant after he has attained age 65.
(g) "Subsidiary" means any corporation (other than Knowledgeware) in
an unbroken chain of corporations beginning with KnowledgeWare if, at the time
of the sale or award of any shares or the grant of any option under the Plan,
each of the corporations other than the last in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(h) "Total Disability" shall mean that a participant is determined to
be, in the sole discretion of the Administrator, disabled, due to sickness or
injury from a cause other than an excluded cause specified below, and such
disability is likely to be continuous and permanent, such that the participant
is, in the opinion of the Administrator, completely unable to perform any and
every duty pertaining to his occupation with the Company and unable to engage in
any reasonable occupation with the Company or any other employer, where
"reasonable occupation" shall mean any occupation which other individuals who
have an educational and employment background similar to that of the
participant, and are in good health, are actually engaged in as their principal
means of financial support. Any opinion of the Administrator rendered in
accordance herewith shall be final and conclusive and shall not be subject to
review by anyone. A participant will not be considered Totally Disabled if, in
the opinion of the Administrator considering all of the circumstances, the
disability is a result of:
(1) excessive and habitual use by the participant of drugs,
intoxicants or narcotics;
(2) injury or disease sustained by the participant which was
diagnosed or discovered subsequent to the date his employment was
terminated; or
(3) injury or sickness sustained by the participant as a result
of reckless or wanton disregard of his own health or safety, or self-
inflicted injuries. The Administrator may require proof in such form as it
may decide, including, in all cases where practicable, the certificate of a
duly licensed physician, satisfactory to the Administrator, that the
participant has become disabled as provided herein.
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(i) "Unvested Stock" shall mean all shares of Restricted Stock, Bonus
Stock and Option Stock other than Vested Stock.
(j) "Vested Stock" shall mean (i) all shares of Restricted Stock,
Bonus Stock and Option Stock which at the time in question have been freed of
the restrictions imposed pursuant to the Plan and any related Restricted Stock,
Bonus Stock or Stock Option Agreement (other than those imposed by Section 11)
and (ii) all shares of Restricted Stock, Bonus Stock and Option Stock which
shall have been issued free of restriction (other than those imposed by Section
11).
3. ADMINISTRATION OF PLAN. This Plan shall be administered, construed
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and interpreted by the Administrator. The Administrator shall have full and
final authority, in its discretion,
(a) to determine those corporate officers and key employees who shall
be eligible to participate in the Plan and the number of shares to be sold or
awarded to each participant and the number of shares to be covered by any
options granted and the time or times at which such options shall be granted to
each participant (it being understood that more than one sale, award or option
or any combination thereof may relate to the same participant),
(b) to determine the terms and provisions of any Restricted Stock
Agreement, Bonus Stock Agreement or Stock Option Agreement (the terms of which
need not be identical), and
(c) to make all other determinations and take all other actions deemed
necessary and advisable for the proper administration of the Plan.
The Administrator may adopt such rules and regulations for the administration of
the Plan as it deems advisable. The Administrator may act by a meeting person
or by telephone or by written determinations signed by all of the members of the
Administrator. All actions, interpretations and determinations with respect to
the administration of the Plan taken by the Administrator shall be conclusively
binding for all purposes and upon all persons.
4. ELIGIBLE PARTICIPANTS. Key employees, including officers and
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directors who are employees, of the Company as determined by the Administrator
shall be eligible for participation under the Plan. However, with respect to
Incentive Options, persons eligible to receive Incentive Options shall be
limited to key employees (including officers and directors who are employees) of
KnowledgeWare and its Subsidiaries.
