<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended September 30, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from ____________________________
to ____________________________
COMMISSION FILE NO. 1-8465
STERLING SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1873956
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8080 NORTH CENTRAL EXPRESSWAY, SUITE 1100
DALLAS, TEXAS 75206
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (214) 891-8600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $0.10 Par Value New York Stock Exchange
5 3/4% Convertible Subordinated
Debentures Due February 1, 2003 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of November 30, 1994, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was $650,531,195 based on the closing sales
price of $30 3/4 on the New York Stock Exchange.
As of November 30, 1994, 23,094,091 shares of the Registrant's common stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual meeting of the Registrant to
be held during 1995 are incorporated by reference in Part III.
<PAGE>
<TABLE>
<CAPTION>
STERLING SOFTWARE, INC.
TABLE OF CONTENTS
Form 10-K Item Page
- -------------- ----
<S> <C> <C>
Part I.
Item 1. Business.......................................................................... *
Item 2. Properties........................................................................ *
Item 3. Legal Proceedings................................................................. *
Item 4. Submission of Matters to a Vote of Security Holders............................... *
Part II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............. *
Item 6. Selected Financial Data........................................................... *
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations....................................................................... *
Item 8. Financial Statements and Supplementary Data....................................... *
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure........................................................................ *
Part III.
Item 10. Directors and Executive Officers of the Registrant................................ *
Item 11. Executive Compensation............................................................ *
Item 12. Security Ownership of Certain Beneficial Owners and Management.................... *
Item 13. Certain Relationships and Related Transactions.................................... *
Part IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................... 3
</TABLE>
- ------------------------
*Not amended
2
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
<TABLE>
<S> <C>
(a) The following documents are filed as a part of this Annual Report on
Form 10-K.
1. Consolidated Financial Statements:
<CAPTION>
Page
----
<S> <C>
Reports of Independent Auditors............................................... *
Consolidated Balance Sheets at September 30, 1994 and 1993.................... *
Consolidated Statements of Operations for the Years Ended
September 30, 1994, 1993 and 1992............................................ *
Consolidated Statements of Stockholders' Equity for the Years Ended
September 30, 1994, 1993 and 1992............................................ *
Consolidated Statements of Cash Flows for the Years Ended
September 30, 1994, 1993 and 1992............................................ *
Notes to Consolidated Financial Statements.................................... *
<CAPTION>
2. Consolidated Financial Statement Schedules:
Page
----
Report of Independent Auditors on Schedules................................... 10
Schedule II - Amounts Receivable from Related Parties and Underwriters,
Promoters and Employees Other than Related Parties for the Years Ended
September 30, 1994, 1993 and 1992............................................ 11
Schedule VIII - Valuation and Qualifying Accounts for the Years Ended
September 30, 1994, 1993 and 1992............................................ 14
Schedule X - Consolidated Supplementary Income Statement Information
for the Years Ended September 30, 1994, 1993 and 1992........................ 15
</TABLE>
Schedules other than Schedules II, VIII and X are omitted for the reason
that they are either not required or not applicable or the required information
is included in the consolidated financial statements or notes thereto.
- ---------------------
* Not amended.
3
<PAGE>
3. Exhibits:
<TABLE>
<C> <C> <S>
2(a) - Agreement and Plan of Merger dated as of March 31, 1993
among the Company, Systems Center, Inc. and SSI
Acquisition Corporation ("SCI Agreement and Plan of
Merger") (1)
2(b) - First Amendment to SCI Agreement and Plan of Merger
(11)
2(c) - Amended and Restated Agreement and Plan of Merger dated
as of August 31, 1994, among the Company,
KnowledgeWare, Inc. and SSI Corporation ("KWI
Agreement and Plan of Merger") (2)
2(d) - Agreement dated October 11, 1994 among the Company,
KnowledgeWare, Inc. and SSI Corporation (2)
2(e) - First Amendment to KWI Agreement and Plan of Merger (2)
3(a) - Certificate of Incorporation of the Company (3)
3(b) - Certificate of Amendment of Certificate of
Incorporation of the Company (11)
3(c) - Certificate of Amendment of Certificate of
Incorporation of the Company (4)
3(d) - Restated Bylaws of the Company (5)
4(a) - Form of Common Stock Certificate (6)
4(b) - Form of Certificate of Designation, Preferences, Rights
and Limitations with respect to Series B Junior
Preferred Stock (11)
4(c) - Form of Indenture between the Company and Bank of
America Texas, National Association, as Trustee,
including the form of 5 3/4% Convertible Subordinated
Debenture attached as Exhibit A thereto (7)
4(d) - Preferred Stock and Warrant Purchase Agreement dated
June 25, 1991 among Systems Center, Inc. and the
Investors named therein (8)
4(e) - Warrant Agreement dated June 9, 1994 between
KnowledgeWare, Inc. and Trust Company Bank (14)
4(f) - Supplemental Warrant Agreement dated as of November 30,
1994 between KnowledgeWare, Inc. and Trust Company
Bank (14)
9 - None
10(a) - Amended and Restated Stock Option Agreement dated as of
August 31, 1994 between the Company and KnowledgeWare,
Inc. (2)
10(b) - Form of Amended and Restated Stockholder Agreement
dated as of August 31, 1994 between the Company and
certain stockholders of KnowledgeWare, Inc. (2)
10(c) - Form of Registration Rights Agreement dated as of
November 30, 1994 among the Company and the Selling
Stockholders named therein (2)
10(d) - Form of Escrow Agreement dated as of November 30, 1994
among the Company, KnowledgeWare, Inc., The First
National Bank of Boston, N.A. and Stuart Finestone (2)
10(e) - Amended Incentive Stock Option Plan of the Company
(16), (19)
10(f) - Amended Non-Statutory Stock Option Plan of the Company
(16), (19)
10(g) - Supplemental Executive Retirement Plan II of
Informatics General Corporation (11)
10(h) - Form of Supplemental Executive Retirement Plan II
Agreement (the "SERP II Agreement") (11)
10(i) - Amendment to SERP II Agreement (11)
10(j) - Form of Employment Agreement with Jeannette P. Meier,
George H. Ellis and Phillip A. Moore (11), (19)
10(k) - Form of Amendment No. 1 to Employment Agreement with
Jeannette P. Meier, George H. Ellis and Phillip A.
