<PAGE>
As filed with the Securities and Exchange Commission on December 7, 1998
Registration No. 333-66341
Post-Effective Amendment to Registration No. 333-13303
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT AND POST-EFFECTIVE
AMENDMENT 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 75-1873956
DELAWARE (Address, including zip (I.R.S. Employer
(State of incorporation) code and telephone number, Identification Number)
including area code, of
registrant's principal
executive offices)
------------------------------
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
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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. [ ]
------------------------------
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.
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<PAGE>
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 the portion of such 19,994,082 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."
------------------------------------
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.
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The date of this Prospectus is December 7, 1998.
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TABLE OF CONTENTS
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Page
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Available Information......................................................... 2
Incorporation of Certain Documents by Reference............................... 3
The Company................................................................... 3
Use of Proceeds............................................................... 3
Resales of Shares; Selling Stockholders....................................... 3
1996 Stock Option Plan........................................................ 6
Plan of Distribution......................................................... 10
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 Commission's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. (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 of common stock of the company issued or issuable under the
Sterling Software, Inc. Amended and Restated 1996 Stock Option 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.
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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,
1998.
(b) 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, General Counsel and Secretary (telephone: (214) 981-1000).
THE COMPANY
The company was founded in 1981 and became a publicly owned corporation in
1983. The company is a worldwide developer and supplier of application
development, information management and systems management software products and
services, as well as a supplier of specialized information technology services
for sectors of the federal government. 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."
USE OF PROCEEDS
The proceeds from the issuance of shares upon the exercise of options granted
under the plan 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 granted under the plan who are not affiliates of the
company may offer and sell shares acquired upon the exercise of such options
without registration under the Securities Act of 1933. Holders of options
granted under the plan who are affiliates of the company may offer and sell
shares acquired upon the exercise of such options only pursuant to an effective
registration statement under 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 are eligible to offer and sell
shares acquired by them upon the exercise of options pursuant to the
registration statements and this prospectus. The inclusion of any person in the
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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 in the future may 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
statements and this prospectus (which, in each such case, will be
supplemented).
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
OWNERSHIP NUMBER OF OWNERSIP AFTER
PRIOR TO OFFERING (1)(2) SHARES OF OFFERING(2)
------------------------- COMMON STOCK ----------------
NAME AND POSITION NUMBER PERCENTAGE OFFERED HEREBY NUMBER PERCENTAGE
- --------------------------------- ----------- ------------ -------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
John R. Cook (3)................. 201,462 * 200,000 1,462 *
Senior Vice President
Robert J. Donachie (4)........... 125,700 * 100,000 25,700 *
Director
Michael C. French (5)............ 131,600 * 130,000 1,600 *
Director
F.L. (Mike) Harvey (6)........... 263,547 * 262,500 1,047 *
Senior Vice President
M. Gene Konopik (7).............. 212,551 * 200,000 12,551 *
Executive Vice President
Don J. McDermett, Jr. (8)........ 250,978 * 250,000 978 *
Senior Vice President,
General Counsel and Secretary
Donald R. Miller, Jr. (9)........ 105,000 * 100,000 5,000 *
Director
Phillip A. Moore (10)............ 358,026 * 300,000 58,026 *
Director
B. Carole Morton (11)............ 368,976 * 300,000 68,976 *
Senior Vice President
Alan W. Steelman (12)............ 75,000 * 75,000 0 *
Director
Mark A. Theel (13)............... 260,568 * 250,000 10,568 *
Senior Vice President
Geno P. Tolari (14).............. 935,973 1.1% 925,000 10,973 *
Executive Vice President
and Chief Operating Officer
Sterling L. Williams (15)........ 3,608,410 4.2% 3,600,000 8,410 *
President, Chief Executive
Officer and Director
R. Logan Wray (16)............... 308,659 * 307,400 1,259 *
Senior Vice President and
Chief Financial Officer
Charles J. Wyly, Jr. (17)........ 3,201,905 3.8% 1,800,000 1,401,905 1.7%
Vice-Chairman of the
Board and Director
Evan A. Wyly (18)................ 369,183 * 200,000 169,183 *
Director
Sam Wyly (19).................... 4,403,286 5.1% 3,600,000 803,286 1.0%
Chairman of the Board and
Director
</TABLE>
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* Less than 1% of class.