5. SHARES SUBJECT TO PLAN. An aggregate of 4,000,000 shares of Common
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Stock shall be subject to this Plan either from authorized but unissued shares
or from issued shares reacquired by KnowledgeWare, including shares purchased in
the open market, and such number of shares subject to the Plan shall be
appropriately adjusted, in the discretion of the Administrator in the event of
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any one or more stock dividends, stock splits or any other forms of
recapitalization. The Administrator in its sole discretion may provide in any
Restricted Stock Agreement, Bonus Stock Agreement or Stock Option Agreement or
otherwise for adjustments to be made with respect to shares sold or awarded
hereunder. If prior to the termination of the Plan, shares or Restricted Stock
or Bonus Stock issued pursuant hereto shall have been repurchased by or
redelivered to KnowledgeWare in connection with the restrictions imposed on such
shares pursuant to this Plan, such repurchase or redelivered shares shall again
become available for sale, award or option under the Plan. To the extent any
options granted hereunder terminate, are canceled or expire unexercised in whole
or in part, the shares with respect to which such options were not exercised
shall again become available for sale, award or option under the Plan.
6. PRICE. The Administrator in its absolute discretion shall determine
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the price, if any, at which shares of Restricted Stock shall be sold to
participants hereunder and may award shares of Bonus Stock to participants
hereunder without cash consideration. The Administrator shall determine the
price at which any options granted to purchase shares of Option Stock hereunder
shall become exercisable, provided that such sale or exercise price with respect
to Incentive Options is not less than the fair market value of a share of Common
Stock at the time such option is granted, except as otherwise provided in
Section 10(b)(vii). For the purposes hereof, fair market value shall be as
determined by the Administrator and the Administrator may make such
determination:
(a) in case the Common Stock is publicly traded but shall not then be
listed and traded upon a recognized securities exchange or shall not be quoted
on a recognized national market system, upon the basis of the mean between the
bid and asked quotations for such stock on the date of grant of such option as
reported by the National Association of Securities Dealers Automated Quotation
system (NASDAQ) or, in the event that there shall be no bid or asked quotations
on the date of grant of such option, then upon the basis of the mean between the
bid and asked quotations on the date nearest preceding such date of grant, and
upon any other factors which the Administrator shall deem appropriate, or
(b) in case the Common Stock is publicly traded and shall then be
listed and traded upon a recognized securities exchange or shall be quoted on a
recognized national market system, upon the basis of the mean between the
highest and lowest selling prices at which shares of Common Stock were traded on
such recognized securities exchange or national market system on such date of
grant or, if the Common Stock was not traded on said date, upon the basis of the
mean of such prices on the date nearest preceding such date of grant, and upon
any other factors which the Administrator shall deem appropriate, or
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(c) in case the Common Stock is not listed or traded as referred to in
Sections 6(a) or (b) above, in good faith and taking into consideration factors
which the Administrator determines are applicable in the determination of such
fair market value.
7. PAYMENT.
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(a) Payment for shares purchased under this Plan shall be payable in
cash, by check, by promissory note (or in connection with any option granted
pursuant to this Plan, in addition to the above, in shares of Common Stock as
provided in (d) below) or in any combination thereof, as shall be determined by
the Administrator and provided in the applicable Restricted Stock, Bonus Stock,
or Stock Option Agreement.
(b) If the payment is made in cash or by check, such payment shall be
made at the time the shares are sold.
(c) If the payment is made by promissory note, such note shall be
delivered at the time the shares are sold and shall bear interest, if any, at
such rate and shall be payable upon such terms as the Administrator shall
determine. Certificates for the purchased shares shall be registered in the
name of the participant and may be delivered to the purchaser or held by
KnowledgeWare as security for payment of the promissory note as determined in
the discretion of the Administrator.
(d) In connection with any options granted pursuant to this Plan, the
Administrator, in its discretion may accept as payment for all or any portion of
the option price of any Option Stock, shares of Common Stock owned by the
participant having a fair market value equal to the required payment. The
participant shall deliver to KnowledgeWare a certificate or certificates
representing such shares duly endorsed to KnowledgeWare or accompanied by a
separate stock power so endorsed.
8. RESTRICTED STOCK. While not required to be subject to any
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restrictions, shares of Restricted Stock sold pursuant to this Plan (including
any shares received by the holders thereof as a result of stock dividends, stock
splits or any other forms of recapitalization) may, in the discretion of the
Administrator, be subject to any one or more of the following restrictions:
(a) Shares of Unvested Stock may not be sold, assigned, transferred or
otherwise alienated or hypothecated.