Moore (11), (19)
10(l) - Employment Agreement with Sam Wyly (11), (19)
10(m) - Employment Agreement with Charles J. Wyly, Jr. (11),
(19)
10(n) - Employment Agreement with Sterling L. Williams (11),
(19)
10(o) - Form of Amendment No. 1 to Employment Agreement with
Charles J. Wyly, Jr. and Sterling L. Williams (11),
(19)
10(p) - Amendment No. 1 to Employment Agreement with Sam Wyly
(11), (19)
</TABLE>
4
<PAGE>
<TABLE>
<C> <C> <S>
10(q) - Amendment No. 2 to Employment Agreement with Sam Wyly
(11), (19)
10(r) - Consultation Agreement with REC Enterprises, Inc. (11),
(19)
10(s) - Employment Agreement with William D. Plumb (11), (19)
10(t) - Employment Agreement with William D. Plumb (11), (19)
10(u) - Form of Employment Agreement with Edward J. Lott,
Warner C. Blow, Werner L. Frank and Geno P. Tolari
(11), (19)
10(v) - Employment Agreement with Sterling L. Williams (1),
(19)
10(w) - Form of Employment Agreement with Jeannette P. Meier,
George H. Ellis, Phillip A. Moore, Warner C. Blow and
Geno P. Tolari (1), (19)
10(x) - Employment Agreement with Werner L. Frank (19), (20)
10(y) - Form of Series B Warrant Agreement (11)
10(z) - Form of Amendment to Series B Warrant Agreement
(January 1988) (11)
10(aa) - Form of Amendment to Series B Warrant Agreement (May
1989) (11)
10(bb) - Form of Series E Warrant Agreement (11)
10(cc) - Form of Amendment to Series E Warrant Agreement (May
1989) (11)
10(dd) - Form of Series F Warrant Agreement (11)
10(ee) - Form of Amendment to Series F Warrant Agreement (May
1989) (11)
10(ff) - Amended and Restated Revolving Credit and Term Loan
Agreement dated June 8, 1990 between the Company and
The First National Bank of Boston and BankOne Texas
N.A. ("Loan Agreement") (11)
10(gg) - First Amendment to Loan Agreement dated as of October
16, 1990 (11)
10(hh) - Second Amendment to Loan Agreement dated as of
September 19, 1991 (11)
10(ii) - Third Amendment to Loan Agreement dated as of December
31, 1991 (11)
10(jj) - Fourth Amendment to Loan Agreement dated as of June 15,
1992 (11)
10(kk) - Fifth Amendment to Loan Agreement dated as of July 31,
1992 (11)
10(ll) - Sixth Amendment to Loan Agreement dated as of August
31, 1992 (11)
10(mm) - Seventh Amendment to Loan Agreement dated as of
September 9, 1992 (11)
10(nn) - Eighth Amendment to Loan Agreement dated as of
September 30, 1992 (11)
10(oo) - Ninth Amendment to Loan Agreement dated as of October
13, 1992 (11)
10(pp) - Tenth Amendment to Loan Agreement dated as of December
17, 1992 (1)
10(qq) - Form of Eleventh Amendment to Loan Agreement dated as
of March 29, 1993 (11)
10(rr) - Twelfth Amendment to Loan Agreement dated as of June
30, 1993 (11)
10(ss) - Form of Thirteenth Amendment to Loan Agreement dated as
of November 10, 1993 (11)
10(tt) - Form of Fourteenth Amendment to Loan Agreement dated as
of November 22, 1993 (11)
10(uu) - Fifteenth Amendment to Loan Agreement dated as of
December 21, 1993 (12)
10(vv) - Sixteenth Amendment to Loan Agreement dated as of
December 30, 1993 (12)
10(ww) - Seventeenth Amendment to Loan Agreement dated as of
January 31, 1994 (12)
10(xx) - Eighteenth Amendment to Loan Agreement dated as of
March 15, 1994 (13)
10(yy) - Nineteenth Amendment to Loan Agreement dated as of May
17, 1994 (16)
10(zz) - Form of Twentieth Amendment to Loan Agreement dated as
of November 30, 1994 (20)
10(aaa) - Twenty-First Amendment to Loan Agreement dated as of
December 29, 1994(21)
10(bbb) - 1993 Executive Compensation Plan for Group Presidents
(1), (19)
10(ccc) - 1994 Executive Compensation Plan for Group Presidents
(11), (19)
10(ddd) - 1995 Executive Compensation Plan for Group Presidents
(19), (20)
10(eee) - Form of Series G Warrant Agreement (11)
10(fff) - Amended 1992 Non-Statutory Stock Option Plan (17), (19)
10(ggg) - 1994 Non-Statutory Stock Option Plan (15), (19)
10(hhh) - Form of Indemnity Agreement between the Company and
each of its directors and officers (11)
10(iii) - Systems Center, Inc. Restated and Amended Restricted
Stock Plan (9)
10(jjj) - Systems Center, Inc. Amended and Restated
Nondiscretionary Restricted Stock Plan (9)
</TABLE>
5
<PAGE>
<TABLE>
<C> <C> <S>
10(kkk) - Systems Center, Inc. 1982 Stock Option Plan (9)
10(lll) - Systems Center, Inc. 1992 Stock Incentive Plan (9)
10(mmm) - Systems Center, Inc. 1983 Stock Plan (9)
10(nnn) - Systems Center, Inc. Share Option Scheme (9)
10(ooo) - Registration Rights Agreement dated as of July 1, 1993
among the Company and the Selling Stockholders named
therein (10)
10(ppp) - KnowledgeWare, Inc. Incentive Stock Option Plan of 1984
(18)
10(qqq) - KnowledgeWare, Inc. Second Incentive Stock Option Plan
of 1984 (18)
10(rrr) - KnowledgeWare, Inc. 1988 Stock Incentive Plan (18)
10(sss) - Consultation Agreement dated December 1, 1994 between
the Company and Francis A. Tarkenton (20)
10(ttt) - Form of Employment Agreement with M. Gene Konopik, A.
Maria Smith and Clive Smith (19)(21)
10(uuu) - Form of Employment Agreement with M. Gene Konopik, A.
Maria Smith and Clive Smith (19)(21)
10(vvv) - Consultation Agreement with REC Enterprises, Inc.
dated July 2, 1994 (19)(21)
11 - Computation of Earnings Per Share, Year Ended September
30, 1994 (20)
12 - None
13 - None
16 - None
18 - None
21 - Subsidiaries (20)
22 - None
23.1 - Consent of Ernst & Young LLP, Independent Auditors (20)
23.2 - Consent of Arthur Andersen LLP, Independent Accountants
(20)
23.3 - Consent of Ernst & Young LLP, Independent Auditors (21)
24 - None
27 - Financial Data Schedule (20)
28 - None
99 - None
</TABLE>
(b) Reports on Form 8-K.
On August 2, 1994, the Company filed a Current Report on Form 8-K dated July
31, 1994, with respect to Item 5 and Item 7 of said form, which report related
to a definitive Agreement and Plan of Merger with KnowledgeWare, Inc., pursuant
to which the Company will acquire KnowledgeWare, Inc.
On August 2, 1994, the Company filed a Current Report on Form 8-K dated
August 1, 1994, with respect to Item 5 and Item 7 of said form, which report
related to the Company's acquisition of American Business Computer Company.
On September 2, 1994, the Company filed a Current Report on Form 8-K dated
August 31, 1994, with respect to Item 5 and Item 7 of said form, which report
related to an Amended and Restated Agreement and Plan of Merger with
KnowledgeWare, Inc., pursuant to which the Company will acquire KnowledgeWare,
Inc.
On November 3, 1994, the Company filed a Current Report on Form 8-K dated
November 3, 1994, with respect to Item 5 and Item 7 of said form, which report
related to the Company's proposed acquisition of KnowledgeWare. The Company
included in such report the following financial statements of KnowledgeWare: (i)
Consolidated Balance Sheets as of June 30, 1994 and 1993; (ii) Consolidated
Statements of Operations for the years ended June 30, 1994, 1993 and 1992; (iii)
Consolidated Statements of Shareholders' Equity for the years ended June 30,
1994, 1993 and 1992; (iv) Consolidated Statements of Cash Flows for the years
ended June 30, 1994, 1993 and 1992 and (v) the related notes thereto. The
Company also included in such report the following pro forma combined condensed
financial statements assuming a business combination between the Company and
KnowledgeWare accounted for as a purchase of KnowledgeWare by Sterling: (i) the
unaudited Pro Forma Combined Condensed Balance Sheet of Sterling and
KnowledgeWare as of June 30, 1994; (ii) the unaudited Pro Forma Combined
Condensed Statements of Operations of Sterling and KnowledgeWare for the nine
months ended June 30, 1994; (iii) the unaudited Pro Forma Combined Condensed
Statements of Operations of Sterling and KnowledgeWare for the year ended
September 30, 1993; and (iv) the related notes thereto.
6
<PAGE>
On November 14, 1994, the Company filed a Current Report on Form 8-K
dated November 14, 1994, with respect to Item 5 and Item 7 of said form,
which report related to the Company's proposed acquisition of
KnowledgeWare. The Company included in such report the following Financial
Statements of KnowledgeWare: (i) the unaudited Condensed Consolidated
Statements of Operations for the three months ended September 30, 1994 and
1993; (ii) the unaudited Condensed Consolidated Balance Sheets as of
September 30, 1994 (unaudited) and June 30, 1994 (audited); (iii) the
unaudited Condensed Consolidated Statements of Cash Flows for the three
months ended September 30, 1994 and 1993 and (iv) the related notes
thereto.
On November 25, 1994, the Company filed a Current Report on Form 8-K
dated November 14, 1994, with respect to Item 5 of said form, which report
related to the Company's proposed acquisition of KnowledgeWare.
On December 15, 1994, the Company filed a Current Report on Form 8-K
dated December 14, 1994, with respect to Item 2 and Item 7 of said form,
which report related to the Company's acquisition of KnowledgeWare.
- -----------------
(1) Previously filed as an exhibit to the Company's Registration Statement No.
33-62028 on Form S-4 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement No.
33-56185 on Form S-4 and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Registration Statement No.
2-82506 on Form S-1 and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Registration Statement No.
33-69926 on Form S-8 and incorporated herein by reference.
(5) Previously filed as an exhibit to the Company's Registration Statement No.
33-47131 on Form S-8 and incorporated herein by reference.
(6) Previously filed as an exhibit to the Company's Registration Statement No.
2-86825 on Form S-1 and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's Registration Statement No.
33-57428 on Form S-3 and incorporated herein by reference.
(8) Previously filed as an exhibit to the Quarterly Report on Form 10-Q of
Systems Center, Inc. for the quarter ended June 30, 1991 and incorporated
herein by reference.
(9) Previously filed as an exhibit to the Company's Registration Statement No.
