Exhibit 10.47
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "AGREEMENT"), made
and entered into effective as of the 16th day of October, 1998 (the "EFFECTIVE
DATE") by and between System Software Associates, Inc., a Delaware corporation
(the "EMPLOYER"), and Xxxxxxx X. Xxxxx (the "EXECUTIVE"), is an amendment and
restatement of the employment agreement by and between the Employer and the
Executive that was entered into as of the 5th day of January, 1998 (the "PRIOR
AGREEMENT").
RECITALS
A. The Employer and the Executive desire to amend, revise and
restate the Prior Agreement.
B. The Employer desires that the Executive continue to provide
services for the benefit of the Employer and its affiliates and the Executive
desires to accept such continued employment with the Employer under the revised
terms and conditions set forth herein.
C. The Employer and the Executive acknowledge that the Executive
will continue to be a member of the senior management team of the Employer and,
as such, will continue to participate in creating and implementing the
Employer's business plan.
D. In the course of employment with the Employer, the Executive
will continue to have access to certain confidential information that relates to
or will relate to the business of the Employer and its affiliates.
E. The Employer desires that any such information not be
disclosed to other parties or otherwise used for unauthorized purposes.
NOW, THEREFORE, in consideration of the above premises and the
following mutual covenants and conditions, the parties agree as follows:
1. Employment. The Employer shall continue to employ the
Executive as its Chief Executive Officer and Chairman of the Board of Directors
(the "BOARD"), which positions the Executive assumed on April 6, 1998. The
Executive hereby accepts such continued employment on the following terms and
conditions.
2. Duties. The Executive shall work for the Employer in a
full-time capacity. The Executive shall have the duties, responsibilities,
powers, and authority customarily associated with the position of Chief
Executive Officer and Chairman, which duties shall include, but not be limited
to, responsibility for all field-related activities on a worldwide basis,
including all sales, marketing, services and other relationships, as well as
responsibility for the overall financial operations of the Employer and selected
research and development activities of the Employer.
The Executive shall report to, and follow the direction of the Board. In
addition to, or in lieu of, the foregoing, the Executive also shall perform such
other and unrelated services and duties as may be assigned to him from time to
time by the Board. The Executive shall diligently, competently, and faithfully
perform all duties, and shall devote his entire business time, energy,
attention, and skill to the performance of duties for the Employer or its
affiliates and will use his best efforts to promote the interests of the
Employer. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic, religious, or charitable
boards or committees, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Employer in accordance with this Agreement.
3. Executive Loyalty. The Executive shall devote all of his time,
attention, knowledge, and skill solely and exclusively to the business and
interests of the Employer, and the Employer shall be entitled to all benefits
and profits arising from or incident to any and all work, services, and advice
of the Executive. The Executive expressly agrees that during the term of this
Agreement, he shall not engage, directly or indirectly, as a partner, officer,
director, stockholder, advisor, agent, employee, or in any other form or
capacity, in any other business similar to that of the Employer. The foregoing
notwithstanding, nothing herein contained shall be deemed to prevent the
Executive from investing his money in the capital stock or other securities of
any corporation whose stock or securities are publicly-owned or are regularly
traded on any public exchange, nor shall anything herein contained be deemed to
prevent the Executive from investing his money in real estate.
4. Term of Employment. Unless sooner terminated as hereinafter
provided, this Agreement shall be entered into for the period commencing on the
Effective Date and ending on January 4, 2003.
5. Compensation.
A. Salary. The Employer shall pay the Executive an
annual salary of $500,000, payable in substantially equal installments in
accordance with the Employer's payroll policy from time to time in effect. The
Executive's salary shall be subject to any payroll or other deductions as may be
required to be made pursuant to law, government order, or by agreement with, or
consent of, the Executive.
B. Incentive Bonus. The Executive shall participate in
an annual bonus program, which program shall provide the Executive with an
opportunity to achieve a targeted annual bonus of up to $500,000. The actual
terms and conditions of the annual bonus program shall be established by the
Employer, with input from the Executive, shall be memorialized in a written
document to be prepared by the Employer and which will be incorporated herein by
reference, and will provide for the payment of an annual bonus hereunder if the
Employer achieves specified company-wide objectives and if the Executive
achieves specified personal management objectives. All such objectives shall be
agreed upon by the Executive and the Board prior to the beginning of each fiscal
year of the Employer. Any bonus earned hereunder
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shall be payable no later than sixty (60) days following the end of the
Employer's fiscal year in which the bonus is earned.
C. Stock Options. Effective on the date hereof, the
Employer shall grant the Executive an option to purchase one million four
hundred forty thousand (1,440,000) shares of the common stock of the Employer.