(b) In the event of termination of employment with the Company by a
participant within such period or periods after shares are sold to him hereunder
as is established by the Administrator in the related Restricted Stock
Agreement, if such termination is for any reason other than death, Total
Disability, or Retirement, KnowledgeWare shall have the option for 30 days
following written tender, within such period as is specified in the related
Restricted Stock Agreement, of all shares of Unvested Stock by the participant
to the Secretary of KnowledgeWare to buy for cash all
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or any part of the shares of Unvested Stock sold to such participant at the cash
price per share paid by him to KnowledgeWare, which purchase shall be as of the
date of such termination of employment and participant shall be deemed to have
ceased to own such shares as of such date. A participant's failure to make the
above tender shall not limit in any manner the rights of KnowledgeWare to
repurchase shares of Unvested Stock hereunder and in such event the Secretary of
KnowledgeWare may give notice to such participant that his tender shall have
been deemed to be made on the date of termination of employment.
(c) In the event a participant who has purchased shares hereunder
ceases to be employed by the Company as a result of death, Total Disability or
Retirement, then (i) KnowledgeWare may repurchase such of the shares of Unvested
Stock sold to such participant, at such price and on such terms and conditions,
as the Administrator shall determine at such time in its sole discretion and
(ii) the other restrictions imposed and still existing upon any or all of the
shares of Unvested Stock sold to such participant shall lapse or shall be
removed in accordance with a specified formula, all as shall be determined at
such time in the sole discretion of the Administrator.
(d) At the end of such period as shall be established by the
Administrator in the related Restricted Stock Agreement, all shares of Unvested
Stock shall be repurchased for cash by KnowledgeWare within 30 days after the
expiration of such period at the cash price per share paid by such participant
to KnowledgeWare.
(e) At any time the Common Stock is not being publicly traded as
described in Sections 6(a) or 6(b), in the event a participant shall desire to
sell all or any part of his shares of Common Stock pursuant to a bona fide
written offer for a monetary consideration, the participant shall give notice to
the Secretary of KnowledgeWare of his desire to accept such offer in writing.
The notice shall set forth the terms of the proposed sale including the identity
of any person that the participant has reason to believe will have a beneficial
interest in such shares. The notice shall also set forth the terms of any other
agreement or understanding between the participant and other parties directly or
indirectly connected with said offer. No sale may be made pursuant to the offer
if KnowledgeWare determines in good faith that such other agreement or
understanding has materially affected the terms of the offer and so notifies the
participant within the option period. Any change in the terms of the proposed
sale shall require a new notice. For a period of 60 days after receipt by
KnowledgeWare of said notice, KnowledgeWare shall have the option, exercisable
by written notice, to purchase said shares on the same terms and conditions as
are specified in the notice except the time for closing shall be not less than
30 days after exercise of the option. Should KnowledgeWare not exercise its
option, the remaining shareholders or KnowledgeWare shall be given the same
notice of the proposed sale and said remaining shareholders shall have an
additional period of 30 days to exercise an option to purchase said shares on
such terms and conditions. If more than
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one of the remaining shareholders shall exercise the option, the shares shall be
purchased by them in proportion to their holdings before such exercise. If
KnowledgeWare and the remaining shareholders fail to exercise the option, the
participant shall be free to sell his shares pursuant to the terms of the notice
for a period of 60 days following the expiration of KnowledgeWare's option
period. Thereafter, the provisions of this Section relating to notice and
options shall again apply.
(f) The Administrator may provide in the related Restricted Stock
Agreement for (i) any other restrictions on any shares of Restricted Stock sold
pursuant to this Plan as it may deem advisable, including, without limitation,
restrictions based on market appreciation of KnowledgeWare Common Stock,
increases in the revenues, sales, net worth or net earnings of KnowledgeWare or
any subsidiary, division or other component thereof, or the attainment of any
other business or financial goal of the Company and (ii) such further
restrictions as may be advisable to comply with the law, including the
requirements of the Securities Act of 1933, as amended, any stock exchange upon
which such share or shares of the same class are then listed, and under any
state securities or other laws applicable to such shares.