33-65402 on Form S-8 and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Registration Statement No.
33-71706 on Form S-3 and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993 and incorporated herein by
reference.
(12) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1993 and incorporated herein by
reference.
(13) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994 and incorporated herein by
reference.
(14) Previously filed as an exhibit to the Company's Registration Statement No.
33-56679 on Form S-3 and incorporated herein by reference.
(15) Previously filed as an exhibit to the Company's Registration Statement No.
33-53837 on Form S-3 and incorporated herein by reference.
(16) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1994 and incorporated herein by
reference.
7
<PAGE>
(17) Previously filed as an exhibit to the Company's Registration Statement No.
33-56683 on Form S-3 and incorporated herein by reference.
(18) Previously filed as an exhibit to the Company's Registration Statement No.
33-56681 on Form S-8 and incorporated herein by reference.
(19) Management Contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c) of the form.
(20) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994.
(21) Filed herewith.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
STERLING SOFTWARE, INC.
Date: January 24, 1995 By /s/ GEORGE H. ELLIS
-------------------------------------
George H. Ellis
Executive Vice President, Finance
and Chief Financial Officer
(Principal Financial and Accounting Officer)
9
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Sterling Software, Inc.
We have audited the consolidated financial statements of Sterling Software, Inc.
(the "Company") as of September 30, 1994 and 1993, and for each of the three
years in the period ended September 30, 1994, and have issued our report thereon
dated December 1, 1994. Our audits also included the financial statement
schedules listed in item 14(a). These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. We did not audit the financial statements of Systems Center, Inc., which
statements reflect total revenues of $112,643,121 for the year ended September
30, 1992.
In our opinion, based on our audits and the report of other auditors, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements as a whole, present fairly, in all material
respects, the information set forth therein.
Ernst & Young LLP
Dallas, Texas
December 1, 1994
10
<PAGE>
SCHEDULE II.1
STERLING SOFTWARE, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEAR ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT SEPTEMBER 30, 1994
SEPTEMBER 30, -----------------------------
NAME OF DEBTOR 1993 ADDITIONS DEDUCTIONS CURRENT NON-CURRENT
- ---------------- ------------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Sterling L. Williams......... $831,717 $298,935(C) $(110,505)(B) $229,834(A) $790,313(A)
Sam Wyly..................... 169,027 (169,027)(B)
Geno P. Tolari............... 135,670(E) 2,359(D) (138,029)(E)
------- ----- -------- ________ ________
TOTAL $1,136,414 $301,294 $(417,561) $229,834 $790,313
========== ======== ========= ======== ========
</TABLE>
____________
(A) Includes amounts outstanding pursuant to an $800,000 promissory note,
interest accrued on the promissory note of $105,813 and advances. Such
promissory note bears interest at 4.69% per annum and is payable in varying
installments through its final maturity at December 31, 2000.
(B) Represents repayments of accrued interest, advances and notes.
(C) Represents additions of accrued interest and advances.
(D) Represents additions of accrued interest.
(E) Balance at September 30, 1993 represents a $125,000 loan and accrued
interest of $10,670. The loan was repaid on January 10, 1994.
11
<PAGE>
SCHEDULE II.2
STERLING SOFTWARE, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEAR ENDED SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT SEPTEMBER 30, 1993
SEPTEMBER 30, -----------------------------
NAME OF DEBTOR 1992 ADDITIONS DEDUCTIONS CURRENT NON-CURRENT
- ---------------- -------------- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Sterling L. Williams.......... $814,418 $61,808(C) $(44,509)(E) $36,589(A) $795,128(A)
Sam Wyly...................... 169,027 169,027(B)
Geno P. Tolari................ 126,920 8,750(D) 135,670(F)
-------- ------- ______ ______ ---------
TOTAL $1,110,365 $70,558 $(44,509) $36,589 $1,099,825
========== ======= ========= ======= ==========
</TABLE>
____________
(A) Represents amounts outstanding pursuant to an $800,000 promissory note and
advances of $36,589. Such promissory note bears interest at 4.69% per annum
and is payable in varying installments through its final maturity at
December 31, 2000.
(B) Represents advances.
(C) Represents additions of accrued interest and advances.
(D) Represents additions of accrued interest.
(E) Represents repayments of accrued interest, advances and notes.
(F) Represents a $125,000 loan and accrued interest of $10,670. Such loan bears
interest at 1% above the prime rate and is due on July 13, 1995.
12
<PAGE>
SCHEDULE II.3
STERLING SOFTWARE, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEAR ENDED SEPTEMBER 30, 1992
<TABLE>
<CAPTION>
BALANCE AT
SEPTEMBER 30, BALANCE AT SEPTEMBER 30, 1992
-------------------------------
NAME OF DEBTOR 1991 ADDITIONS DEDUCTIONS CURRENT NON-CURRENT
- ---------------- -------------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Sterling L. Williams............ $1,097,075 $153,396(C) $(436,053)(D) $19,284(A) $795,134(A)
Sam Wyly........................ 169,027 169,027(B)
Geno P. Tolari.................. ______ 126,920(E) ______ _____ 126,920(E)
-------- ---------
TOTAL $1,266,102 $280,316 $(436,053) $19,284 $1,091,081
========== ======== ========== ======= ==========
</TABLE>
____________
(A) Represents amounts outstanding pursuant to an $800,000 promissory note and
advances of $14,688. Such promissory note bears interest at 5.22% per annum
and is payable in varying installments through its final maturity at
December 31, 2000. Effective October 1, 1992, the promissory note was
amended to adjust the interest rate to 4.69%.
(B) Represents advances.
(C) Represents additions of accrued interest and advances.
(D) Represents repayments of accrued interest, advances and notes.
(E) Represents a $125,000 loan and accrued interest of $1,920. Such loan bears
interest at 1% above the prime rate and is due on July 13, 1995.
13
<PAGE>
SCHEDULE VIII
STERLING SOFTWARE, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
ADDITIONS
------------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS - DEDUCTIONS - END OF
OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
------------ ------------ -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts at September 30,
1992....................... $4,308,000 $5,757,000 $ 687,000(1) $(5,860,000)(2) $4,892,000
========== ========== ============ ============== ==========
Allowance for doubtful
accounts at September 30,
1993....................... $4,892,000 $6,200,000 $ 517,000(1) $(3,248,000)(2) $8,361,000
========== ========== ============ ============== ==========
Allowance for doubtful
accounts at September 30,
1994....................... $8,361,000 $5,442,000 $(257,000)(1) $(4,184,000)(2) $9,362,000
========== ========== ============ ============== ==========
</TABLE>
(1) Offsets to deferred revenue.
(2) Accounts written off.
14
<PAGE>
SCHEDULE X
STERLING SOFTWARE, INC.
CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs.................. $4,748,000 $4,404,000 $5,039,000
============ ============ ============
Royalties................................ $3,172,000 $3,643,000 $2,267,000
============ ============ ============
Advertising.............................. $3,571,000 $3,519,000 $5,300,000
============ ============ ============
</TABLE>
Certain items are omitted from this schedule for the reason that they are either
not required (amounts are less than 1% of total revenue) or the required
information is included in the consolidated financial statements or notes
thereto.
15
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
-----------------
<C> <C> <S>
2(a) - Agreement and Plan of Merger dated as of March 31, 1993 among the Company, Systems
Center, Inc. and SSI Acquisition Corporation ("SCI Agreement and Plan of Merger") (1)
2(b) - First Amendment to SCI Agreement and Plan of Merger (11)
2(c) - Amended and Restated Agreement and Plan of Merger dated as of August 31, 1994, among the
Company, KnowledgeWare, Inc. and SSI Corporation ("KWI Agreement and Plan of Merger") (2)
2(d) - Agreement dated October 11, 1994 among the Company, KnowledgeWare, Inc. and SSI
Corporation (2)
2(e) - First Amendment to KWI Agreement and Plan of Merger (2)
3(a) - Certificate of Incorporation of the Company (3)
3(b) - Certificate of Amendment of Certificate of Incorporation of the Company (11)
3(c) - Certificate of Amendment of Certificate of Incorporation of the Company (4)
3(d) - Restated Bylaws of the Company (5)
4(a) - Form of Common Stock Certificate (6)
4(b) - Form of Certificate of Designation, Preferences, Rights and Limitations with respect to
Series B Junior Preferred Stock (11)
4(c) - Form of Indenture between the Company and Bank of America Texas, National Association, as
Trustee, including the form of 5 3/4% Convertible Subordinated Debenture attached as
Exhibit A thereto (7)
4(d) - Preferred Stock and Warrant Purchase Agreement dated June 25, 1991 among Systems Center,
Inc. and the Investors named therein (8)
4(e) - Warrant Agreement dated June 9, 1994 between KnowledgeWare, Inc. and Trust Company Bank
(14)
4(f) - Supplemental Warrant Agreement dated as of November 30, 1994 between KnowledgeWare, Inc.