Two hundred thousand (200,000) of such shares shall be granted in accordance
with and pursuant to the terms of the Employer's Long-Term Incentive Plan. The
grant of such stock option has been memorialized in the Option Agreement
attached hereto as Exhibit A. One million two hundred forty thousand (1,240,000)
of such shares shall be granted in accordance with and pursuant to the terms of
the Option Agreement attached hereto as Exhibit B. In consideration of the
options granted pursuant to this Paragraph 5C, the Executive agrees and
acknowledges that he has surrendered, and the Employer has canceled, both the
option to purchase three hundred thousand (300,000) shares of the Employer's
common stock, which had been granted to him under the Employer's Long-Term
Incentive Plan pursuant to the Prior Agreement, and the option to purchase three
hundred thousand (300,000) shares of the Employer's common stock, which option
was to be granted to the Executive upon his appointment as Chief Executive
Officer of the Employer.
D. Engagement Bonus. The Executive acknowledges that he
has received a one-time engagement bonus in the amount of $1,583,000 in
recognition of his execution of the Prior Agreement and his resignation from IBM
prior to March 31, 1998 and in lieu of the engagement bonus set forth in
Paragraph 5E of the Prior Agreement.
E. Other Benefits. During the term of this Agreement, the
Employer shall:
(1) include the Executive in any life insurance
(including, but not limited to, a term life insurance
policy for the Executive with a death benefit of
$3,000,000 and with the beneficiary(ies) to be
designated by the Executive), disability insurance,
medical, dental or health insurance, vacation,
savings, pension and retirement plans and other
benefit plans or programs (including, if applicable,
any excess benefit or supplemental executive
retirement plans) maintained by the Employer for the
benefit of its executives; and
(2) include the Executive in such perquisites as
the Employer may establish from time to time that are
commensurate with his position and at least comparable
to those received by other executives of the Employer.
6. Expenses. The Employer shall reimburse the Executive for all
reasonable and approved business expenses, provided the Executive submits paid
receipts or other documentation acceptable to the Employer and as required by
the Internal Revenue Service to qualify as ordinary and necessary business
expenses under the Internal Revenue Code of 1986, as amended (the "CODE").
7. Termination. Notwithstanding anything in Paragraph 4 of this
Agreement to the contrary, the Executive's services shall terminate upon the
first to occur of the following events:
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A. Upon the Executive's date of death or the date the
Executive is given written notice that he has been determined to be disabled by
the Employer. For purposes of this Agreement, the Executive shall be deemed to
be disabled if the Executive, as a result of illness or incapacity, shall be
determined to be disabled in accordance with the terms of the Employer's
Long-Term Disability Plan, as in effect from time to time. A termination of the
Executive's employment by the Employer for disability shall be communicated to
the Executive by written notice and shall be effective on the tenth (10th)
calendar day after receipt of such notice by the Executive, unless the Executive
returns to full-time performance of his duties before such tenth (10th) calendar
day.
B. On the date the Employer provides the Executive with
written notice that he is being terminated for "Cause." For purposes of this
Agreement, the Executive shall be deemed terminated for Cause if the Employer
terminates the Executive after the Executive:
(1) shall have been indicted (or the equivalent
thereof) for any felony including, but not limited to,
a felony involving fraud, theft, misappropriation,
dishonesty, or embezzlement;
(2) shall have committed intentional acts of
gross misconduct that materially impair the goodwill
or business of the Employer or cause material damage
to its property, goodwill, or business; or
(3) shall have refused to, or willfully failed
to, perform his material duties hereunder, provided,
however, that no termination under this subparagraph
(3) shall be effective unless the Executive does not
cure such refusal or failure to the Employer's
satisfaction as soon as practicable after the Employer
gives the Executive written notice identifying such
refusal or failure (and, in any event, within thirty
(30) calendar days after receipt of such written
notice).
No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that his action or omission was in the best
interests of the Employer. A termination of the Executive's employment for Cause
shall be effected in accordance with the following procedures. The Employer
shall give the Executive written notice ("NOTICE OF TERMINATION FOR CAUSE") of
its intention to terminate the Executive's employment for Cause, setting forth
in reasonable detail the specific conduct of the Executive that it considers to
constitute Cause and the specific provision(s) of this Agreement on which it
relies, and stating the date, time and place of the Board Meeting for Cause. The
"BOARD MEETING FOR CAUSE" means a meeting of the Board at which the Executive's
termination for Cause will be considered, that takes place not less than ten
(10) and not more than twenty (20) business days after the Executive receives
the Notice of Termination for Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Board Meeting for Cause.
The Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Board Meeting for Cause by a majority vote of
the entire membership of the Board (exclusive of the Executive, who shall recuse
himself
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from such a vote), stating that in the good faith opinion of the Board, the
Executive is guilty of the conduct described in the Notice of Termination for
Cause, and that such conduct constitutes Cause under this Agreement.