9. BONUS STOCK. The Administrator shall have the sole discretion to
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determine in the related Bonus Stock Agreement whether shares or Bonus Stock
awarded pursuant to the Plan (including any shares received by the holders
thereof as a result of stock dividends, stock splits or any other forms of
recapitalization) shall be free of any restrictions (other than those advisable
to comply with the law) or shall be subject to restrictions similar to those
referred to in Section 8 (including specifically Section 8(f)) with respect to
shares of Restricted Stock.
10. OPTION STOCK.
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(a) All options granted pursuant to the Plan shall have such terms and
conditions as the Administrator shall determine, including the period during
which they may be exercised in whole or in part and the conditions under which
they may be terminated or canceled and such other provisions as may be advisable
to comply with the law or the rules of any such stock exchange, and each option
shall have the following additional conditions:
(i) The options shall not be transferable other than by will or
the laws of descent and distribution and shall be exercisable during the
participant's lifetime only by him and, except as otherwise determined by
the Administrator, shall only be exercisable prior to termination of
employment with the Company.
(ii) KnowledgeWare shall not issue any fractional shares upon the
exercise of options granted under the Plan.
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(iii) No optionee will be deemed to be a holder of any shares of
Common Stock or shall have any rights of a shareholder of KnowledgeWare
until the issuance of certificates after the exercise thereof. No
adjustment shall be made for any dividends or distributions or other rights
for which the record date is prior to the date of such stock certificates
so issued except as provided in (iv) below.
(iv) The number of shares subject to an option and the price per
share shall be appropriately adjusted by the Administrator to reflect any
stock splits, stock dividends or other form of recapitalization.
(v) The Administrator shall have sole discretion to determine in
the Stock Option Agreement whether shares of Option Stock (including any
shares received thereon as a result of stock dividends, stock splits and
any other forms of recapitalization) shall be free of any restrictions
(other than those advisable to comply with the law) or shall be subject to
restrictions similar to those referred to in Section 8 (including
specifically Section 8(f)) with respect to shares of Restricted Stock.
(vi) The granting of an option shall impose no obligation upon
the participant to exercise such option.
(b) All Incentive Options granted hereunder, in addition to the
conditions required by Section 10(a) and the other Sections of the Plan
applicable to Incentive Options, must meet the following additional conditions
where applicable:
(i) The Plan must be approved by the shareholders of
KnowledgeWare within 12 months after its adoption by the Board of
Directors.
(ii) Any Incentive Option must be granted within 10 years from
the date the Plan is adopted by the Board of Directors.
(iii) Any Incentive Option must be exercised only within 10
years of the date it is granted, except as otherwise provided in 10(b)(vii)
below.
(iv) A maximum of 2,750,000 shares of Common Stock may be issued
under Incentive Options.
(v) The aggregate fair market value (determined at the time the
option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by such individual during any
calendar year (under all plans of KnowledgeWare and its Subsidiaries) shall
not exceed $100,000.
(vi) Any Incentive Option granted hereunder shall be consistent
with the provisions of Sections 421, 422A and
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425 and related Sections of the Code and applicable Treasury Regulations.
The Stock Option Agreements authorized under this Plan in connection with
the grant of Incentive Options may contain other provisions, not
inconsistent with the Plan and Section 422A of the Code, as the
Administrator shall deem advisable.
(vii) If the participant owns (subject to applicable ownership
attribution rules of Section 425(d) of the Code and Treasury Regulations
promulgated thereunder) stock possessing more than 10 percent of the total
combined voting power of all classes of stock of KnowledgeWare or of stock
of any parent or subsidiary of KnowledgeWAre at the time the Incentive
Option is granted, the option price shall be not less than 110 percent of
the fair market value of the stock subject to the Incentive Option and the
Incentive Option by its terms shall not be exercisable after the expiration
of five years from the date the Incentive Option is granted.