and Trust Company Bank (14)
9 - None
10(a) - Amended and Restated Stock Option Agreement dated as of August 31, 1994 between the
Company and KnowledgeWare, Inc. (2)
10(b) - Form of Amended and Restated Stockholder Agreement dated as of August 31, 1994 between
the Company and certain stockholders of KnowledgeWare, Inc. (2)
10(c) - Form of Registration Rights Agreement dated as of November 30, 1994 among the Company and
the Selling Stockholders named therein (2)
10(d) - Form of Escrow Agreement dated as of November 30, 1994 among the Company, KnowledgeWare,
Inc., The First National Bank of Boston, N.A. and Stuart Finestone (2)
10(e) - Amended Incentive Stock Option Plan of the Company (16), (19)
10(f) - Amended Non-Statutory Stock Option Plan of the Company (16), (19)
10(g) - Supplemental Executive Retirement Plan II of Informatics General Corporation (11)
10(h) - Form of Supplemental Executive Retirement Plan II Agreement (the "SERP II Agreement") (11)
10(i) - Amendment to SERP II Agreement (11)
10(j) - Form of Employment Agreement with Jeannette P. Meier, George H. Ellis and Phillip A.
Moore (11), (19)
10(k) - Form of Amendment No. 1 to Employment Agreement with Jeannette P. Meier, George H. Ellis
and Phillip A. Moore (11), (19)
10(l) - Employment Agreement with Sam Wyly (11), (19)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S>
10(m) - Employment Agreement with Charles J. Wyly, Jr. (11), (19)
10(n) - Employment Agreement with Sterling L. Williams (11), (19)
10(o) - Form of Amendment No. 1 to Employment Agreement with Charles J. Wyly, Jr. and Sterling L.
Williams (11), (19)
10(p) - Amendment No. 1 to Employment Agreement with Sam Wyly (11), (19)
10(q) - Amendment No. 2 to Employment Agreement with Sam Wyly (11), (19)
10(r) - Consultation Agreement with REC Enterprises, Inc. (11), (19)
10(s) - Employment Agreement with William D. Plumb (11), (19)
10(t) - Employment Agreement with William D. Plumb (11), (19)
10(u) - Form of Employment Agreement with Edward J. Lott, Warner C. Blow, Werner L. Frank and
Geno P. Tolari (11), (19)
10(v) - Employment Agreement with Sterling L. Williams (1), (19)
10(w) - Form of Employment Agreement with Jeannette P. Meier, George H. Ellis, Phillip A. Moore,
Warner C. Blow and Geno P. Tolari (1), (19)
10(x) - Employment Agreement with Werner L. Frank (19), (20)
10(y) - Form of Series B Warrant Agreement (11)
10(z) - Form of Amendment to Series B Warrant Agreement (January 1988) (11)
10(aa) - Form of Amendment to Series B Warrant Agreement (May 1989) (11)
10(bb) - Form of Series E Warrant Agreement (11)
10(cc) - Form of Amendment to Series E Warrant Agreement (May 1989) (11)
10(dd) - Form of Series F Warrant Agreement (11)
10(ee) - Form of Amendment to Series F Warrant Agreement (May 1989) (11)
10(ff) - Amended and Restated Revolving Credit and Term Loan Agreement dated June 8, 1990 between
the Company and The First National Bank of Boston and BankOne Texas N.A. ("Loan
Agreement") (11)
10(gg) - First Amendment to Loan Agreement dated as of October 16, 1990 (11)
10(hh) - Second Amendment to Loan Agreement dated as of September 19, 1991 (11)
10(ii) - Third Amendment to Loan Agreement dated as of December 31, 1991 (11)
10(jj) - Fourth Amendment to Loan Agreement dated as of June 15, 1992 (11)
10(kk) - Fifth Amendment to Loan Agreement dated as of July 31, 1992 (11)
10(ll) - Sixth Amendment to Loan Agreement dated as of August 31, 1992 (11)
10(mm) - Seventh Amendment to Loan Agreement dated as of September 9, 1992 (11)
10(nn) - Eighth Amendment to Loan Agreement dated as of September 30, 1992 (11)
10(oo) - Ninth Amendment to Loan Agreement dated as of October 13, 1992 (11)
10(pp) - Tenth Amendment to Loan Agreement dated as of December 17, 1992 (1)
10(qq) - Form of Eleventh Amendment to Loan Agreement dated as of March 29, 1993 (11)
10(rr) - Twelfth Amendment to Loan Agreement dated as of June 30, 1993 (11)
10(ss) - Form of Thirteenth Amendment to Loan Agreement dated as of November 10, 1993 (11)
10(tt) - Form of Fourteenth Amendment to Loan Agreement dated as of November 22, 1993 (11)
10(uu) - Fifteenth Amendment to Loan Agreement dated as of December 21, 1993 (12)
10(vv) - Sixteenth Amendment to Loan Agreement dated as of December 30, 1993 (12)
10(ww) - Seventeenth Amendment to Loan Agreement dated as of January 31, 1994 (12)
10(xx) - Eighteenth Amendment to Loan Agreement dated as of March 15, 1994 (13)
10(yy) - Nineteenth Amendment to Loan Agreement dated as of May 17, 1994 (16)
10(zz) - Form of Twentieth Amendment to Loan Agreement dated as of November 30, 1994 (20)
10(aaa) - Twenty-First Amendment to Loan Agreement dated as of December 29, 1994(21)
10(bbb) - 1993 Executive Compensation Plan for Group Presidents (1), (19)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S>
10(ccc) - 1994 Executive Compensation Plan for Group Presidents (11), (19)
10(ddd) - 1995 Executive Compensation Plan for Group Presidents (19), (20)
10(eee) - Form of Series G Warrant Agreement (11)
10(fff) - Amended 1992 Non-Statutory Stock Option Plan (17), (19)
10(ggg) - 1994 Non-Statutory Stock Option Plan (15), (19)
10(hhh) - Form of Indemnity Agreement between the Company and each of its directors and officers (11)
10(iii) - Systems Center, Inc. Restated and Amended Restricted Stock Plan (9)
10(jjj) - Systems Center, Inc. Amended and Restated Nondiscretionary Restricted Stock Plan (9)
10(kkk) - Systems Center, Inc. 1982 Stock Option Plan (9)
10(lll) - Systems Center, Inc. 1992 Stock Incentive Plan (9)
10(mmm) - Systems Center, Inc. 1983 Stock Plan (9)
10(nnn) - Systems Center, Inc. Share Option Scheme (9)
10(ooo) - Registration Rights Agreement dated as of July 1, 1993 among the Company and the Selling
Stockholders named therein (10)
10(ppp) - KnowledgeWare, Inc. Incentive Stock Option Plan of 1984 (18)
10(qqq) - KnowledgeWare, Inc. Second Incentive Stock Option Plan of 1984 (18)
10(rrr) - KnowledgeWare, Inc. 1988 Stock Incentive Plan (18)
10(sss) - Consultation Agreement dated December 1, 1994 between the Company and Francis A.
Tarkenton (20)
10(ttt) - Form of Employment Agreement with M. Gene Konopik, A. Maria Smith and Clive Smith (19), (21)
10(uuu) - Form of Employment Agreement with M. Gene Konopik, A. Maria Smith and Clive Smith (19), (21)
10(vvv) - Consultation Agreement with REC Enterprises, Inc. dated July 2, 1994 (19), (21)
11 - Computation of Earnings Per Share, Year Ended September 30, 1994 (20)
12 - None
13 - None
16 - None
18 - None
21 - Subsidiaries (20)
22 - None
23.1 - Consent of Ernst & Young LLP, Independent Auditors (20)
23.2 - Consent of Arthur Andersen LLP, Independent Accountants (20)
23.3 - Consent of Ernst & Young LLP, Independent Auditors (21)
24 - None
27 - Financial Data Schedule (20)
28 - None
99 - None
</TABLE>
- --------------------
(1) Perviously filed as an exhibit to the company's Registration Statement
No. 33-62028 on Form S-4 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registartion Statement
No. 33-56185 on Form S-4 and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Registration Statemnet
No. 2-82506 on Form S-1 and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Registration Statement
No. 33-69926 on Form S-8 and incorporated herein by reference.