(1) Based on ownership as of November 30, 1998.
(2) Based on 82,454,226 shares of common stock issued and outstanding as of
November 30, 1998.
(3) Includes 200,000 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. Also includes approximately 156 shares 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 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.
(6) Includes 262,500 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. Also includes approximately 177 shares held pursuant to
the Savings Plan and 870 shares acquired pursuant to the Stock Purchase
Plan.
(7) 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 11,628 shares held pursuant
to the Savings Plan and 923 shares acquired pursuant to the Stock Purchase
Plan.
(8) Includes 250,000 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 341 shares held pursuant to
the Savings Plan and 637 shares acquired pursuant to the Stock Purchase
Plan.
(9) 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.
(10) 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 10,228 shares held
pursuant to the Savings Plan.
(11) Includes 300,000 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 11,196 shares held
pursuant to the Savings Plan.
(12) 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.
(13) Includes 250,000 shares to be acquired upon exercise of options granted
under the plan, 52,750 of which are exercisable within 60 days of this
prospectus. Also includes approximately 5,956 shares held pursuant to the
Savings Plan and 708 shares acquired pursuant to the Stock Purchase Plan.
(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 9,667 shares held pursuant
to the Savings Plan and 1,306 shares 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 410 shares held pursuant to the Savings Plan.
(16) Includes 307,400 shares to be acquired upon exercise of options granted
under the plan, 19,900 of which are exercisable within 60 days of the date
of this prospectus. Also includes approximately 65 shares held pursuant to
the Savings Plan and 1,194 shares 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 directly owned by family trusts of which Mr. Charles J.
Wyly, Jr. is trustee and 513,148 shares held of record by a limited
partnership of which Mr. Charles J. Wyly, Jr. is a general partner. Also
includes approximately 5,359 shares 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
303 shares 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 521,458 shares directly owned by family trusts
of which Mr. Sam Wyly is trustee and 277,224 shares held of record by a
limited partnership of which Mr. Sam Wyly is a general partner. Also
includes approximately 4,604 shares held pursuant to the Savings Plan.
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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 Securities
Exchange Act of 1934. 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."
PURPOSE AND ADOPTION OF THE PLAN
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.
SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN
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, the number of shares of common stock available for
issuance under the plan is automatically increased after the end of each fiscal
quarter so that the sum of the number of shares subject to previously granted
options and the number of shares available for future option grants is equal to
20% of the common stock then outstanding, computed on a fully-diluted basis.
Shares of common stock issued under the plan may be authorized but unissued
shares, shares held in treasury or a combination thereof.
DESCRIPTION OF THE 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, and which permit a participant to benefit from
increases in the value of shares of common stock above a predetermined purchase
price per share.
The plan does not specify a maximum term for options granted thereunder. 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 administrators of the plan
identified below 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 shares of common
stock already owned by the participant, by any other lawful consideration or by
a combination of the foregoing. A grant of options may provide for the deferred
payment of the exercise price from the proceeds of sales through a bank or
broker of some or all of the shares of common stock to which such exercise
relates. The plan does not require that a participant hold shares received upon
the exercise
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of options for a specified period. The plan 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.
ADMINISTRATION; AUTHORITY OF ADMINISTRATORS
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. However, the Special Stock Option Committee has
exclusive administrative authority with respect to options intended to comply
with Section 162(m) of the Internal Revenue 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 Internal Revenue 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 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 such
provision, will be final and conclusive. However, if the Stock Option Committee
and the Special Stock Option Committee disagree (or either or both disagree with
the Board) with respect to the foregoing matters, 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 Internal Revenue Code.
ELIGIBILITY TO RECEIVE OPTIONS
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 OF OPTIONS
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 TO SHARES AVAILABLE FOR ISSUANCE, OPTION TERMS, ETC.
In certain circumstances, 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, may determine is equitably required to prevent dilution or
enlargement of the rights of plan participants. Such circumstances include 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.