C. On the date the Executive terminates his employment for
"Good Reason." For purposes of this Agreement, "GOOD REASON" means:
(1) the assignment to the Executive of any duties
materially inconsistent in any respect with Paragraph
2 of this Agreement, or any other action by the
Employer that results in a diminution in the
Executive's position, authority, duties or
responsibilities, other than an isolated,
insubstantial and inadvertent action that is not taken
in bad faith and is remedied by the Employer after
receipt of notice thereof from the Executive;
(2) any requirement by the Employer that the
Executive's services be rendered primarily at a
location or locations other than within the greater
Chicago metropolitan area and for other than a de
minimis period of time;
(3) any breach of this Agreement by the Employer
that is not remedied by the Employer promptly after
receipt of notice thereof from the Executive;
(4) any failure by the Employer to comply with
any provision of Paragraph 5 of this Agreement, other
than an isolated, insubstantial and inadvertent
failure that is not taken in bad faith and is remedied
by the Employer promptly after receipt of notice
thereof from the Executive;
(5) any purported termination of the Executive's
employment by the Employer for a reason or in a manner
not expressly permitted by this Agreement; or
(6) the resignation by the Executive following a
"Change in Control." A "CHANGE IN CONTROL" shall be
deemed to occur on the earliest of (a) the acquisition
by any entity, person, or group of beneficial
ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of more than 50%
of the outstanding capital stock of the Employer
entitled to vote for the election of directors
("VOTING STOCK"); (b) the completion by any entity,
person, or group (other than the Employer or a
subsidiary of the Employer) of the purchase of more
than 50% of the outstanding Voting Stock of the
Employer; (c) the effective time of (1) a merger or
consolidation of the Employer with one or more
corporations as a result of which the holders of the
outstanding Voting Stock of the Employer immediately
prior to such merger hold less than 50% of the Voting
Stock of the surviving or resulting corporation, or
(2) a transfer of substantially all of the property or
assets of the Employer other than to an entity of
which the Employer owns at least 80% of the Voting
Stock; and (d) the election to the Board, without the
recommendation or approval of the incumbent Board, of
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the directors constituting a majority of the number of
directors of the Employer then in office.
A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Employer written notice ("NOTICE OF TERMINATION FOR
GOOD REASON") of the termination within three (3) months (six (6) months in the
event of a Change in Control) of the event constituting Good Reason, setting
forth in reasonable detail the specific conduct of the Employer that constitutes
Good Reason and the specific provisions of this Agreement on which Executive
relies. A termination of employment by the Executive for Good Reason shall be
effective on the fifth (5th) business day following the date when the Notice of
Termination for Good Reason is given, unless the notice sets forth a later date
(which date shall in no event be later than thirty (30) business days after the
notice is given).
D. On the date the Executive terminates his employment for
any reason, other than for the reason set forth in Paragraph 7C, provided that
the Executive shall give the Employer ninety (90) days written notice prior to
such date of his intention to terminate this Agreement.
E. On the date the Employer terminates the Executive's
employment for any reason, other than a reason set forth in Paragraph 7B,
provided that the Employer shall give the Executive ninety (90) days written
notice prior to such date of its intention to terminate this Agreement.
8. Compensation Upon Termination.
A. If the Executive's services are terminated pursuant to
Paragraph 7A, 7B, or 7D, the Executive shall be entitled to his salary through
his final date of active employment, plus any accrued but unused vacation pay.
The Executive also shall be entitled to any benefits mandated under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) or required under
the terms of any death, insurance, or retirement plan, program, or agreement
provided by the Employer and to which the Executive is a party or in which the
Executive is a participant, including, but not limited to, any short-term or
long-term disability plan or program, if applicable.
B. If the Executive's services are terminated pursuant to
Paragraph 7C or 7E, the Executive shall be entitled to his salary through his
final date of active employment, plus any accrued but unused vacation pay. The
Executive also shall be entitled to the continuation of his current base salary
(as set forth in Paragraph 5A) for a period of twenty-four (24) months or, if
lesser, through the end of the term of this Agreement (the "SALARY CONTINUATION
PERIOD"), provided (a) he signs an agreement that releases the Employer from
actions, suits, claims, proceedings and demands related to the period of
employment and/or the termination of employment, and (b) the Employer shall be
permitted to offset from the severance pay hereunder any salary paid to the
Executive during the ninety (90) day written notice period, if the Executive
performs no substantial services during such ninety (90) day written notice
period. The Executive also shall be entitled to any benefits mandated under the
Consolidated Omnibus
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Budget Reconciliation Act of 1985 (COBRA) or required under the terms of any
death, insurance, or retirement plan, program, or agreement provided by the
Employer and to which the Executive is a party or in which the Executive is a
participant.