(5) Previously filed as an exhibit to the Company's Registration Statement
No. 33-47131 on Form S-8 and incorporated herein by reference.
(6) Previously filed as an exhibit to the Company's Registration Statement
No. 2-86825 on Form S-1 and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's Registration Statement
No. 33-57428 on Form S-3 and incorporated herein by reference.
(8) Previously filed as an exhibit to the Quarterly Report on Form 10-Q of
Systems Center, Inc. for the quarter ended June 30, 1991 and
incorporated herein by reference.
<PAGE>
(9) Previously filed as an exhibit to the Company's Registration Statement
No. 33-65402 on Form S-8 and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Registration Statement
No. 33-71706 on Form S-3 and incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1993 and incorporated herein by
reference.
(12) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1993 and incorporated herein by
reference.
(13) Previously filed as an exhibit to the Company's Quarterly Report on Form
reference.
(14) Previously filed as an exhibit to the Company's Registration Statement
No. 33-56679 on Form S-3 and incorporated herein by reference.
(15) Previously filed as an exhibit to the Company's Registration Statement
No. 33-53837 on Form S-3 and incorporated herein by reference.
(16) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1994 and incorporated herein by
reference.
(17) Previously filed as an exhibit to the Company's Registration Statement
No. 33-56683 on Form S-3 and incorporated herein by reference.
(18) Previously filed as an exhibit to the Company's Registration Statement
No. 33-56681 on Form S-8 and incorporated herein by reference.
(19) Management Contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c) of the form.
(20) Previously filed as an exhibit to the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1994.
(21) Filed herewith.
<PAGE>
Exhibit 10(aaa)
TWENTY-FIRST AMENDMENT AND
MODIFICATION AGREEMENT
TWENTY-FIRST AMENDMENT AND MODIFICATION AGREEMENT dated as of December 29,
1994 (this "Amendment") by and among STERLING SOFTWARE, INC., a Delaware
corporation (the "Company"), the direct and indirect subsidiaries of the Company
listed on the signature pages hereto (collectively, the "Sterling
Subsidiaries"), THE FIRST NATIONAL BANK OF BOSTON AND BANK ONE, TEXAS, NATIONAL
ASSOCIATION (collectively, the "Banks") and THE FIRST NATIONAL BANK OF BOSTON,
as agent (the "Agent") for the Banks, amending certain provisions of an Amended
and Restated Revolving Credit and Term Loan Agreement dated as of June 8, 1990
(as heretofore amended, the "Loan Agreement") by and among the Company, the
Banks and the Agent. Terms not otherwise defined herein which are defined in
the Loan Agreement shall have the respective meanings herein assigned to such
terms in the Loan Agreement.
WHEREAS, the Company has requested that the Agent and the Banks agree to
amend certain provisions of the Loan Agreement and grant certain limited
waivers;
WHEREAS, upon the terms and subject to the conditions contained herein,
the Agent and the Banks are willing to amend certain provisions of the Loan
Agreement and to grant certain limited waivers;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Loan Agreement, the other Loan Documents and herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged the parties hereto hereby agree as follows:
(S)1. AMENDMENT OF (S)1.1 OF THE LOAN AGREEMENT. Section 1.1 of the Loan
--------- -- ------ -- --- ---- ---------
Agreement is hereby amended by:
(a) deleting the date "December 31, 1994" in the definition of
"Conversion Date" and substituting in lieu thereof the date "March 31, 1995";
(b) amending the definition of "KnowledgeWare Loan Agreements" by (i)
deleting the text "approximately $5,000,000" in subsection (b) thereof and
substituting in lieu thereof the text "up to $10,000,000" and (ii) deleting the
text "approximately $10,000,000" in subsection (c) thereof and substituting in
lieu thereof the text "up to $5,000,000";
(c) amending the definition of "KnowledgeWare Notes" by (i) deleting
the text "approximately $10,000,000" in subsection (c) thereof and substituting
in lieu thereof the text "up to $5,000,000" and (ii) deleting the text
"approximately $5,000,000" in subsection (d) thereof and substituting in lieu
thereof the text "up to $10,000,000";
(d) deleting the words "Sterling Check" from the definition of Dormant
Subsidiaries;
<PAGE>
-2-
(e) deleting the definitions of "Sterling Check" and "Sterling
Distribution" in their entirety; and
(f) deleting the words "Sterling Check" from the definition of
"Sterling Subsidiaries" .
(S)2. AMENDMENT OF (S)3.1 OF THE LOAN AGREEMENT. Section 3.1 of the Loan
--------- -- ------ -- --- ---- ---------
Agreement is hereby amended by deleting the text "shall be payable in eight
equal (as nearly as may be) consecutive quarterly installments" and substituting
in lieu thereof the text "shall be payable in seven equal (as nearly as may be)
consecutive quarterly installments".
(S)3. LIMITED WAIVER OF (S)8.2 OF THE LOAN AGREEMENT. The Company has
------- ------ -- ------ -- --- ---- ---------
informed the Agent and the Banks of the dissolution of Sterling Check
Liquidation, Inc. ("Sterling Check") and has requested that, effective as of
September 8, 1994, the Agent and the Banks waive the requirements of (S)8.2 of
the Loan Agreement with respect to the continued existence of Sterling Check.
Subject to all of the conditions of the Loan Agreement and this Amendment, each
of the Agent and the Banks hereby waives the provisions of (S)8.2 of the Loan
Agreement, solely to the extent necessary to permit the dissolution of Sterling
Check.
(S)4. LIMITED WAIVER OF (S)8.20 OF THE LOAN AGREEMENT. In connection
------- ------ -- ------- -- --- ---- ---------
with the prior merger of KnowledgeWare and SSI Corporation, a Georgia
corporation (the "Acquisition Subsidiary"), the Company has requested that the
Agent and the Banks continue to waive the covenants set forth in (S)8.20 of the
Loan Agreement, solely with respect to KnowledgeWare and the KnowledgeWare
Subsidiaries. Subject to all conditions of the Loan Agreement and this
Amendment, each of the Agent and the Banks hereby waives the provisions of
(S)8.20 of the Loan Agreement which (a) require that the Company pledge to the
Agent for the benefit of the Banks the issued and outstanding capital stock of
KnowledgeWare, and of KnowledgeWare's wholly owned Subsidiaries, (b) require
KnowledgeWare and any of its wholly owned Subsidiaries to grant to the Agent for
the benefit of the Banks a first perfected priority security interest in the
items or types of collateral described in the Security Agreement, and (c)
require that KnowledgeWare and any of its wholly owned Subsidiaries become a
party to and guarantor obligated under the Guaranty; provided, however, that the
-------- -------
waivers contained in clauses (a), (b) and (c) above shall only be effective
until March 31, 1995 and that the security interest granted in the items or
types of collateral described in the Security Agreement following March 31, 1995
shall be subject only to the liens and security interests in favor of the
Company and described in (S)9.2(p) of the Loan Agreement.
(S)5. LIMITED WAIVER OF (S)2(A) OF THE ASSIGNMENT AGREEMENT. In
------- ------ -- ------- -- --- ---------- ---------
connection with the prior merger of KnowledgeWare and the Acquisition
Subsidiary, the Company has requested that the Agent and the Banks continue to
waive the requirements of (S)2(a) of the Assignment Agreement with respect to
the assignment of (a) the Amended and Restated Term Note dated as of November
30, 1994 executed by KnowledgeWare in favor of the Company in the original
principal amount of $6,000,000, (b) the Amended and Restated Revolving Note
dated as of November 30, 1994 executed by KnowledgeWare in favor of the Company
in the original principal amount of $22,000,000, (c) the Term Note dated as of
November 30, 1994 executed by KnowledgeWare in favor of the Company in the
original principal amount of up to $5,000,000 and (d) the Revolving
<PAGE>
-3-
Credit Note dated as of November 30, 1994 executed by KnowledgeWare in favor of
the Company in the original principal amount of up to $10,000,000 (collectively,
the "KnowledgeWare Notes"), collectively evidencing, in the case of (a), (b),
(c) and (d) above, up to $38,000,000 of Intercompany Indebtedness of
KnowledgeWare to the Company under the KnowledgeWare Loan Agreements and in the
case of (c) and (d), up to $10,000,000 of Intercompany Indebtedness of
KnowledgeWare to the Company under the loan agreements referenced in subsections
(b) and (c) of the definition of KnowledgeWare Loan Agreements. Subject to all
conditions of the Loan Documents and this Amendment and solely to the limited
extent provided herein, each of the Agent and the Banks hereby waives, until
March 31, 1995, the requirement of (S)2(a) of the Assignment Agreement that the
Company pledge, endorse and deliver to the Agent the KnowledgeWare Notes.
