<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE ON OCTOBER 29, 1998
REGISTRATION NO. 333-
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION NO. 333-13303
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT AND POST-EFFECTIVE
AMENDMENT NO. 1 UNDER THE SECURITIES ACT OF 1933
-------------------------
STERLING SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
300 CRESCENT COURT, SUITE 1200
DALLAS, TEXAS 75201
(214) 981-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
DELAWARE 75-1873956
(State of incorporation) (I.R.S. Employer
Identification Number)
-------------------------
DON J. MCDERMETT, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
STERLING SOFTWARE, INC.
300 CRESCENT COURT, SUITE 1200
DALLAS, TEXAS 75201
(214) 981-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
MARK E. BETZEN, ESQ.
JONES, DAY, REAVIS & POGUE
2300 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201
(214) 220-3939
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] ____________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] __________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(2) PRICE PER UNIT(3) OFFERING PRICE FEE(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.10 per
share(1) ........................ 4,494,082 Shares $23.84 $107,155,768 $29,790
=============================================================================================================
</TABLE>
(1) Includes associated rights to purchase shares of Series A Junior
Participating Preferred Stock, par value $0.10 per share, of the Registrant.
(2) Represents shares issuable upon the exercise of options available for grant
under the Registrant's Amended and Restated 1996 Stock Option Plan (the
"Plan"). The Prospectus contained herein also relates to up to 15,500,000
shares of Common Stock of the Registrant covered by Registration Statement
No. 333-13303, as to which shares a registration fee in the amount of
$68,253 has been previously paid. This Registration Statement and
Registration Statement No. 333-13303, and the Prospectus contained herein,
cover such additional shares as may become subject to awards under the Plan
as a result of the antidilution provisions contained therein.
(3) Estimated solely for the purpose of calculating the registration fee under
Rule 457(h) upon the basis of the average high and low prices of shares of
Common Stock of the Registrant on the Composite Tape of the New York Stock
Exchange, Inc. on October 28, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE PROSPECTUS CONTAINED HEREIN ALSO RELATES TO UP TO 15,500,000 SHARES OF
COMMON STOCK OF THE REGISTRANT COVERED BY REGISTRATION STATEMENT NO. 333-13303.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ The information in this prospectus is not complete and may be changed. The +
+ Company has filed a Registration Statement with the Securities and Exchange +
+ Commission relating to these securities, and may not sell these securities +
+ until the Registration Statement becomes effective. This Prospectus is not +
+ an offer to sell or a solicitation of an offer to buy securities in any +
+ jurisdiction where such offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
19,994,082 SHARES
STERLING SOFTWARE, INC.
COMMON STOCK
Under the Sterling Software, Inc. 1996 Stock Option Plan, the Company has
granted, and may in the future grant, options to purchase shares of its Common
Stock to participants in the Plan. This Prospectus relates to the offer and
sale by the Company to participants in the Plan (or their permitted transferees)
of up to 19,994,082 shares of Common Stock issued or issuable upon the exercise
of such options. This Prospectus also relates to offers and sales by certain of
the Company's directors and executive officers (or their permitted transferees)
of shares of Common Stock that have been or may be acquired by them upon the
exercise of such options.
The Company will receive the proceeds from the issuance of shares upon the
exercise of options granted under the Plan, but will not receive any of the
proceeds from sales of such shares by selling stockholders following the
exercise of such options. Selling stockholders may sell their shares of Common
Stock on one or more exchanges, in the over-the-counter market or in negotiated
transactions. The price and other terms of these sales will be established at
the time they occur. The sales prices may be equal to or based upon then-
current market prices or determined through negotiation.
Selling stockholders and participating agents, brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933.
Commissions or discounts or any profit realized on any sale of such
stockholders' shares of Common Stock may be deemed to be underwriting
commissions or discounts.
The Common Stock is listed for trading on the New York Stock Exchange under
the symbol "SSW." On October 28, 1998, the closing price of the Common Stock on
the New York Stock Exchange was $23.75. The Company will pay all expenses in
connection with the offering contemplated by this Prospectus, other than
underwriting discounts and commissions, brokers' fees and the fees and expenses
of any legal counsel to selling stockholders.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is October 29, 1998.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Available Information...................................................... 2
Incorporation of Certain
Documents by Reference.................................................. 3
The Company................................................................ 3
Recent Developments........................................................ 3
Use of Proceeds............................................................ 4
Resales of Shares; Selling Stockholders.................................... 4
1996 Stock Option Plan..................................................... 6
Plan of Distribution....................................................... 11
Legal Matters.............................................................. 11
Experts.................................................................... 11
Forward-Looking Information................................................ 11
Disclaimer................................................................. 12
AVAILABLE INFORMATION
The Company files reports, proxy statements and other documents with the
Securities and Exchange Commission in accordance with the requirements of the
Securities Exchange Act of 1934. You may read and copy such reports, proxy
statements and other documents at the public reference facilities maintained by
the Commission at the following addresses:
<TABLE>
<S> <C> <C>
Judiciary Plaza Citicorp Center 7 World Trade Center
450 Fifth Street, N.W., 500 West Madison Street Suite 1300
Washington, D. C. 20549 Suite 1400 New York, New York 10048
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of such reports, proxy statements and other documents
from the Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. (You may obtain information
regarding the operation of the Public Reference Room by calling the Commission
at 1-800-SEC-0330.) The Commission maintains an Internet site, located at
http://www.sec.gov., that contains reports, proxy statements and other documents
regarding registrants that file electronically with the Commission. You may
also read reports, proxy statements and other documents relating to the Company
at the offices of the New York Stock Exchange at 20 Broad Street, New York, New
York 10005.