C. This Paragraph 8 shall not supersede or invalidate any
severance benefit agreement or other benefit plans to which the Executive is a
party or in which the Executive is a participant; provided, however, if a change
in control shall occur (as defined in Section 280G(b)(2)(a)(i) of the Code), and
a determination is made by legislation, regulation, ruling directed to the
Executive or the Employer, or court decision, that the aggregate amount of any
payment made to the Executive hereunder, or pursuant to any plan, program, or
policy of the Employer in connection with, on account of, or as a result of,
such change in control constitutes "excess parachute payments" under the Code
that are subject to the excise tax provisions of Section 4999 of the Code, or
any successor sections thereof, the Executive shall be entitled to receive from
the Employer, in addition to any other amounts payable hereunder, an additional
payment (a "GROSS-UP PAYMENT") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed thereon) and any excise tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the excise tax imposed. All determinations required to be made under this
Paragraph 8, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a certified public accounting firm
designated by the Employer and reasonably acceptable to the Executive which is
one of the five largest accounting firms in the United States (the "ACCOUNTING
FIRM"), which shall provide detailed supporting calculations both to the
Employer and the Executive within fifteen (15) business days of the receipt of
notice from the Executive that there has been an excess parachute payment, or
such earlier time as is requested by the Employer. All fees and expenses of the
Accounting Firm shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Paragraph 8 shall be paid by the Employer to the
Executive within five (5) business days of the receipt of the Accounting Firm's
determination. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Employer should have been made ("UNDERPAYMENT") consistent with the
calculations required to be made hereunder. In the event that the Employer
exhausts its remedies hereunder and the Executive thereafter is required to make
a payment of any excise tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Employer to or for the benefit of the Executive. The Executive shall
notify the Employer in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Employer of the Gross-Up
Payment. Such notification shall be given as soon as practicable but no later
than ten (10) business days after the Executive is informed in writing of such
claim and shall apprise the Employer of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the thirty (30) day period following the date on
which he gives such notice to the Employer (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Employer notifies
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the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(1) give the Employer any information reasonably requested
by the Employer relating to such claim;
(2) take such action in connection with contesting such
claim as the Employer shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(3) cooperate with the Employer in good faith in order
effectively to contest such claim; and
(4) permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any excise tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provision of
this Paragraph 8C, the Employer shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Employer shall
determine. Notwithstanding anything herein to the contrary, if, after the
receipt by the Executive of an amount advanced by the Employer pursuant to this
Paragraph 8C, the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Employer's substantial
compliance with the requirements of this Paragraph 8C) promptly pay to the
Employer the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Employer pursuant to Paragraph 8C, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Employer does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
9. Protective Covenants. The Executive acknowledges and agrees
that solely by virtue of his employment by, and relationship with, the Employer,
he has acquired and will continue to acquire "Confidential Information", as
hereinafter defined, as well as special knowledge of the Employer's
relationships with its customers and business brokers, and that, but
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for his association with the Employer, the Executive will not have had access to
said Confidential Information or knowledge of said relationships. The Executive
further acknowledges and agrees (i) that the Employer has long term,
near-permanent relationships with its customers and business brokers, and that
those relationships were developed at great expense and difficulty to the
Employer over several years of close and continuing involvement; (ii) that the
Employer's relationships with its customers and business brokers are and will
continue to be valuable, special and unique assets of the Employer and that the
identity of its customers and business brokers is kept under tight security with
the Employer and cannot be readily ascertained from publicly available materials
or from materials available to the Employer's competitors; and (iii) that the
Employer has the following protectable interests that are critical to its
competitive advantage in the industry and would be of demonstrable value in the
hands of a competitor: marketing strategies and research information and
benchmarks; and plans, processes, customer networks and protocols. In return for
the consideration described in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
as a condition precedent to the Employer entering into the Prior Agreement and
this Agreement, and as an inducement to the Employer to do so, the Executive
hereby represents, warrants, and covenants as follows:
A. The Executive has executed and delivered this Agreement
as his free and voluntary act, after having determined that the provisions
contained herein are of a material benefit to him, and that the duties and
obligations imposed on him hereunder are fair and reasonable and will not
prevent him from earning a comparable livelihood following the termination of
his employment with the Employer;
B. The Executive has read and fully understands the terms
and conditions set forth herein, has had time to reflect on and consider the
benefits and consequences of entering into this Agreement, and has had the
opportunity to review the terms hereof with an attorney or other representative,
if he so chooses;
C. The execution and delivery of this Agreement by the
Executive does not conflict with, or result in a breach of or constitute a
default under, any agreement or contract, whether oral or written, to which the
Executive is a party or by which the Executive may be bound;
D. The Executive agrees that, during the time of his
employment and for a period of one (1) year after the termination of the
Executive's employment hereunder for any reason whatsoever or for no reason,
whether voluntary or involuntary, the Executive will not, except on behalf of
the Employer, in any place or venue where the Employer or any affiliate,
subsidiary, or division thereof now conducts or operates, or may conduct or