(S)6. CONSENT TO CERTAIN TRANSACTIONS. The Company has advised the Agent
------- -- ------- ------------
and the Banks that (a) Sterling Software (North America) has entered into an
arrangement (the "Furniture Transaction") with USL Capital Corporation ("USL")
pursuant to which (i) USL will purchase up to $2,200,000 of new Henry Miller
Systems office furniture (the "Furniture") which has been delivered to Sterling
Software (North America) and upon which Sterling Software (North America) has
placed an initial deposit, (ii) USL will reimburse Sterling Software (North
America) for such deposit and (iii) USL will lease for an initial term of sixty
(60) months the Furniture to Sterling Software (North America) pursuant to the
terms of an operating lease; and (b) the Company is contemplating the
disposition (the "Software Transaction") of certain computer software known as
Vector:Bankdata (the "Software") to Thomson Financial Publishing, Inc.
("Thomson") for a net cash purchase price of approximately $200,000 and the
assumption by Thomson of certain liabilities of the Company pursuant to the
terms and conditions of a letter dated as of November 7, 1994 between Thomson
and the Company and attached hereto as Exhibit A (such letter, as modified by
------- -
the additional letter attached hereto as Exhibit A-1 is hereinafter referred to
------- ---
as the "Letter of Intent"). Subject to the terms and conditions set forth
herein, the Agent and the Banks hereby (x) consent to the Furniture Transaction
and the Software Transaction (the "Transactions"), but solely to the extent
that: the Transactions close on or before, January 15, 1996, the Furniture
Transaction includes the disposition (if any) of only the "Furniture" and the
Software Transaction includes the disposition of only the Software, the purchase
price (to Sterling Software (North America) or USL, as applicable) of the
Furniture does not exceed $2,200,000 and the net cash proceeds of the Software
is not less than $190,000, and the terms and conditions of the Transactions are
as set forth in this (S)6 and in the Letter of Intent attached hereto as Exhibit
-------
A and Exhibit A-1 and (y) release the security interest of the Agent on behalf
- - ------- ---
of the Banks in and to the Software. The Agent and the Banks hereby agree to
provide, at the Company's expense and as promptly as practicable following the
closing of the Software Transaction, such UCC-3 partial releases as Thomson may
reasonably request in order to effect the release of the Agent's security
interest in the Software.
(S)7. CONDITIONS TO EFFECTIVENESS. This Amendment shall be deemed to be
---------- -- -------------
effective as of September 8, 1994 with respect to (S)3 above and otherwise as of
December 21, 1994 (the "Effective Date") upon the satisfaction of the conditions
precedent that, on or before December 23, 1994, the Agent shall have received
(a) facsimile copies of original counterparts (to be followed promptly by
original counterparts) of this Amendment, executed by each of the Company, the
Sterling Subsidiaries, the Banks and the Agent and (b) fully executed copies of
the letters comprising the Letter of Intent.
<PAGE>
-4-
(S)8. REPRESENTATION AND WARRANTIES; NO DEFAULT; AUTHORIZATION. Each of
-------------- --- ---------- -- ------- -------------
the Company and the Sterling Subsidiaries hereby represents and warrants to each
of the Agent and the Banks as follows:
(a) Each of the representations and warranties of the Company and the
Sterling Subsidiaries contained in the Loan Agreement, the other Loan Documents
or in any document or instrument delivered pursuant to or in connection with the
Loan Agreement, the other Loan Documents or this Amendment was true as of the
date as of which it was made and is true as and at the date of this Amendment,
and no Default or Event of Default has occurred and is continuing as of the date
of this Amendment; and
(b) This Amendment has been duly authorized, executed and delivered by
the Company and each of the Sterling Subsidiaries and shall be in full force and
effect upon the satisfaction of the conditions set forth in (S)7 hereof, and the
agreements of the Company and each of the Sterling Subsidiaries party hereto
contained herein, in the Loan Agreement, as amended, and the other Loan
Documents, as amended, respectively constitute the legal, valid and binding
obligations of the Company and each of the Sterling Subsidiaries party hereto,
enforceable against the Company or such Sterling Subsidiary in accordance with
their respective terms.
(S)9. RATIFICATION ETC. Except as expressly amended hereby, the Loan
------------ ---
Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. All references in the Loan Agreement
or such other Loan Documents or in any related agreement or instrument to the
Loan Agreement or such other Loan Documents shall hereafter refer to such
agreements as amended hereby and as previously amended, if previously amended,
pursuant to the provisions of the Loan Agreement.
(S)10. NO IMPLIED WAIVER, ETC. Except as expressly provided herein,
-- ------- ------ ---
nothing contained herein shall constitute a waiver of, impair or otherwise
affect any Obligations, any other obligations of the Company or any right of the
Agent or the Banks consequent thereon. The waivers and consents provided herein
are limited strictly to their terms. Neither the Agent nor any of the Banks
shall have any obligation to issue any further waiver or consent with respect to
the subject matter hereof or any other matter.
(S)10. COUNTERPARTS. This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)11. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE GOVERNED
--------- ---
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).
<PAGE>
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
THE FIRST NATIONAL BANK OF BOSTON,
Individually and as Agent
By:/s/ Elizabeth Passela
--------------------------------------
Title: Director
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By:/s/ William Little
--------------------------------------
Title: V.P.
STERLING SOFTWARE, INC.
By:/s/ Richard Connelly
--------------------------------------
Title: V.P., Controller
Each of the undersigned hereby acknowledges the foregoing Amendment as of
September 8, 1994 with respect to (S)3 above and otherwise as of the Effective
Date and agrees that its obligations under the Guaranty will extend to the Loan
Agreement, as so amended, and the other Loan Documents, as so amended.
STERLING SOFTWARE (MIDWEST), INC.
(formerly Creative Data Systems, Inc.)
By:/s/ Richard Connelly
--------------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE
(NORTHERN AMERICA), INC.
(formerly Directions, Inc.)
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
<PAGE>
-6-
STERLING SOFTWARE
(UNITED STATES), INC.
(formerly Zanthe, Inc. Dylakor, Inc.
and Answer Systems, Inc.
By:/s/ Richard Connelly
----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE (AMERICA), INC.
(formerly Ordernet Services, Inc.)
By:/s/ Richard Connelly
----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE (U.S.A.), INC.
(formerly Systems Software Marketing,
Inc. and Software Laboratories, Inc.)
By:/s/ Richard Connelly
----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE (US), INC.
(formerly known as Sterling
Federal Systems, Inc.
and Sterling IMD, Inc.)
By:/s/ Richard Connelly
-------------------------------
Title: Assistant Treasurer
SYSTEMS CENTER, INC.
(formerly Sterling Software, Inc.
a Wyoming corporation)
By:/s/ Richard Connelly
-------------------------------
Title: Assistant Treasurer
<PAGE>
-7-
STERLING SOFTWARE LEASING COMPANY
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE
INTERNATIONAL, INC.
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
STERLING ZEROONE, INC.
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
ZEROONE SYSTEMS, INC.
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE (UNITED STATES
OF AMERICA), INC.
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE
(NORTH AMERICA), INC.
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
STERLING SOFTWARE
(U.S. OF AMERICA), INC.
By:/s/ Richard Connelly
-----------------------------------
Title: Assistant Treasurer
<PAGE>
Exhibit (ttt)
EMPLOYMENT AGREEMENT
By and Between
STERLING SOFTWARE, INC.
and
<PAGE>
THIS AGREEMENT entered into this 25th day of November, 1994, by and between
STERLING SOFTWARE, INC., a Delaware corporation, (hereinafter referred to as the
"Company") and (hereinafter referred to as the "Executive").
WHEREAS, the Company wishes to attract and retain well-qualified executive
and key personnel and to assure both itself and Executive of continuity of
management in the event of any actual or threatened change of control of the
Company; and
WHEREAS, Executive has heretofore been employed by the Company and is
experienced in the business of the Company;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Term of Agreement. This Agreement shall commence on the date hereof and
shall continue in effect through November 30, 1997; provided, however, that
commencing on December 1, 1995 and each December 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than the June 30th immediately preceding such December 1st, the Company
shall have given notice that it does not wish to extend this Agreement;
provided, further, that notwithstanding any such notice by the Company not to
extend, if a Change in Control shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect for a
period of thirty-six (36) months beyond the term in effect immediately before
such Change in Control.