This Prospectus constitutes a part of Registration Statements filed by the
Company with the Commission under the Securities Act of 1933 relating to
19,994,082 shares (the "Shares") of Common Stock of the Company (the "Common
Stock") issued or issuable under the Sterling Software, Inc. Amended and
Restated 1996 Stock Option
-2-
<PAGE>
Plan (the "Plan") and offered hereby. This Prospectus and the Registration
Statements also relate to such additional shares of Common Stock that any person
may acquire as a result of the antidilution provisions of the Plan.
Additional information regarding the Company and the Shares offered hereby is
contained in the Registration Statements (including the exhibits thereto). The
statements contained in this Prospectus regarding the provisions of any other
document are not necessarily complete. Accordingly, each such statement is
qualified in its entirety by reference to the copy of such document filed as an
exhibit to the Registration Statements or otherwise filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
As specified below, certain documents filed or to be filed by the Company with
the Commission are incorporated by reference into this Prospectus. The
information contained in such documents is considered to be part of this
Prospectus, except that the information contained in later-dated documents shall
supplement, modify or supersede, as applicable, the information contained in
earlier-dated documents.
The Company incorporates by reference into this Prospectus the documents
listed below and all documents filed by the Company with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this Prospectus and prior to the time that the offering made hereby
is completed.
(a) The Company's Annual Report on Form 10-K for the year ended September 30,
1997.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997, March 31, and June 30, 1998.
(c) The Company's Current Report on Form 8-K dated June 21, 1998.
(d) The Company's Proxy Statement on Schedule 14A for the Annual Meeting of
Stockholders held on March 11, 1998.
(e) The Company's Registration Statement on Form 8-A/A filed with the
Commission on May 27, 1998.
You may obtain, without charge, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (other than any
exhibits expressly incorporated by reference in such documents) by writing or
telephoning us as follows: Sterling Software, Inc., 300 Crescent Court, Suite
1200, Dallas, Texas 75201, Attention: Don J. McDermett, Jr., Senior Vice
President and General Counsel (telephone: (214) 981-1000).
THE COMPANY
The Company was founded in 1981 and became a publicly owned corporation in
1983. The Company is a recognized worldwide supplier of software products and
services within three major markets: applications management, systems management
and federal systems. The mailing address of the Company's principal executive
offices is 300 Crescent Court, Suite 1200, Dallas, Texas 75201, and its
telephone number is (214) 981-1000. See "Available Information" and
"Incorporation of Certain Documents by Reference."
RECENT DEVELOPMENTS
On July 9, 1998, the Company acquired all of the equity interest in Mystech
Associates, Inc., a supplier of information technology services within the
federal systems market, pursuant to a merger of Mystech with a wholly owned
subsidiary of the Company. The aggregate consideration for the acquisition of
Mystech consisted of 942,813
-3-
<PAGE>
shares of Common Stock (inclusive of shares of Common Stock issuable upon the
exercise of certain former Mystech stock options). On the closing date for this
acquisition, the aggregate fair market value of such shares (based on the
closing price reported on the NYSE Composite Transaction List) was $28,343,315.
The acquisition of Mystech will be treated as a tax-free reorganization for
federal income tax purposes and as a pooling of interests for accounting
purposes.
On July 31, 1998, the Company acquired all of the equity interest in Synon
Corporation, a supplier of enterprise application development software tools and
related professional services, pursuant to a merger of Synon with a wholly owned
subsidiary of the Company. The aggregate consideration for the acquisition of
Synon consisted of 2,978,367 shares of Common Stock (inclusive of shares of
Common Stock issuable upon the exercise of certain former Synon stock options).
On the closing date for this acquisition, the aggregate fair market value of
such shares (based on the closing price reported on the NYSE Composite
Transaction List) was $77,623,689. The acquisition of Synon will be treated as a
tax-free reorganization for federal income tax purposes and as a pooling of
interests for accounting purposes.
On October 26, 1998, the Company acquired all of the equity interest in
Cayenne Software, Inc., a supplier of a suite of workgroup-to-enterprise
analysis and design solutions for software developers. The purchase price for
the acquisition was approximately $11.4 million in cash. The acquisition of
Cayenne will be treated as a taxable transaction for federal income tax purposes
and as a purchase for accounting purposes.
USE OF PROCEEDS
The proceeds from the issuance of Shares upon the exercise of options granted
under the Plan ("Options") will be added to the Company's funds and used for
general corporate purposes. The Company will not receive any of the proceeds
from any sales of Shares by selling stockholders following the exercise of such
Options.
RESALES OF SHARES; SELLING STOCKHOLDERS
Holders of Options who are not affiliates of the Company may offer and sell
Shares acquired upon the exercise of Options without registration under the
Securities Act of 1933. Holders of Options who are affiliates of the Company
may offer and sell Shares acquired upon the exercise of Options only pursuant to
an effective registration statement under the such Act or an exemption from the
registration requirements of such Act. As used in this Prospectus, the term
"affiliate" includes any person who directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with, the
Company.
The persons identified in the following table (collectively, the "Selling
Stockholders") are eligible to offer and sell Shares acquired by them upon the
exercise of Options pursuant to the Registration Statement and this Prospectus.
The inclusion of any person in the following table should not be construed as an
indication or admission that such person is an affiliate of the Company.
The Company is unaware of whether the Selling Stockholders presently intend to
sell the Shares that they now own or that they may hereafter acquire upon
exercise of Options. See "Plan of Distribution." The Company in the future may
grant additional Options to the persons listed below and may allow persons other
than those listed below to offer and sell Shares acquired upon the exercise of
Options pursuant to the Registration Statement and this Prospectus (which, in
each such case, will be supplemented).