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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 STATUS OF THE PLAN
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
Internal Revenue Code.
NO RIGHTS TO CONTINUED EMPLOYMENT
The plan does not confer upon any plan participant any rights 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 OF THE PLAN
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.
CERTAIN U.S. 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 Internal
Revenue 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.
Recognition of Income; Tax Withholding. 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 Internal Revenue 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.
Tax Basis in Shares Acquired; Gain or Loss on Disposition. 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 (a) the individual's holding period for the shares at the time of the
sale or other
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taxable disposition (with the lowest rate available for shares held more than 12
months) and (b) the individual's marginal tax rate for ordinary income. The
deductibility of capital losses is subject to certain limitations which are not
addressed herein.
Payment of Exercise Price with Shares. 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 recognized on the exchange of the
Previously Acquired Shares for a like number of optioned shares, and the plan
participant's basis in that number of optioned shares will 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 (a) the amount is an ordinary and necessary business expense and
such income meets the test of reasonableness, (b) the deduction is not
disallowed pursuant to the annual compensation limit set forth in Section 162(m)
of the Internal Revenue Code, and (c) 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 Internal Revenue Code.
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<PAGE>
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.
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 persons who are eligible to offer and sell shares acquired upon the
exercise of options pursuant to the registration statements and this prospectus
(each, a "Selling Stockholder") may sell or otherwise dispose of all or any
portion of such shares from time to time as follows:
. to purchasers directly;
. in ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. 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;
. through the writing of options on the shares;
. 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;
. through purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account pursuant to this prospectus;
. 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;
. through exchange distributions in accordance with the rules of the
applicable exchange, including the NYSE;
. in transactions in the over-the-counter market;
. in any combination of one or more of the foregoing; or
. 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 their successors in interest, and any underwriters, brokers,
dealers or agents that participate in the distribution of such shares, may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
and any profit on the sale of such 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.
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<PAGE>
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, 1998 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 may contain and/or incorporate 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: (a)
statements preceded by, followed by or that include the words "may," "will,"
"could," "should," "believe," "expect," "future," "potential," "anticipate,"
"intend," "plan," "estimate" or "continue" or the negative or other variations
thereof and (b) other statements regarding matters that are not historical
facts. Such forward-looking statements are subject to various risks and
uncertainties, including the following:
. risks and uncertainties relating to the possible invalidity of the
underlying beliefs and assumptions;
. possible changes or developments in social, economic, business, industry,
market, legal and regulatory circumstances and conditions; and
. 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 under captions such as "Risk Factors,"
"Certain Considerations Relative to the Company" and "Special Considerations" 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.
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<PAGE>
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.
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<PAGE>
19,994,082 SHARES
STERLING SOFTWARE, INC.
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
DECEMBER 7, 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
Sterling Software, Inc.'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 Sterling Software, Inc.'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
Sterling Software, Inc.'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
Sterling Software, Inc.'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 Sterling Software, Inc.'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 (previously filed)
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP (previously filed as an exhibit to
Sterling Software, Inc.'s Annual Report on Form 10-K for the year
ended September 30, 1998 and incorporated herein by reference)
24.1 Power of Attorney (previously filed)
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
II-2
<PAGE>
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.
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 Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, on December 7, 1998.
STERLING SOFTWARE, INC.
By: /s/ Don J. McDermett, Jr.
--------------------------------------
Don J. McDermett, Jr.
Senior Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities indicated on
December 7, 1998.
Signatures Title
---------- -----
* 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
*The undersigned, by signing his name hereto, does sign and execute this
Amendment pursuant to the Powers of Attorney executed on behalf of the above-
named officers and directors and filed as Exhibit 24.1 to this Registration
Statement.
/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
Sterling Software, Inc.'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 Sterling Software, Inc.'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
Sterling Software, Inc.'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
Sterling Software, Inc.'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 Sterling Software, Inc.'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 (previously filed)
23.1 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP (previously filed as an exhibit to
Sterling Software, Inc.'s Annual Report on Form 10-K for the year
ended September 30, 1998 and incorporated herein by reference)
24.1 Power of Attorney (previously filed)
II-5