2. Employment. Unless sooner terminated pursuant to the provisions of
Section 8 of this Agreement, the Company hereby agrees to employ Executive, and
Executive hereby agrees to remain in the employ of the Company, for the period
commencing on the Change of Control Date and ending on the 65th birthday of
Executive (the "Employment Period"), to exercise such authority and perform such
executive duties as are commensurate with the authority being exercised and
duties being performed by Executive immediately prior to the Change of Control
Date, which services shall be performed at the location where Executive was
employed immediately prior to the Change of Control Date.
3. Base Compensation. The Company agrees to pay Executive during the
Employment Period a salary, payable in cash at intervals not less frequently
than twice monthly, which is not less than her annual salary immediately prior
to the Change of Control Date, with the opportunity for increases, from time to
time thereafter, which are in accordance with the Company's regular practices in
effect prior to the Change of Control Date.
4. Discretionary Bonuses. During the Employment Period, Executive shall be
entitled to participate in an equitable manner with all other key management
personnel of the Company in discretionary bonuses paid to the Company's key
management employees. No
-1-
<PAGE>
other compensation provided for in this Agreement shall be deemed a substitute
for Executive's right to participate in such discretionary bonuses when and as
declared by the Board of Directors or by any committee thereof.
5. Other Compensation.
(a) Participation in Retirement and Medical Plans. During the
Employment Period, Executive shall be entitled to receive employee benefits
under, and participate in, all employee benefit plans to which Executive was
entitled immediately prior to the Change of Control Date, including but not
limited to any applicable pension, retirement, employee stock ownership or
Section 401(k) thrift and savings plans (collectively, "Retirement Plans"),
and any disability, life insurance or medical and dental plans provided by
the Company to executives with comparable duties; provided, however, that
this provision shall not be construed to require the Company to establish
any new plans.
(b) Executive Benefits; Expenses. During the Employment Period,
Executive shall be entitled to receive any fringe benefits and perquisites
which may be or become applicable to the Company's executive employees,
including but not limited to participation in the Company's Incentive Stock
Option Plan, Non-Statutory Stock Option Plan, and any other stock option or
incentive plans adopted by the Board of Directors, a reasonable expense
account, and any other benefits and perquisites which are commensurate with
the responsibilities and functions to be performed by Executive under this
Agreement. The Company shall reimburse Executive for all out-of-pocket
expenses which Executive shall incur in connection with her services for the
Company. During the Employment Period, Executive shall be entitled to the
use of a Company automobile in accordance with the Company's practices in
effect prior to the Change of Control Date for providing automobiles to its
executives. In addition, during the Employment Period, Executive shall be
entitled to legal and financial planning benefits consistent with benefits
made available by the Company to its executives prior to the Change of
Control Date.
6. Vacation, Sick Leave and Leaves of Absence. During the Employment
Period, Executive shall be entitled, without loss of pay, to absent herself
voluntarily from the performance of her employment under this Agreement for the
following purposes:
(a) Executive shall be entitled to an annual vacation in accordance with
the Company's practices in effect prior to the Change of Control Date for
its senior management officials.
(b) Upon Executive's request, the Board of Directors shall be entitled
to grant to Executive a leave or leaves of absence with or without pay at
such time or times and
-2-
<PAGE>
upon such terms and conditions as the Board of Directors in its reasonable
discretion may determine.
(c) In addition, Executive shall be entitled to an annual sick leave in
accordance with the Company's practices in effect prior to the Change of
Control Date for its senior management officials.
7. Control.
(a) Change of Control. Except as provided in this Section 7(a), for
purposes of this Agreement, a Change of Control shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirement; provided that,
without limitation, a Change of Control shall be deemed to have occurred if
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than Mr. Sam Wyly, Mr. Charles J. Wyly, Jr., or any
affiliate of either of them, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding securities; or (B) during any period
of three consecutive years (not including any period prior to the execution
of this Agreement), individuals who at the beginning of such period
constitute the Board of Directors, including for this purpose any new
director whose election by the Board, or nomination for election by the
Company's stockholders, was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority
thereof.
(b) Change of Control Date. For purposes of this Agreement, the term
Change of Control Date shall mean the date upon which a Change of Control as
defined in Section 7(a) hereof is deemed to have occurred.
8. Termination of the Employment Period. The Employment Period shall
terminate upon the occurrence of any of the following events:
(a) any termination by the Company of the employment of Executive with
the Company for any reason other than death, physical or mental incapacity,
or
(b) the resignation of Executive upon the occurrence of any of the
following:
(i) a significant change in the nature or scope of Executive's
authorities or duties from those described in Section 2,
-3-
<PAGE>
(ii) a reduction in or delay in payment of total compensation
from that provided in Sections 3, 4 and 5,
(iii) the material breach by the Company of any other
provision of this Agreement; or
(iv) a determination made by Executive, in her sole
discretion, that as a result of a Change in Control of the Company and
a change in circumstances thereafter affecting her position, she is
unable to fully exercise the authorities, powers, functions or duties
attached to her position as contemplated by Section 2 of this
Agreement.
9. Calculation of Termination Pay. For purposes of this Agreement,
Termination Date shall mean the date upon which the Employment Period terminates
pursuant to Section 8 hereof. If the Employment Period is terminated pursuant
to Section 8 hereof after a Change of Control, but prior to the third
anniversary of the Change of Control Date, the Company shall pay to Executive as
termination pay the amounts determined as follows:
(a) an amount equivalent to three (3) times one hundred percent 100% of
Executive's aggregate monthly salary for the twelve (12) months immediately
prior to the Termination Date; and
(b) an amount equivalent to three (3) times one hundred percent (100%)
of Executive's aggregate bonuses for the twelve (12) months immediately
prior to the Termination Date; and
(c) an amount equivalent to three (3) times one hundred percent (100%)
of the aggregate monthly equivalent cash values of those benefits which
Executive shall have received during the twelve (12) months immediately
prior to the Termination Date in the form of (i) a car allowance or company
car, (ii) those contributions by the Company on behalf of Executive pursuant
to a Section 401(k) or other tax-advantaged savings plan established or to
be established by the Company, and (iii) those legal and financial planning
benefits made available by the Company to Executive; and
(d) in addition to the benefits to which Executive is entitled under any
pension or retirement benefit plan or plans maintained by the Company, or
any successor plan or plans thereto (hereinafter referred to as the "Pension
Plan"), a lump sum equal to the actuarial equivalent of the excess of (x)
the retirement pension (determined as a straight life annuity commencing at
age sixty-five (65) which Executive would have accrued under the terms of
the Company's Pension Plan (without regard to any amendment to such Pension
Plan made subsequent to the Change in Control Date and on or prior to the
Termination Date, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if Executive
were fully
-4-
<PAGE>
vested thereunder and had accumulated (after the Termination Date) thirty-
six (36) months of service credit thereunder at a level of one hundred
percent (100%) of Executive's average rate of compensation during the twelve
(12) months immediately prior to the Termination Date and (y) the retirement
pension (determined as a straight life annuity commencing at age sixty-five
(65)) which Executive had then accrued pursuant to the provisions of the
Pension Plan.
10. Continuation of Medical and Health Benefits. For a period of thirty-six
(36) months following the Termination Date, the Company shall arrange to provide
Executive with life, medical, dental, health, accident and disability insurance
benefits substantially similar to those that Executive is receiving or is
entitled to receive immediately prior to the Termination Date, which benefits
shall in no event be less than those benefits in effect immediately prior to the
Change of Control Date.
11. Payment of Legal Expenses. The Company shall also pay Executive all
legal fees and expenses incurred by Executive as a result of any termination
pursuant to Section 8 hereof, including, but not limited to, all such fees and
expenses, if any, incurred in contesting or disputing any such termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement.
12. Disbursement of Termination Pay. The aggregate amount of all
termination payments that are payable to Executive as provided in Section 9
hereof shall be determined in good faith by the Company within 15 days following
the Termination Date, and such termination payments shall be distributed by the
Company to Executive, at the election of Executive (which election shall be made
within thirty (30) days following the Termination Date), either (A) in one lump
sum within ninety (90) days following the Termination Date or (B) in thirty-six
(36) equal monthly installments beginning thirty (30) days following the
Termination Date and continuing every thirty (30) days thereafter.
13. Notices. Any notices, demands and other communications provided for by
this Agreement shall be sufficient if in writing and if sent by registered or
certified mail to Executive at the last address she has filed in writing with
the Company or, in the case of the Company, at its principal executive offices
to the attention of the President, with a copy to the attention of the General
Counsel.
14. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets of the Company.