operate, its business prior to the date of the Executive's termination of
employment:
(1) directly or indirectly, contact, solicit or direct
any person, firm, or corporation to contact or solicit, any of
the Employer's customers, prospective customers, or business
brokers (as hereinafter defined) for the purpose of selling or
attempting to sell, any products and/or services that are the
same as or similar
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to the products and services provided by the Employer to its
customers during the term hereof. In addition, the Executive
will not disclose the identity of any such business brokers,
customers, or prospective customers, or any part thereof, to
any person, firm, corporation, association, or other entity
for any reason or purpose whatsoever; and
(2) directly or indirectly, whether as an investor
(excluding investments representing less than one percent (1%)
of the common stock of a public company), lender, owner,
stockholder, officer, director, consultant, employee, agent,
salesperson or in any other capacity, whether part-time or
full-time, become associated with any business involved in the
design, manufacture, marketing, or servicing of products then
constituting ten percent (10%) or more of the annual sales of
the Employer; and
(3) solicit or accept if offered to him, with or
without solicitation, on his own behalf or on behalf of any
other person, the services of any person who is an employee of
the Employer, nor solicit any of the Employer's employees to
terminate employment with the Employer, nor agree to hire any
employee of the Employer into employment with himself or any
company, individual or other entity; and
(4) act as a consultant, advisor, officer, manager,
agent, director, partner, independent contractor, owner, or
employee for or on behalf of any of the Employer's business
brokers, customers, or prospective customers (as hereinafter
defined), with respect to or in any way with regard to any
aspect of the Employer's business and/or any other business
activities in which the Employer engages during the term
hereof;
E. The Executive acknowledges and agrees that the scope
described above is necessary and reasonable in order to protect the Employer in
the conduct of its business and that, if the Executive becomes employed by
another employer, he shall be required to disclose the existence of this
Paragraph 9 to such employer and the Executive hereby consents to and the
Employer is hereby given permission to disclose the existence of this Paragraph
9 to such employer;
F. For purposes of this Paragraph 9, "customer" shall be
defined as any person, firm, or entity that purchased any type of product and/or
service from the Employer or is or was doing business with the Employer or the
Executive within the twelve (12) month period immediately preceding termination
of the Executive's employment. For purposes of this Paragraph 9, "prospective
customer" shall be defined as any person, firm, or entity contacted or solicited
by the Employer or the Executive (whether directly or indirectly) or who
contacted the Employer or the Executive (whether directly or indirectly) within
the twelve (12) month period immediately preceding termination of the
Executive's employment for the purpose of having such persons, firms, or
entities become a customer of the Employer. For purposes of this Paragraph 9,
"business broker" shall be defined as any person, firm, or entity who is or was
doing
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business with the Employer or the Executive or who was contacted or
solicited by the Employer or the Executive (whether directly or indirectly) or
who contacted or solicited the Employer or the Executive (whether directly or
indirectly) within the thirty-six (36) month period immediately preceding
termination of the Executive's employment;
G. The Executive agrees that both during his employment
and thereafter the Executive will not, for any reason whatsoever, use for
himself or disclose to any person not employed by the Employer any "Confidential
Information" of the Employer acquired by the Executive during his relationship
with the Employer. The Executive further agrees to use Confidential Information
solely for the purpose of performing duties with the Employer and further agrees
not to use Confidential Information for his own private use or commercial
purposes or in any way detrimental to the Employer. The Executive agrees that
"Confidential Information" includes but is not limited to: (1) any financial,
business, planning, operations, services, potential services, products,
potential products, technical information and/or know-how, formulas, production,
purchasing, marketing, sales, personnel, customer, broker, supplier, or other
information of the Employer; (2) any papers, data, records, processes, methods,
techniques, systems, models, samples, devices, equipment, compilations,
invoices, customer lists, or documents of the Employer; (3) any confidential
information or trade secrets of any third party provided to the Employer in
confidence or subject to other use or disclosure restrictions or limitations;
and (4) any other information, written, oral, or electronic, whether existing
now or at some time in the future, whether pertaining to current or future
developments, which pertains to the Employer's affairs or interests or with whom
or how the Employer does business. The Employer acknowledges and agrees that
Confidential Information does not include (1) information properly in the public
domain, or (2) information in the Executive's possession prior to the date of
his original employment with the Employer;
H. During and after the term of employment hereunder, the
Executive will not remove from the Employer's premises any documents, records,
files, notebooks, correspondence, computer printouts, computer programs,
computer software, price lists, microfilm, or other similar documents containing
Confidential Information, including copies thereof, whether prepared by him or
others, except as his duty shall require, and in such cases, will promptly
return such items to the Employer. Upon termination of his employment with the
Employer, all such items including summaries or copies thereof, then in the
Executive's possession, shall be returned to the Employer immediately;
I. The Executive recognizes and agrees that all ideas,
inventions, enhancements, plans, writings, and other developments or
improvements (the "INVENTIONS") conceived by the Executive, alone or with
others, during the term of his employment, whether or not during working hours,
that are within the scope of the Employer's business operations or that relate
to any of the Employer's work or projects, are the sole and exclusive property
of the Employer. The Executive further agrees that (1) he will promptly disclose
all Inventions to the Employer and hereby assigns to the Employer all present
and future rights he has or may have in those Inventions, including without
limitation those relating to patent, copyright, trademark or trade secrets; and
(2) all of the Inventions eligible under the copyright laws are "work made for
hire." At the request of and without charge to the Employer, the Executive will
do all things
11
deemed by the Employer to be reasonably necessary to perfect title to the