-4-
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
OWNERSHIP NUMBER OF OWNERSHIP AFTER
PRIOR TO OFFERING (1)(2) SHARES OF OFERING (2)
------------------------- COMMON STOCK ---------------------------
NAME AND POSITION NUMBER PERCENTAGE OFFERED HEREBY NUMBER PERCENTAGE
- -------------------------------- ----------- ------------ -------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
John R. Cook (3)................ 201,457 * 200,000 1,457 *
Senior Vice President
Robert J. Donachie (4).......... 125,700 * 100,000 25,700 *
Director
Werner L. Frank (5)............. 442,376 * 250,000 192,376 *
Executive Vice President
Michael C. French (6)........... 131,600 * 130,000 1,600 *
Director
F.L. (Mike) Harvey (7).......... 326,011 * 325,000 1,011 *
Senior Vice President
M. Gene Konopik (8)............. 212,497 * 200,000 12,497 *
Executive Vice President
Don J. McDermett, Jr. (9)....... 166,950 * 166,000 950 *
Senior Vice President and
General Counsel
Donald R. Miller, Jr. (10)...... 105,000 * 100,000 5,000 *
Director
Phillip A. Moore (11)........... 358,001 * 300,000 58,001 *
Director
B. Carole Morton (12)........... 318,918 * 250,000 68,918 *
Senior Vice President
Alan W. Steelman (13)........... 75,000 * 75,000 0 *
Director
Geno P. Tolari (14)............. 935,948 1.1% 925,000 10,948 *
Executive Vice President
and Chief Operating Officer
Sterling L. Williams (15)....... 3,608,408 4.2% 3,600,000 8,408 *
President, Chief Executive
Officer and Director
R. Logan Wray (16).............. 251,248 * 250,000 1,248 *
Senior Vice President and
Chief Financial Officer
Charles J. Wyly, Jr. (17)....... 3,201,892 3.8% 1,800,000 1,401,808 1.7%
Vice-Chairman of the
Board and Director
Evan A. Wyly (18)............... 369,158 * 200,000 169,158 *
Director
Sam Wyly (19)................... 4,598,523 5.4% 3,600,000 998,476 1.2%
Chairman of the Board and
Director
</TABLE>
____________________
* Less than 1% of class.
(1) Based on ownership as of September 30, 1998.
(2) Based on 82,243,173 shares of Common Stock issued and outstanding as of
September 30, 1998.
(3) Includes 200,000 shares to be acquired upon exercise of Options granted
under the Plan, 20,000 of which are exercisable within 60 days of the date
of this Prospectus. Also includes approximately 151 shares of Common Stock
held pursuant to the Sterling Software, Inc. Savings and Security Plan
(the "Savings Plan") and 1,306 shares acquired pursuant to the Sterling
Software, Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan").
(4) Includes 100,000 Shares to be acquired upon exercise of Options granted
under the Plan, 50,000 of which are exercisable within 60 days of the date
of this Prospectus.
(5) Includes 250,000 Shares to be acquired upon exercise of Options granted
under the Plan, 75,000 of which are exercisable within 60 days of the date
of this Prospectus. Also includes approximately 8,470 shares of Common
Stock held pursuant to the Savings Plan.
(6) Includes 130,000 Shares to be acquired upon exercise of Options granted
under the Plan, 55,000 of which are exercisable within 60 days of the date
of this Prospectus.
(7) Includes 325,000 Shares to be acquired upon exercise of Options granted
under the Plan, 62,500 of which are exercisable within 60 days of the date
of this Prospectus. Also includes approximately 141 shares of Common Stock
held pursuant to the Savings Plan and 870 shares of Common Stock acquired
pursuant to the Stock Purchase Plan.
-5-
<PAGE>
(8) Includes 200,000 Shares to be acquired upon exercise of Options granted
under the Plan, 62,500 of which are exercisable within 60 days of the date
of this Prospectus. Also includes approximately 11,574 shares of Common
Stock held pursuant to the Savings Plan and 923 shares of Common Stock
acquired pursuant to the Stock Purchase Plan.
(9) Includes 166,000 Shares to be acquired upon exercise of Options granted
under the Plan, 37,900 of which are exercisable within 60 days of the date
of this Prospectus. Also includes approximately 313 shares of Common Stock
held pursuant to the Savings Plan and 637 share of Common Stock acquired
pursuant to the Stock Purchase Plan.
(10) Includes 100,000 Shares to be acquired upon exercise of Options granted
under the Plan, 50,000 of which are exercisable within 60 days of the date
of this Prospectus.
(11) Includes 300,000 Shares to be acquired upon exercise of Options granted
under the Plan, 150,000 of which are exercisable within 60 days of the
date of this Prospectus. Also includes approximately 10,203 shares of
Common Stock held pursuant to the Savings Plan.
(12) Includes 250,000 Shares to be acquired upon exercise of Options granted
under the Plan, 112,500 of which are exercisable within 60 days of the
date of this Prospectus. Also includes approximately 11,168 shares of
Common Stock held pursuant to the Savings Plan.
(13) Includes 75,000 Shares to be acquired upon exercise of Options granted
under the Plan, none of which are exercisable within 60 days of the date
of this Prospectus.
(14) Includes 925,000 Shares to be acquired upon exercise of Options granted
under the Plan, 300,000 of which are exercisable within 60 days of the
date of this Prospectus. Also includes approximately 9,642 shares of
Common Stock held pursuant to the Savings Plan and 1,306 shares of Common
Stock acquired pursuant to the Stock Purchase Plan.
(15) Includes 3,600,000 Shares to be acquired upon exercise of Options granted
under the Plan, all of which are presently exercisable. Also includes
approximately 408 shares of Common Stock held pursuant to the Savings
Plan.
(16) Includes 250,000 shares to be acquired upon exercise of options granted
under the Plan, 62,500 of which are exercisable within 60 days of the date
of this Prospectus. Also includes approximately 54 shares of Common Stock
held pursuant to the Savings Plan and 1,194 shares of Common Stock
acquired pursuant to the Stock Purchase Plan.