11. COMPETITION BY PARTICIPANT.
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(a) At the discretion of the Administrator, provisions may be included
in a Restricted Stock Agreement, Bonus Stock Agreement or Stock Option Agreement
that a participant within such period of time as shall be specified in the
related Restricted Stock Agreement, Bonus Stock Agreement or Stock Option
Agreement, shall not directly or indirectly, individually or as an employee,
partner, officer, director or stockholder or in any other capacity whatsoever of
any person, firm, partnership or corporation (i) recruit, hire, assist others in
recruiting or hiring, discuss employment with, or refer to others, any persons
who is, or within the preceding 12 months was, an employee of KnowledgeWare or
any parent, subsidiary, or affiliated company, or of any present, prospective or
former customer of KnowledgeWare or any parent, subsidiary or affiliated
company, (ii) compete with KnowledgeWare or any parent, subsidiary or affiliated
company in such segments of the business of the Company and within such
territory as shall be specified in such related Agreement, (iii) use in
competition with KnowledgeWare, or any parent, or subsidiary, or affiliated
company, customer, prospective customer, or former customer, within such
segments and specified territory, any of the methods, information, or systems
developed by KnowledgeWare or any parent, or subsidiary, or affiliated company,
customer, prospective customer, or former customer, where such customer,
prospective customer, or former customer does business or (iv) call upon,
solicit, accept employment with, sell or endeavor to sell within such segments
and specified territory any customer, prospective customer, or former customer
of KnowledgeWare, or any parent, subsidiary, or affiliated company. A
Restricted Stock Agreement, Bonus Stock Agreement or Stock Option Agreement may
contain such provisions regarding the forfeiture, resale or return to
KnowledgeWare of shares received by the participant, or the termination or
cancellation of options granted to the participant, under the Plan as the
Administrator may deem appropriate upon the occurrence of an event prohibited
under this Section.
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(b) The provision of this Section shall not limit or restrict in any
manner any rights or remedies which KnowledgeWare may have under any separate
employment agreement with a participant or otherwise with respect to competition
by a participant.
12. RELATED AGREEMENTS. In order to enforce the restrictions imposed upon
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shares issued and options granted hereunder and to comply with federal and state
securities laws and the Code, KnowledgeWare shall enter into a Restricted Stock
Agreement, Bonus Stock Agreement or Stock Option Agreement with each participant
containing such terms and conditions as the Administrator shall determine; and
KnowledgeWare may require that the certificates representing shares of Unvested
Stock or shares securing an installment payment for shares shall remain in the
physical custody of KnowledgeWare or an escrow holder.
13. WITHHOLDING OF TAXES. Upon the award, sale or delivery of any shares,
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or the grant or exercise of any option hereunder and should KnowledgeWare
determine that the participant will be considered to have received income
subject to withholding due to such event and the Company will be required to
withhold amounts for federal and state income tax purposes, the distribution of
any such shares to the participant may be deferred by KnowledgeWare until the
participant makes satisfactory arrangements to provide KnowledgeWare with the
funds to meet any such tax withholding obligation. If the participant fails to
provide such funds to KnowledgeWare the time required to pay such withholding
tax or should KnowledgeWare and the participant agree that such tax withholding
obligation may be paid with shares to be distributed to the participant,
KnowledgeWare may retain and sell a sufficient number of the participant's
shares which are otherwise to be distributed to the participant as may be
required to discharge, or reimburses KnowledgeWare for, the payment of such
withholding obligation and any interest and penalty which may have accrued in
connection therewith. KnowledgeWare shall have and retain a security interest
in such shares of the participant for the purpose of securing the participant's
obligation hereunder and the participant shall take such steps and execute such
documents to perfect such security interest as KnowledgeWare shall reasonably
request.
14. COMPLIANCE WITH SECURITIES LAW.
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(a) KnowledgeWare shall not be obligated to sell or issue any shares
pursuant to this Plan unless the shares to be distributed are at that time
effectively registered or exempt from registration, in the opinion of
KnowledgeWare, under the applicable federal and state securities laws.
(b) Unless the shares covered by the Plan have been registered under
the applicable federal and state securities laws, or KnowledgeWare has
determined that such registration is unnecessary, each person receiving shares
under the Plan may be required by KnowledgeWare to give a representation in
writing that he is acquiring such shares for his own account for investment and
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not with a view to, or for sale in connection with, the distribution of any part
thereof.