Inventions in the Employer and to assist in obtaining for the Employer such
patents, copyrights or other protection as may be provided under law and desired
by the Employer, including but not limited to executing and signing any and all
relevant applications, assignments or other instruments. Notwithstanding the
foregoing, pursuant to the Employee Patent Act, Illinois Public Act 83-493, the
Employer hereby notifies the Executive that the provisions of this Paragraph 9
shall not apply to any Inventions for which no equipment, supplies, facility or
trade secret information of the Employer was used and which were developed
entirely on the Executive's own time, unless (1) the Invention relates (i) to
the business of the Employer, or (ii) to actual or demonstrably anticipated
research or development of the Employer, or (2) the Invention results from any
work performed by the Executive for the Employer;
J. The Executive acknowledges and agrees that all customer
lists, supplier lists, and customer and supplier information, including, without
limitation, addresses and telephone numbers, are and shall remain the exclusive
property of the Employer, regardless of whether such information was developed,
purchased, acquired, or otherwise obtained by the Employer or the Executive. The
Executive agrees to furnish to the Employer on demand at any time during the
term of this Agreement, and upon termination of this Agreement, his complete
list of the correct names and places of business and telephone numbers of all of
its customers served by him, including all copies thereof wherever located. The
Executive further agrees to immediately notify the Employer of the name and
address of any new customer, and report all changes of a location of old
customers, so that upon the termination of this Agreement, the Employer will
have a complete list of the correct names and addresses of all of its customers
with which the Executive has had dealings. The Executive also agrees to furnish
to the Employer on demand at any time during the term of this Agreement, and
upon the termination of this Agreement, any other records, notes, computer
printouts, computer programs, computer software, price lists, microfilm, or any
other documents related to the Employer's business, including originals and
copies thereof; and
K. It is agreed that any breach or anticipated or
threatened breach of any of the Executive's covenants contained in this
Paragraph 9 will result in irreparable harm and continuing damages to the
Employer and its business and that the Employer's remedy at law for any such
breach or anticipated or threatened breach will be inadequate and, accordingly,
in addition to any and all other remedies that may be available to the Employer
at law or in equity in such event, any court of competent jurisdiction may issue
a decree of specific performance or issue a temporary and permanent injunction,
without the necessity of the Employer posting bond or furnishing other security
and without proving special damages or irreparable injury, enjoining and
restricting the breach, or threatened breach, of any such covenant, including,
but not limited to, any injunction restraining the Executive from disclosing, in
whole or part, any Confidential Information. In addition to, but not in lieu of,
the remedies contained herein, the Employer and the Executive agree that for
purposes of this Agreement, damages will be difficult to assess and, in
recognition thereof, the Executive shall pay and the Employer shall accept as
liquidated damages, and not as a penalty, the sum of $250,000. The Executive
acknowledges the truthfulness of all factual statements in this Agreement and
agrees that he is estopped from and
12
will not make any factual statement in any proceeding that is contrary to this
Agreement or any part thereof.
10. Notices. Any and all notices required in connection with this
Agreement shall be deemed adequately given only if in writing and (a) personally
delivered, or sent by first class, registered or certified mail, postage
prepaid, return receipt requested, or by recognized overnight courier, (b) sent
by facsimile, provided a hard copy is mailed on that date to the party for whom
such notices are intended, or (c) sent by other means at least as fast and
reliable as first class mail. A written notice shall be deemed to have been
given to the recipient party on the earlier of (a) the date it shall be
delivered to the address required by this Agreement; (b) the date delivery shall
have been refused at the address required by this Agreement; (c) with respect to
notices sent by mail or overnight courier, the date as of which the Postal
Service or overnight courier, as the case may be, shall have indicated such
notice to be undeliverable at the address required by this Agreement; or (d)
with respect to a facsimile, the date on which the facsimile is sent and receipt
of which is confirmed. Any and all notices referred to in this Agreement, or
which either party desires to give to the other, shall be addressed to his
residence in the case of the Executive, or to its principal office in the case
of the Employer.
11. Waiver of Breach. A waiver by the Employer of a breach of any
provision of this Agreement by the Executive shall not operate or be construed
as a waiver or estoppel of any subsequent breach by the Executive. No waiver
shall be valid unless in writing and signed by an authorized officer of the
Employer.
12. Assignment. The Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Employer under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Employer.
13. Entire Agreement. This Agreement sets forth the entire and
final agreement and understanding of the parties and contains all of the
agreements made between the parties with respect to the subject matter hereof.
This Agreement supersedes any and all other agreements, either oral or in
writing, between the parties hereto, with respect to the subject matter hereof
(including, but not limited to, the Prior Agreement). No change or modification
of this Agreement shall be valid unless in writing and signed by the Employer
and the Executive. If any provision of this Agreement shall be found invalid or
unenforceable for any reason, in whole or in part, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement, as the case may require, and this Agreement shall be
construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified, restricted, or
reformulated or as if such provision had not been originally incorporated
herein, as the case may be. The parties further agree to seek a lawful
substitute for any provision found to be unlawful; provided, that, if the
parties are unable to agree upon a lawful substitute, the parties desire and
request that a court or other authority called upon to decide the enforceability
of this Agreement modify those restrictions in this
13
Agreement that, once modified, will result in an agreement that is enforceable
to the maximum extent permitted by the law in existence at the time of the
requested enforcement.
14. Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
hereof.
15. Execution of Agreement. This Agreement may be executed in
several counterparts, each of which shall be considered an original, but which
when taken together, shall constitute one agreement.