-5-
<PAGE>
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while he or she is entitled to receive any amounts payable pursuant to
this Agreement, all such amounts shall be paid in accordance with the terms
of this Agreement to Executive's devisee, legatee or other designee or, if
there is no such designee, to Executive's estate.
15. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties.
16. Applicable Law. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of Texas, except to the extent that federal law shall be
deemed to apply.
17. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. Entire Agreement. This Agreement contains all the terms agreed upon by
the parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements and communications.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first herein above written.
EXECUTIVE:
________________________________
ATTEST: STERLING SOFTWARE, INC.
___________________________ By: ____________________________
-6-
<PAGE>
Exhibit (uuu)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 1st day of December, 1994 by and between Sterling Software, Inc., a Delaware
corporation ("Sterling"), and , an individual ("Executive").
RECITALS:
WHEREAS, Sterling, through its wholly owned subsidiaries, acquires,
develops, markets and supports a broad range of products and services; and
WHEREAS, Sterling desires to continue to retain Executive as its
Executive Vice President; and
WHEREAS, Executive is willing to accept such responsibilities;
NOW, THEREFORE, in consideration of the premises and covenants
contained herein and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. Employment. Executive agrees to render such managerial services as are
customarily required of the Executive Vice President and Sterling
agrees to utilize such services on the terms and conditions contained
herein.
2. Term. This Agreement shall commence on December 1, 1994 and shall
continue in effect for thirty-six (36) months after the "Termination
Date" as defined in paragraph 3 hereof.
3. Termination of Employment. The parties acknowledge that Executive is
employed "at will" and may be terminated by Sterling at any time with
or without cause. The Executive shall be entitled to termination pay
calculated in accordance with Section 4 hereof upon termination of
Executive's employment by Sterling, with or without cause.
The date on which a notice of termination is given to Executive by
Sterling shall be deemed the "Termination Date".
4. Termination Pay. For purposes of this Agreement, if Executive's
employment is terminated pursuant to Section 3, Sterling shall pay to
Executive as termination pay:
-1-
<PAGE>
(a) an amount equal to three (3) times one hundred percent of
Executive's aggregate monthly salary for the twelve (12) months
immediately preceding the Termination Date; and
(b) an amount equivalent to three (3) times one hundred percent (100%)
of Executive's aggregate bonuses for the twelve months immediately
prior to the Termination Date.
5. Disbursement of Termination Pay. The aggregate amount of all
termination payments that are payable to Executive as provided in
Section 4 hereof shall be determined in good faith by the Company
within 15 days following the Termination Date, and such termination
payments shall be distributed by the Company to Executive in thirty-six
(36) equal monthly installments beginning thirty (30) days following
the Termination Date and continuing every thirty (30) days thereafter.
6. Continuation of Medical and Health Benefits. For a period of thirty-
six (36) months following the Termination Date, the Company shall
arrange to provide Executive, at no additional charge to Executive,
with life, medical, dental, health, accident and disability insurance
benefits substantially similar to those that Executive is receiving or
is entitled to receive immediately prior to the Termination Date, which
benefits shall in no event be less than those benefits in effect
immediately prior to the Termination Date.
7. Continuation of Stock Options. For a period of thirty-six (36) months
following the Termination Date, the Executive shall continue to
participate in Sterling's Incentive and Non-Statutory Stock Option
Plans, 1992 Non-Statutory Stock Option Plan and any other such plans as
may be adopted in the future for the benefit and retention of
Sterling's executive officers, provided that such participation shall
only apply with respect to options granted on or after November 25,
1994 and prior to the Termination Date. In no event will Sterling be
required to make any new grants of options to such Executive after the
Termination Date.
8. Change in Control. Anything in this Agreement to the contrary
notwithstanding, in the event of termination of Executive's employment
following a Change in Control (as that term is defined in the
Employment Agreement dated the 1st day of December, 1994 between
Executive and Sterling (the "Parachute Agreement")), at the option of
Executive, the terms of the Parachute Agreement shall govern the
termination.
-2-
<PAGE>
9. Miscellaneous.
(i) Notices, demands, payments, reports and correspondence shall be
addressed to the parties hereto at the address for such party set
forth below or such other places as may from time to time be
designated in writing to the other party. Notices hereunder
shall be deemed to be given on the date such notices are actually
received.
If to Sterling, to: 8080 N. Central Expressway
Suite 1100
Dallas, TX 75206
If to Executive, to: 3340 Peachtree Road, N. E.
Atlanta, GA 30326
(ii) This Agreement shall be binding upon Sterling and Executive and
their respective successors, assigns, heirs and personal
representatives.
(iii) The substantive laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of the
provisions of this Employment Agreement.
Executed by the parties hereto on the 1st day of December, 1994.
EXECUTIVE
___________________________________________
STERLING SOFTWARE, INC.
By: _______________________________________
Sterling L. Williams
President and Chief Executive Officer
-3-
<PAGE>
Exhibit (vvv)
CONSULTATION AGREEMENT
----------------------
THIS AGREEMENT, made and entered into this 2nd day of July, 1994, by and
between STERLING SOFTWARE, INC., a Delaware corporation, with its principal
office and place of business at 8080 North Central Expressway, Suite 1100,
Dallas, Texas (hereinafter referred to as "Sterling") and REC ENTERPRISES,INC.,
a Florida corporation, with its principal office and place of business at 620
Bridge Way Lane, Naples, Florida (hereinafter referred to as "Consultant");
W I T N E S S E T H :
WHEREAS, Consultant is familiar with and has the knowledge, expertise and
background as to the analysis of financial matters concerning Sterling with
specific background in the businesses of Systems Center, Inc.; and
WHEREAS, Sterling is desirous of engaging the services of Consultant, and
Consultant is desirous of serving Sterling in an advisory capacity:
NOW, THEREFORE, for and in consideration of the promises, covenants and
conditions contained herein, the parties hereto agree as follows:
1. Consultant shall serve in an advisory capacity to the President of
Sterling, for the purpose of making financial and strategic recommendations
affecting the general welfare of Sterling. Consultant, through its officers,
including Robert E. Cook, shall make itself available for such advisory and
consultation purposes during all normal business hours as may be desired by
Sterling, upon reasonable notice, at such times and for such duration as may be
agreed upon.
2. As compensation for and in consideration of the services to be performed
hereunder, Sterling shall pay Consultant an annual fee of $240,000.00 per year.
The term of this Agreement shall be from July 2, 1994 through July 1, 1996.
Commencing July 2, 1994, Sterling shall pay to Consultant the $480,000.00 fee in
twenty-four (24) equal monthly payments of $20,000.00, with the first payment
to be due on July 2, 1994, and a like payment to be due on the first day of each
month thereafter during the remaining term of the Agreement. The fee shall be
paid without regard to whether or not Sterling avails itself of Consultant's
services at any time during the term of this Agreement. The Consultant shall be
reimbursed for all other authorized expenses such as travel, food and lodging
and which are incurred at the direction of Sterling consistent with this
Agreement. Sterling shall also make available at its Reston offices, for the
benefit and use by Consultant, office facilities such as secretarial services,
telephone and office space.
3. This Agreement shall terminate on July 1, 1996. This Agreement may be
terminated by Consultant at any time during the term of this Agreement, but any
compensation
-1-
<PAGE>
which has been paid as of the date of termination shall be deemed to have been
earned and there shall be no repayment of any sums previously paid. This
Agreement may be terminated by Sterling without further liability in the event
of the death of Mr. Robert E. Cook.
EXECUTED as of the date and year first above written.
STERLING SOFTWARE, INC.
By: /s/ Sterling L. Williams
-----------------------------
Sterling L. Williams
President and Chief Executive Officer
REC ENTERPRISES, INC.
By: /s/ Robert E. Cook
-----------------------------
Robert E. Cook
President
-2-
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements on Form S-3 (File No. 33-2644, No. 33-13490, No. 33-32699, No. 33-
35433, No. 33-48553, No. 33-55954, No. 33-57428, No. 33-71706, No. 33-53831, No.
33-53837, No. 33-54961, No. 33-56685, No. 33-56683, No. 33-56677 and No. 33-
56679), and in the Registration Statements on Form S-8 (File No. 33-65402, No.
33-69926, No. 33-47131, No. 33-13532, No. 33-8828, No. 2-95215, No. 2-95216, No.
33-53833 and No. 33-56681) of Sterling Software, Inc., and in the related
Prospectuses of our report dated December 1, 1994, with respect to the
consolidated financial statement schedules of Sterling Software, Inc. included
in this Annual Report on Form 10-K/A, Amendment No. 1 for the year ended
September 30, 1994.
Ernst & Young LLP
Dallas, Texas
January 24, 1995