(17) Includes 1,800,000 Shares to be acquired upon exercise of Options granted
under the Plan, all of which are presently exercisable. Also includes
883,398 shares of Common Stock directly owned by family trusts of which
Mr. Charles J. Wyly, Jr. is trustee and 513,148 shares of Common Stock
held of record by a limited partnership of which Mr. Charles J. Wyly, Jr.
is a general partner. Also includes approximately 5,346 shares of Common
Stock held pursuant to the Savings Plan.
(18) Includes 200,000 Shares to be acquired upon exercise of Options granted
under the Plan, currently held of record by a limited partnership of which
Mr. Evan A. Wyly is a general partner, 100,000 of which are exercisable
within 60 days of the date of this Prospectus. Also includes approximately
254 shares of Common Stock held pursuant to the Savings Plan.
(19) Includes 3,600,000 Shares to be acquired upon exercise of Options granted
under the Plan, 150,000 of which are currently held of record by the
marital trust of Mr. Sam Wyly's spouse and all of which are presently
exercisable. Also includes 716,706 shares of Common Stock directly owned
by family trusts of which Mr. Sam Wyly is trustee and 277,224 shares of
Common Stock held of record by a limited partnership of which Mr. Sam Wyly
is a general partner. Also includes approximately 4,593 shares of Common
Stock held pursuant to the Savings Plan.
1996 STOCK OPTION PLAN
GENERAL
A copy of the Plan has been filed as an exhibit to the Company's Registration
Statement on Form S-3 (Commission File No. 333-13303). Any amendment that may
be made to the Plan after the date of this Prospectus will be filed with the
Commission in accordance with the informational requirements of the Exchange
Act. See "Available Information" and "Incorporation of Certain Documents by
Reference."
The following summaries of certain provisions of the Plan do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, the full text of the Plan. Copies of the Plan and additional information
regarding the Plan and the Plan's administrators may be obtained by contacting
the Company in the manner specified in "Incorporation of Certain Documents by
Reference." Capitalized terms not otherwise defined below or elsewhere in this
Prospectus have the meanings given to such terms in the Plan.
PURPOSE AND ADOPTION
The Plan is intended to provide an equity interest in the Company to certain
of the Company's executive officers, key employees, directors, advisors and
consultants, and to provide additional incentives for such persons to devote
themselves to the Company's business. The Plan is also intended to aid in
attracting persons of outstanding ability to serve, and remain in the service
of, the Company. The Board of Directors of the Company (the "Board") adopted
the Plan on April 22, 1996. The stockholders of the Company approved the
adoption of the Plan on May 29, 1996.
-6-
<PAGE>
SHARES COVERED
As of October 1, 1998, the total number of shares of Common Stock available
for issuance under the Plan was 19,994,082 and Options for 18,299,600 of such
shares had been granted, resulting in Options for 1,694,482 shares being
available for grant as of such date. As of October 26, 1998, Options to
purchase 11,419,875 shares of Common Stock were presently exercisable. Under
the terms of the Plan, if at the close of business on the last day of any fiscal
quarter of the Company, the sum of (i) the total number of shares of Common
Stock theretofore issued upon the exercise of Options, (ii) the total number of
shares of Common Stock then subject to outstanding Options, and (iii) the total
number of shares of Common Stock then remaining available under the Plan for
future grants of Options (such sum being the "Actual Number") is less than 20%
of the total number of shares of Common Stock then outstanding, computed on a
fully-diluted basis (the "Target Number"), the number of shares of Common Stock
available for issuance under the Plan will automatically be increased to a
number that will result in the Actual Number being equal to the Target Number.
Shares of Common Stock issued under the Plan may be authorized but unissued
shares, shares held in treasury or a combination thereof.
OPTIONS
The Plan authorizes the grant of Options to purchase shares of Common Stock
that are not intended to qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and which permit a
participant to benefit from increases in the value of shares of Common Stock
above a predetermined purchase price per share. Options are more fully
described under "--Description of Awards" below.
ADMINISTRATION
The Plan is administered by the Board, the 1996 Stock Option Committee of the
Board (the "Stock Option Committee") and the 1996 Special Stock Option Committee
of the Board (the "Special Stock Option Committee"), which have the authority to
determine from time to time the individuals to whom Options will be granted, the
number of shares to be covered by each Option and the time or times at which
Options will become exercisable; provided that the Special Stock Option
Committee has exclusive administrative authority with respect to Options
intended to comply with Section 162(m) of the Code. All of the members of the
Special Stock Option Committee, which may not be comprised of fewer than two
members, are intended to qualify as "outside directors" within the meaning of
Section 162(m) of the Code and as "Non-Employee Directors" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934. Although each of the
Board, the Special Stock Option Committee and the Stock Option Committee has the
authority under the Plan to make grants of Options to any Plan participant, it
is anticipated that the Special Stock Option Committee will make grants to Plan
participants who are executive officers of the Company and/or members of the
Board, and that the Stock Option Committee will make grants to all other Plan
participants.
The Board, the Stock Option Committee and the Special Stock Option Committee
have the full authority and discretion to administer the Plan and to take any
action that is necessary or advisable in connection with the administration of
the Plan, including without limitation the authority and discretion to interpret
and construe any provision of the Plan or of any agreement, notification or
document evidencing the grant of an Option. The interpretation and construction
by the Board, the Stock Option Committee or Special Stock Option Committee, as
applicable, of any such provision and any determination by the Board, the Stock
Option Committee or the Special Stock Option Committee, as applicable, pursuant
to any provision of the Plan or of any such agreement, notification or document
will be final and conclusive; provided that in the event the Stock Option
Committee and the Special Stock Option Committee disagree (or either disagrees
or both disagree with the Board) with respect to such interpretation,
construction or determination, the Board's determination will be final and
conclusive except as described above with respect to Options intended to comply
with Section 162(m) of the Code.