15. INDEMNIFICATION. In addition to any other rights of indemnification
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that they may have as directors of KnowledgeWare or as members of the Committee,
the directors of KnowledgeWare and members of the Committee shall be indemnified
by KnowledgeWare against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or
any them may be a party by reason of action taken or failure to act under or in
connection with the Plan, or any securities sold or issued hereunder, and
against all amounts paid by them in settlement thereof (provided the settlement
is approved by KnowledgeWare) or paid by them in satisfaction of a judgment in
any action, suit or proceeding; provided that within 20 days after institution
of any action, suit or proceeding, the director or the Committee member shall in
writing offer KnowledgeWare the opportunity, at its own expense, to handle and
defend the same.
16. EXPENSES OF PLAN. The expenses of administering the Plan shall be
----------------
borne by KnowledgeWare.
17. NO EFFECT ON EMPLOYMENT. Nothing herein contained, including the sale
-----------------------
or award of any shares and the grant of any option, shall affect the right of
the Company to terminate any participant's employment at any time for any
reason.
18. EXEMPTION FROM PENSION COMPUTATION. By acceptance of shares sold or
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awarded or options granted under this Plan, each participant shall be deemed to
agree that it is special incentive compensation and that it will not be taken
into account as "wages" or "salary" in retirement or deferred profit sharing
plans of the Company. In addition, each beneficiary of a deceased participant
shall be deemed to agree that such sale, award or grant will not affect the
amount of any life insurance coverage available to such beneficiary under any
life insurance plan covering employees of the Company.
19. LEGEND. In order to enforce the restrictions imposed upon shares sold
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or awarded hereunder the Administrator may cause a legend or legends to be
placed on any certificates representing shares sold or awarded pursuant to this
Plan, which legend or legends shall make appropriate reference to the
restrictions imposed hereunder.
20. AMENDMENTS. This Plan may be amended at any time by the Board of
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Directors, provided that without the approval of the shareholders of
KnowledgeWare, no such amendment shall become effective if it would (a)
materially increase the benefits accruing to participants under the Plan, (b)
materially increase the number of shares of Common Stock which may be sold under
the Plan, or (c) materially modify the requirements as to eligibility for
participation in the Plan. Any amendment to the Plan shall not,
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without the written consent of the participant, affect such participant's rights
under any Restricted Stock Agreement, Bonus Stock Agreement or Stock Option
Agreement entered into prior to such amendment.
21. TERMINATION. This Plan shall terminate and no further shares shall be
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sold or issued hereunder after September 1, 1998, or such earlier date as may be
determined by the Board of Directors. The termination of this Plan, however,
shall not affect any restrictions previously imposed on shares issued pursuant
to this Plan, or alter the rights of participants with respect to options
granted or shares issued pursuant to this Plan.
22. RIGHTS OF PARTICIPANTS AS SHAREHOLDERS. Each participant acquiring
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shares of Restricted Stock, Bonus Stock or Option Stock hereunder shall, upon
the issuance of certificates with respect to such shares, be the registered
owner of such shares and, except as otherwise provided herein or in any related
Restricted Stock Agreement, Bonus Stock Agreement or Stock Option Agreement,
shall be entitled to full voting, dividend and distribution rights like any
other holder of KnowledgeWare Common Stock as long as such participant remains
the registered owner thereof.
23. GOVERNING LAW. This Plan shall be governed and construed in
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accordance with the laws of Georgia in all respects.
24. CONSTRUCTION. The masculine gender, where appearing in the Plan,
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shall be deemed to include the feminine and neuter genders, unless the context
clearly indicates to the contrary; the singular includes the plural, and the
plural shall include the singular.
25. VALIDITY AND LEGALITY. If any provision of this Plan for any reason
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is declared invalid, illegal or unenforceable, in whole or in part, such
declaration shall not affect the validity, legality or enforceability of any
remaining provision or portion thereof, which remaining provisions or portion
thereof shall remain in force and effect as if this Plan had been adopted with
the invalid, illegal or unenforceable provision or portion thereof eliminated.
26. EFFECTIVE DATE. This Plan shall become effective upon its adoption by
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the Board of Directors and approval by the shareholders of KnowledgeWare.
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