16. Recitals. The recitals to this Agreement are incorporated
herein as an integral part hereof and shall be considered as substantive and not
precatory language.
17. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, without
reference to its conflict of law provisions. Any and all disputes arising under
this Agreement, other than a dispute arising under Paragraph 9, initially shall
be referred by the parties hereto to non-binding mediation for resolution. If
such mediation is unsuccessful in resolving the dispute (or in the context of
Paragraph 9 hereof), any court action commenced to enforce this Agreement shall
have as its sole and exclusive venue the County of Xxxx, Illinois.
IN WITNESS WHEREOF, the parties have set their signatures on the date
first written above.
EMPLOYER: EXECUTIVE:
SYSTEM SOFTWARE ASSOCIATES, XXXXXXX X. XXXXX
INC.,
/s/ Xxxxxxx X. Xxxxx
a Delaware corporation -----------------------
By: /s/ Xxxxxxxx X. Xxxxxxxxx
----------------------------------------
Its: Executive Vice President & C.F.O.
---------------------------------------
14
EXHIBIT A
---------
SYSTEM SOFTWARE ASSOCIATES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective this 16th day of October, 1998 between
System Software Associates, Inc., a Delaware corporation (the "COMPANY"), and
Xxxxxxx X. Xxxxx (the "OPTIONEE").
WHEREAS, the Company desires to grant to the Optionee an option to
purchase shares of its common capital stock (the "SHARES") under the Company's
Long-Term Incentive Plan (the "PLAN"); and
WHEREAS, the Company and the Optionee understand and agree that any
terms used herein have the same meanings as in the Plan (the Optionee being
referred to in the Plan as a "Participant").
NOW, THEREFORE, in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:
1. GRANT OF OPTION
The Company grants to the Optionee the right and Option to purchase all
or any part of an aggregate of 200,000 Shares (the "OPTION") on the
terms and conditions and subject to all the limitations set forth
herein and in the Plan, which is incorporated herein by reference. The
Optionee acknowledges receipt of a copy of the Plan and acknowledges
that the definitive records pertaining to the grant of this Option, and
exercises of rights hereunder, shall be retained by the Company. The
Option granted herein is intended to be a Nonstatutory Option as
defined in the Plan.
2. PURCHASE PRICE
The purchase price of the Shares subject to the Option shall be Four
Dollars ($4.00) per Share, the Fair Market Value of the Shares on
October 16, 1998.
3. EXERCISE OF OPTION
Subject to the Plan and this Agreement, the Option shall be
exerciseable as follows:
1
EXERCISE PERIOD
Commencement Expiration
Number of Shares Date Date
---------------- ------------ -----------
15,278 October 16, 1998 April 5, 2008
46,180 April 6, 1999 April 5, 2008
46,180 April 6, 2000 April 5, 2008
46,181 April 6, 2001 April 5, 2008
46,181 April 6, 2002 April 5, 2008
Notwithstanding anything in this Paragraph 3 to the contrary, the Shares subject
to the Option shall be exercisable, as described below, upon the following
events:
A. Upon a "CHANGE IN CONTROL," as such term is defined in Paragraph 7C(6)
of the Optionee's Amended and Restated Employment Agreement (the
"EMPLOYMENT AGREEMENT") with the Company made and entered into
effective as of the 16th day of October, 1998, all Shares not then
exercisable shall immediately become exerciseable and shall be
exercisable through April 5, 2008.
B. (i) Upon the first date that the closing sales price of the Common
Stock as reported on the NASDAQ National Market System shall have been
equal to or in excess of $15.00 per share, as adjusted for stock splits
or stock dividends, for any sixty (60) Trading Days (as defined below)
out of any consecutive ninety (90) calendar days during the period
beginning on April 6, 1998 and ending on January 4, 2002 (the "OPTION
ACCELERATION PERIOD"), 61,458 Shares in the aggregate shall be
exerciseable, whether or not they were previously exercisable in
accordance with the Exercise Period set forth above. Such adjustment to
the Exercise Period shall occur only upon the initial attainment of
such sixty-day share price during any ninety (90) consecutive calendar
day period. A "TRADING DAY" shall be defined as any day on which the
principal national securities exchange or market quotation system on
which the Common Stock is then listed or admitted for trading is open.
(ii) Upon the first date that the closing sales price of the Common
Stock as reported on the NASDAQ National Market System shall have been
equal to or in excess of $20.00 per share, as adjusted for stock splits
or stock dividends, for sixty (60) Trading Days out of any consecutive
ninety (90) calendar days during the Option Acceleration Period,
107,638 Shares in the aggregate shall be exerciseable, whether or not
they were previously exercisable in accordance with the Exercise Period
set forth above. Such adjustment to the Exercise Period shall occur
only
2
upon the initial attainment of such sixty-day share price during
any ninety (90) consecutive calendar day period.
(iii) Upon the first date that the closing sales price of the Common
Stock as reported on the NASDAQ National Market Systems shall have been
equal to or in excess of $25.00 per share, as adjusted for stock splits
or stock dividends, for sixty (60) Trading Days out of any consecutive
ninety (90) calendar days during the Option Acceleration Period, the
remaining Shares of the Option, if otherwise unexercisable at such
time, shall become exerciseable.