-7-
<PAGE>
ELIGIBILITY
Executive officers, key employees, advisors and consultants of the Company
and its subsidiaries and directors of the Company are eligible to receive grants
of Options.
TRANSFERABILITY
Each Option granted pursuant to the Plan may be subject to such transfer
restrictions, if any, as the Board, the Stock Option Committee or the Special
Stock Option Committee, as applicable, may determine.
ADJUSTMENTS
The Board, the Stock Option Committee or the Special Stock Option Committee
may make or provide for such adjustments in the maximum number of shares
available under the Plan, in the number of shares of Common Stock covered by
outstanding Options, in the purchase price per share of Common Stock covered by
Options, and/or in the kind of shares covered thereby (including shares of
another issuer), as the Board or such committee, as applicable, in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Plan participants that
otherwise would result from any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, merger, consolidation, spin-off, reorganization, liquidation, issuance
of rights or warrants to purchase securities or any other corporate transaction
or event having an effect similar to any of the foregoing.
VESTING OF CERTAIN OPTIONS UPON A CHANGE IN CONTROL
The stock option agreement evidencing any Option may provide for the earlier
exercise of such Option in the event of a change in control of the Company (as
defined in such stock option agreement or in any agreement referenced in such
stock option agreement) or in the event of any other similar transaction or
event.
NONQUALIFIED AND UNFUNDED
The Plan is unfunded and does not give participants any rights that are
superior to those of the Company's general creditors. The Plan is not subject
to the provisions of ERISA and is not qualified under Section 401(a) of the
Code.
CONTINUATION AND TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP
The Plan does not confer upon any Plan participant any rights with respect to
continuation of employment or other service with the Company or any of its
subsidiaries and does not interfere in any way with any right that the Company
or any of its subsidiaries would otherwise have to terminate a Plan
participant's employment or other service at any time.
TERMINATION AND AMENDMENT
The Plan may be terminated at any time by action of the Board. The
termination of the Plan will not adversely affect the terms of any outstanding
Options. The Plan may be amended from time to time by the Board or any duly
authorized committee thereof. In the event any law or any rule or regulation
issued or promulgated by the Internal Revenue Service, the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., any
stock exchange upon which the Common Stock is listed for trading, or any other
governmental or quasi-governmental agency having jurisdiction over the Company,
the Common Stock or the Plan requires the Plan to be amended, or in the event
Rule 16b-3 or any other rule under Section 16 of the Securities Exchange Act of
1934 is amended or supplemented, in either event to permit the Company to remove
or lessen any restrictions with respect to Options, the Board, the Stock Option
Committee or the Special Stock Option Committee may amend the Plan to
-8-
<PAGE>
the extent of any such requirement, amendment or supplement, and all Options
then outstanding will be subject to such amendment.
DESCRIPTION OF AWARDS
The Plan does not specify a maximum term for Options granted thereunder. A
grant of Options may provide for the deferred payment of the exercise price from
the proceeds of sales through a bank or broker on the exercise date of some or
all of the shares of Common Stock to which such exercise relates. The exercise
price of the Options may not be less than the fair market value per share of
Common Stock on the grant date. The Board, the Stock Option Committee or the
Special Stock Option Committee, as applicable, may, without the consent of the
holder of an Option, amend the terms of such Option in various respects,
including acceleration of the time at which the Option may be exercised,
extension of the expiration date, reduction of the exercise price and waiver of
other conditions or restrictions.
Each grant of Options will specify whether the exercise price is payable in
cash, by the actual or constructive transfer to the Company of nonforfeitable,
unrestricted shares of Common Stock already owned by the participant having an
actual or constructive value as of the time of exercise equal to the total
exercise price, by any other legal consideration authorized by the Board, the
Stock Option Committee or the Special Stock Option Committee, as the case may
be, or by a combination of such methods of payment. The Plan does not require
that a participant hold shares received upon the exercise of Options for a
specified period and permits immediate sequential exercises of Options with the
exercise price therefor being paid in shares of Common Stock, including shares
acquired as a result of prior exercises of Options.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. Certain U.S. federal income tax consequences of the grant, exercise
and transfer of Options, and of subsequent sales of Shares acquired upon the
exercise of Options, are summarized below. This Summary is based on the Code,
as amended to date, applicable proposed and final Treasury Regulations, judicial
authority and current administrative rulings and practice, all of which are
subject to change. Moreover, this summary does not attempt to describe all of
the possible tax consequences that could result from the acquisition, exercise,
transfer or disposition of an Option or of Shares acquired upon the exercise of
an Option. IN PARTICULAR, THIS SUMMARY DOES NOT ADDRESS THE TAX CONSEQUENCES,
IF ANY, OF ANY SUCH ACQUISITION, EXERCISE, TRANSFER OR DISPOSITION UNDER ANY
APPLICABLE FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.
Options granted under the Plan are intended to be nonqualified stock options.
Nonqualified stock options generally will not result in any taxable income to
the Plan participant at the time of the grant, but the participant will
recognize ordinary compensation income at the time of exercise of the options if
the shares acquired upon such exercise are not subject to any substantial risk
of forfeiture (as defined in Section 83 of the Code). Under such circumstances,
the amount of ordinary income is measured by the excess of the fair market value
of the optioned shares at the time of exercise over the exercise price of the
related option. Such income is subject to payment and withholding of income,
FICA and medicare taxes. Generally, Plan participants may satisfy their
withholding obligation by writing a check to the Company or by another method
permitted by the Company, including through so-called "cashless" exercises. A
Plan participant's tax basis in shares acquired upon the exercise of
nonqualified stock options is generally equal to the exercise price of the
related options plus any amount treated as ordinary income. If shares acquired
upon exercise of an option are later sold or exchanged, the difference between
the sales price and the Plan participant's tax basis in the shares will
generally be taxable as a capital gain or loss (if the stock is a capital asset
of the Plan participant). For individuals, the rate of taxation of capital
gains will depend on (i) the individual's holding period for the shares at the
time of the sale or other taxable disposition (with the lowest rate available
for shares held more than 12 months) and (ii) the individual's marginal tax rate
for ordinary income. The deductibility of capital losses is subject to certain
limitations which are not addressed herein.
If the exercise price of a nonqualified stock option is paid for, in whole or
in part, by the delivery of shares of Common Stock previously owned by the Plan
participant ("Previously Acquired Shares"), no gain or loss will be
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<PAGE>
recognized on the exchange of the Previously Acquired Shares for a like number
of shares of Common Stock. The Plan participant's basis in the number of
optioned shares received equal to the number of Previously Acquired Shares
surrendered would be the same as the Plan participant's basis in the Previously
Acquired Shares. However, the Plan participant would be treated as receiving
ordinary income equal to the fair market value (at the time of exercise) of the
number of shares of Common Stock received in excess of the number of Previously
Acquired Shares surrendered, and the Plan participant's basis in such excess
shares would be equal to their fair market value at the time of exercise.
Federal Income Tax Consequences for Transferors. A Plan participant who
transfers a transferable Option by way of gift (the "Transferor") will not
recognize income at the time of the transfer. Instead, at the time the
transferee of the transferable Option (the "Transferee)" exercises the
transferable Option, the Transferor will generally recognize ordinary
compensation income in an amount equal to the excess of the fair market value of
the Shares purchased by the Transferee over the exercise price of the related
Option, in the same manner as if the Transferor had retained and exercised the
Option. Prior to making a transfer of a transferable Option, a Plan participant
should consult with his or her personal tax advisor concerning the possible
federal and state gift, estate, inheritance, and generation skipping tax
consequences of such a transfer, as well as state and local income tax
consequences which are not addressed herein.
Federal Income Tax Consequences for Transferees. A Transferee will not
recognize income at the time of a transfer of a transferable Option. As
described in the preceding paragraph, the Transferor and not the Transferee will
generally recognize ordinary compensation income at the time the Transferee
exercises the Option. A Transferee who chooses to exercise a transferable
Option in whole or in part by delivery of other shares of Common Stock already
owned by the Transferee should consult with his or her own tax advisor
concerning the tax consequences of such a transaction. If Shares acquired upon
exercise of a transferable Option are later sold or exchanged, the difference
between the sales price and the Transferee's tax basis in the shares will
generally be taxable as long-term or short-term capital gain or loss (if the
stock is a capital asset of the Transferee). The tax basis for the Shares in
the hands of the Transferee would be the exercise price of the transferable
Option plus the amount of the income recognized by the Transferor at the time of
exercise.
Special Rules Applicable to Insiders. In limited circumstances where the
sale of Shares that are received as the result of the exercise of an Option
could subject an officer or director of the Company to suit under Section 16(b)
of the Securities Exchange Act of 1934, the tax consequences to the officer or
director may differ from the tax consequences described above. In these
circumstances, unless a special election has been made, the principal difference
usually will be to postpone valuation and taxation of the Shares received so
long as the sale of the Shares received could subject the officer or director to
suit under Section 16(b) of such Act, but not longer than six months.
General Matters Applicable to the Company. To the extent that a Plan
participant (including a Transferor) recognizes ordinary income in the
circumstances described above, the Company or a subsidiary, as the case may be,
would be entitled to a corresponding federal income tax deduction, provided in
general that (i) the amount is an ordinary and necessary business expense and
such income meets the test of reasonableness, (ii) the deduction is not
disallowed pursuant to the annual compensation limit set forth in Section 162(m)
of the Code, and (iii) certain statutory provisions relating to so-called
"excess parachute payments" do not apply. Awards granted under the Plan may be
subject to acceleration in the event of a change in control of the Company. In
the event of a change in control of the Company, it is possible that this
feature may affect whether amounts realized upon the receipt or exercise of the
Options will be deductible by the Company under the "excess parachute payments"
provisions of the Code.
BECAUSE THE TAX CONSEQUENCES TO A PLAN PARTICIPANT MAY VARY DEPENDING ON HIS
OR HER INDIVIDUAL CIRCUMSTANCES, EACH PLAN PARTICIPANT SHOULD CONSULT HIS OR HER
PERSONAL TAX ADVISOR REGARDING THE FEDERAL AND ANY STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES TO HIM OR HER.
-10-
<PAGE>
PLAN OF DISTRIBUTION
Upon the exercise of Options, the Company will issue Shares directly to or
for the benefit of the Plan participants (or their permitted transferees)
exercising such Options.
Any of the Selling Stockholders may sell or otherwise dispose of all or any
portion of his or her Shares from time to time: (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 Stockholders or from the purchasers of the Shares for whom they may act
as agent, (iv) through the writing of options on the Shares, (v) through 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) through purchases by a
broker or dealer as principal and resale by such broker or dealer for its own
account pursuant to this Prospectus, (vii) through block trades 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, (viii) through exchange distributions in accordance with the rules
of the applicable exchange, including the NYSE, (ix) in transactions in the
over-the-counter market, (x) in any combination of one or more of the foregoing,
or (xi) in any other lawful manner. Such sales may be made at then-current
market prices, at prices related to then-current market prices or at negotiated
prices. In effecting sales, brokers or dealers may arrange for other brokers or
dealers to participate. The Selling Stockholders 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 of 1933, 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 such Act. In addition, any of the Shares
covered by this Prospectus that qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus.
The Company will pay all of the expenses in connection with the offering
contemplated by this Prospectus, other than underwriting discounts or
commissions, brokers' fees and the fees and expenses of any legal counsel to the
Selling Stockholders.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Common Stock
offered hereby have been passed upon for the Company by Jones, Day, Reavis &
Pogue. Michael C. French, a consultant to Jones, Day, Reavis & Pogue, is a
director and an employee of the Company.
EXPERTS
The consolidated financial statements and financial statement schedule
appearing in the Company's Annual Report on Form 10-K for the year ended
September 30, 1997 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and financial statement
schedule are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
FORWARD-LOOKING INFORMATION
This Prospectus contains and/or incorporates by reference forward-looking
statements. Such statements are based upon the beliefs and assumptions of, and
on information available to, the management of the Company. The following
statements are or may constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995: (1) statements
preceded by, followed by or that include the words "may," "will,"
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<PAGE>
"could," "should," "believe," "expect," "future," "potential," "anticipate,"
"intend," "plan," "estimate" or "continue" or the negative or other variations
thereof and (2) other statements regarding matters that are not historical
facts. Such forward-looking statements are subject to various risks and
uncertainties, including (a) risks and uncertainties relating to the possible
invalidity of the underlying beliefs and assumptions, (b) possible changes or
developments in social, economic, business, industry, market, legal and
regulatory circumstances and conditions, and (c) actions taken or omitted to be
taken by third parties, including customers, suppliers, business partners,
competitors and legislative, regulatory, judicial and other governmental
authorities and officials. In addition to any risks and uncertainties
specifically identified in the text surrounding such forward-looking statements,
the statements in the immediately preceding sentence and the statements in the
reports, proxy statements and other information referred to in "Available
Information" constitute cautionary statements identifying important factors that
could cause actual amounts, results, events and circumstances to differ
materially from those reflected in such forward-looking statements.
DISCLAIMER
EXCEPT FOR THE INFORMATION CONTAINED IN THIS PROSPECTUS, THE COMPANY HAS NOT
AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN
CONNECTION WITH THE OFFER OR SALE OF THESE SECURITIES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
-12-
<PAGE>
19,994,082 SHARES
STERLING SOFTWARE, INC.
COMMON STOCK
--------------------------------
PROSPECTUS
---------------------------------
OCTOBER 29, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be borne by the Company in connection with the issuance and
distribution of the securities being registered are estimated as follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.. $29,790
NYSE listing fee..................................... 15,730
Legal fees and expenses.............................. 7,500
Accounting fees and expenses......................... 5,000
Printing expenses.................................... 5,000
Miscellaneous expenses............................... 5,000
Total................................................ $68,020
=======
</TABLE>
The expenses to be borne by the Selling Stockholders in connection with the
issuance and distribution of the securities being registered (other than any
underwriting discounts and commissions, which will be described in an applicable
Prospectus Supplement to the extent required) are expected to consist solely of
the fees and expenses of their respective legal counsel and other incidental
expenses which the Company is unable to estimate.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company (the "Certificate of
Incorporation") provides that the personal liability of directors of the Company
to the Company is eliminated to the maximum extent permitted by Delaware law.
The Bylaws of the Company (the "Bylaws") provide for the indemnification of the
directors, officers, employees and agents of the Company and its subsidiaries to
the fullest extent that may be permitted by Delaware law from time to time, and
the Bylaws provide for various procedures relating thereto.
Although the Certificate of Incorporation generally absolves the Company's
directors from personal liability for monetary damages resulting from breaches
of their fiduciary duty of care, the Company's directors remain liable for
breaches of their duty of loyalty to the Company and its stockholders, as well
as for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law and transactions from which a director
derives improper personal benefit. In addition, the Certificate of
Incorporation does not absolve directors of liability under Section 174 of the
Delaware General Corporation Law, which makes directors personally liable for
unlawful dividends or unlawful stock repurchases or redemptions in certain
circumstances and expressly sets forth a negligence standard with respect to
such liability.
Under Delaware law, directors, officers, employees and other individuals may
be indemnified against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action")
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of conduct is applicable in the case of a
derivative action, but indemnification extends only to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such an
action and Delaware law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to the corporation.
As authorized by the Certificate of Incorporation, the Company has entered
into indemnification agreements with each of its directors and officers. These
indemnification agreements provide for, among other things, (i) the
indemnification by the Company of the indemnitees thereunder to the extent
described above, (ii) the advancement of attorneys' fees and other expenses, and
(iii) the establishment, upon approval by the Board, of trusts or other funding
mechanisms to fund the Company's indemnification obligations thereunder.
II-1
<PAGE>
ITEM 16. EXHIBITS
4.1 Certificate of Incorporation (previously filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 and incorporated herein by reference)
4.2 Bylaws (previously filed as an exhibit to the Company's Registration
Statement on Form 8-A/A filed on May 27, 1998 and incorporated herein
by reference)
4.3 Form of Common Stock Certificate (previously filed as an exhibit to
the Company's Registration Statement No. 2-86825 and incorporated
herein by reference)
4.4 Rights Agreement, dated December 18, 1996, between the Company and
BankBoston, N.A., as Rights Agent (previously filed as an exhibit to
the Company's Current Report on Form 8-K dated December 18, 1996 and
incorporated herein by reference)
4.5 First Amendment to Rights Agreement, dated as of March 12, 1998,
between the Company and BankBoston, N.A., as Rights Agent (previously
filed as an exhibit to the Company's Registration Statement on Form 8-
A/A filed April 3, 1998 and incorporated herein by reference)
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney
ITEM 17. UNDERTAKINGS
A. The 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; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(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.
II-2
<PAGE>
B. The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on October 29, 1998.
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
-----------------------------------------
Don J. McDermett, Jr.
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on October 29, 1998.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
* Chief Executive Officer and President; Director
- ---------------------- (Principal Executive Officer)
Sterling L. Williams
* Senior Vice President and Chief Financial Officer
- ---------------------- (Principal Financial and Accounting Officer)
R. Logan Wray
* Chairman of the Board; Director
- ----------------------
Sam Wyly
* Vice Chairman of the Board; Director
- ----------------------
Charles J. Wyly, Jr.
* Vice President; Director
- ----------------------
Evan A. Wyly
* Director
- ----------------------
Phillip A. Moore
* Director
- ----------------------
Michael C. French
* Director
- ----------------------
Donald R. Miller
* Director
- ----------------------
Robert J. Donachie
* Director
- ----------------------
Alan W. Steelman
</TABLE>
*The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
/s/ Don J. McDermett, Jr.
------------------------------
Don J. McDermett, Jr.
Attorney-in-Fact
II-4
<PAGE>
EXHIBITS
4.1 Certificate of Incorporation (previously filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 and incorporated herein by reference)
4.2 Bylaws (previously filed as an exhibit to the Company's Registration
Statement on Form 8-A/A filed on May 27, 1998 and incorporated herein
by reference)
4.3 Form of Common Stock Certificate (previously filed as an exhibit to
the Company's Registration Statement No. 2-86825 and incorporated
herein by reference)
4.4 Rights Agreement, dated December 18, 1996, between the Company and
BankBoston, N.A., as Rights Agent (previously filed as an exhibit to
the Company's Current Report on Form 8-K dated December 18, 1996 and
incorporated herein by reference)
4.5 First Amendment to Rights Agreement, dated as of March 12, 1998,
between the Company and BankBoston, N.A., as Rights Agent (previously
filed as an exhibit to the Company's Registration Statement on Form 8-
A/A filed April 3, 1998 and incorporated herein by reference)
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney
II-5
<PAGE>
EXHIBIT 5.1
-----------
Jones, Day, Reavis & Pogue
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2958
October 29, 1998
Sterling Software, Inc.
300 Crescent Court
Suite 1200
Dallas, Texas 75201
Re: Registration of 4,494,082 Shares of Common Stock
------------------------------------------------
Ladies and Gentlemen:
We are acting as counsel to Sterling Software, Inc., a Delaware
corporation (the "Company"), in connection with the registration of 4,494,082
shares (the "Shares") of Common Stock, par value $0.10 per share, of the Company
("Common Stock") pursuant to the Company's Registration Statement on Form S-3 to
which this opinion is attached as Exhibit 5.1 (the "Registration Statement").
Unless otherwise defined herein, terms used herein with initial capital letters
are so used with the respective meanings ascribed to such terms in the
Registration Statement.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. Based on such examination and on
the assumptions set forth below, we are of the opinion that the Shares are duly
authorized and, when issued and delivered upon the exercise of the Options in
accordance with the provisions of the Plan against payment of the consideration
therefor as provided in the Plan and having a value not less than the par value
thereof, were or will be, as applicable, validly issued, fully paid and
nonassessable.
In rendering the foregoing opinion, we have (i) assumed (a) that the
Plan and each other instrument (collectively, the "Instruments") pursuant to
which any of the Shares are to be issued will at the time of such issuance
constitute valid, binding and enforceable obligations of the Company or a
subsidiary thereof, (b) that any issuance of Shares pursuant to the Instruments
will be effected in accordance with the provisions of the Instruments, (c) that
the resolutions of the Company's Board of Directors authorizing the Company to
issue the Shares will remain in full force and effect until all of the Shares
have been issued, and (d) the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted to
us as copies and (ii) relied, as to certain factual matters, without any
independent investigation, inquiry or verification, upon statements or
certificates of public officials and of representatives of the Company. In
addition, our examination of matters of law has been limited to the General
Corporation Law of the State of Delaware and the federal laws of the United
States of America, in each case as in effect on the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus constituting a part of the Registration Statement.
Very truly yours,
/s/ Jones, Day, Reavis & Pogue
Jones, Day, Reavis & Pogue
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Sterling Software,
Inc. for the registration of certain shares of its common stock issuable under
the Sterling Software, Inc. Amended and Restated 1996 Stock Option Plan and to
the incorporation by reference therein of our report dated November 7, 1997,
with respect to the consolidated financial statements and schedule of Sterling
Software, Inc. included in its Annual Report (Form 10-K) for the year ended
September 30, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Dallas, Texas
October 23, 1998
<PAGE>
EXHIBIT 24.1
------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Sterling
Software, Inc., a Delaware corporation (the "Corporation"), hereby constitutes
and appoints each of Don J. McDermett, Jr., Mark H. Kleinman, Robert L. Estep,
Mark E. Betzen, or any of them, the true and lawful attorney-in-fact, with full
power of substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf one or more Registration Statements on Form S-3 or any
other appropriate form (collectively, the "Registration Statement"), for the
purpose of registering, pursuant to the Securities Act of 1933, as amended,
shares of Common Stock, par value $0.10 per share, of the Corporation issuable
in connection with the exercise of options granted or available for grant under
the Sterling Software, Inc. Amended and Restated 1996 Stock Option Plan and the
resale of such shares, and to sign any or all amendments and any or all post-
effective amendments to the Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or attorneys-in-
fact, each of them with or without the others, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorney or
attorneys-in-fact or any of them or their substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Dated: October 29, 1998
/s/ Sterling L. Williams /s/ R. Logan Wray
- ----------------------------- ----------------------------
Sterling L. Williams R. Logan Wray
/s/ Sam Wyly /s/ Michael C. French
- ----------------------------- ----------------------------
Sam Wyly Michael C. French
/s/ Charles J. Wyly, Jr. /s/ Phillip A. Moore
- ----------------------------- ----------------------------
Charles J. Wyly, Jr. Phillip A. Moore
/s/ Evan A. Wyly /s/ Donald R. Miller
- ----------------------------- ----------------------------
Evan A. Wyly Donald R. Miller
/s/ Robert J. Donachie /s/ Alan W. Steelman
- ----------------------------- ----------------------------
Robert J. Donachie Alan W. Steelman