Except as set forth in subparagraph 3(a) above in the event of a Change
in Control, the Option shall expire on, and shall be exercised (if at
all) prior to the first to occur of:
A. April 5, 2008;
B. Ninety (90) days after the date on which the Optionee shall
cease, for any reason or cause whatsoever, and without regard
to such reason or cause (except as set forth in (c) and (d)
below) to be an employee of, or consultant to, the Company or
any affiliate or subsidiary thereof;
C. The date the Optionee's employment is terminated, if it is
terminated for "Cause" as that term is defined in the
Employment Agreement; or
D. Twelve months from the date the Optionee's employment is
terminated, if it is terminated pursuant to Paragraph 7A of
the Employment Agreement, in which case the Option, to the
extent it is otherwise exerciseable on the date the Optionee's
employment is terminated, may be exercised by the Optionee or
his legal representative or estate within such twelve month
period.
Upon expiration of the Option without it having been duly exercised,
the Option shall be and become null, void, and of no further effect.
3. EXERCISE OF OPTION AND ISSUANCE OF STOCK
The Option may be exercised in whole or in part (to the extent that it
is exerciseable in accordance with its terms) by giving written notice
(or any other approved form of notice) to the Company. Such written
notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being
exercised, shall contain the warranty, if any, required under the Plan
and shall specify a date (other than a Saturday, Sunday or legal
holiday) not less than five (5) nor more than ten (10) days after the
date of such written notice, as the date on which the Shares will be
purchased, at the principal office of the Company during ordinary
business hours, or at such other hour and place agreed upon by the
Company and the person or persons exercising the Option, and shall
otherwise comply with the terms and conditions of this Agreement and
the Plan. On the date specified in such written notice (which date may
be extended by the Company if any law or regulation requires the
Company to take any action with respect to the Shares
3
prior to the issuance thereof), the Company shall accept payment for
the Shares and shall deliver to the Optionee an appropriate certificate
or certificates for the Shares as to which the Option was exercised.
The Option price of any Shares shall be payable at the time of exercise
as determined by the Company in its sole discretion either:
A. in cash, by certified check or bank check, or by wire transfer; or
B. in whole shares of the Company's common stock, provided, however,
that if such shares were acquired pursuant to an incentive stock
option plan (as defined in Code Section 422) of the Company or
Affiliate, then the applicable holding period requirements of said
Section 422 have been met with respect to such shares, and, provided
further, that if the Optionee is subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934,
as amended from time to time, then, if (i) such shares were granted
pursuant to an option, then such option must have been granted at
least six (6) months prior to the exercise of the Option hereunder,
and (ii) such shares were purchased other than through the grant
and exercise of an option, such shares were owned by the Optionee
for more than six (6) months prior to the exercise of the Option
hereunder; or
C. in any combination of (a) or (b) above.
The fair market value of the stock to be applied toward the purchase
price shall be determined as of the date of exercise of the Option in a
manner consistent with the determination of fair market value with
respect to the grant of an Option under the Plan. Any certificate for
shares of outstanding stock of the Company used to pay the purchase
price shall be accompanied by a stock power duly endorsed in blank by
the registered holder of the certificate, with signature guaranteed in
the event the certificate shall also be accompanied by instructions
from the Optionee to the Company's transfer agent with respect to
disposition of the balance of the shares covered thereby.
The Company shall pay all original issue taxes with respect to the issuance
of Shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith. The holder of this
Option shall have the rights of a stockholder only with respect to
those Shares covered by the Option which have been registered in the
holder's name in the share register of the Company upon the due
exercise of the Option.
4. NON-ASSIGNABILITY
This Option shall not be transferable by the Optionee and shall be
exerciseable only by the Optionee, except as the Plan may otherwise
provide.
4
5. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by registered or certified mail, return receipt
requested, addressed as follows:
To the Company: System Software Associates, Inc.
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Long-Term Incentive Plan Award Committee
To the Optionee: Xxxxxxx X. Xxxxx
--------------------------
--------------------------
or to such other address or addresses of which notice in the same
manner has previously been given. Any such notice shall be deemed to
have been given when mailed in accordance with the foregoing
provisions.
6. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.
7. BINDING EFFECT
This Agreement shall (subject to the provisions of Section 5 hereof) be
binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed on their behalf, by their duly authorized
representatives, all on the day and year first above written.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Its: Executive Vice President & C.F.O.
-----------------------------------
OPTIONEE
/s/ Xxxxxxx X. Xxxxx
------------------------
Xxxxxxx X. Xxxxx
5
EXHIBIT B
---------
SYSTEM SOFTWARE ASSOCIATES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective this 16th day of October, 1998 between
System Software Associates, Inc., a Delaware corporation (the "COMPANY"), and
Xxxxxxx X. Xxxxx (the "OPTIONEE").
WHEREAS, in accordance with the terms of that certain Amended and
Restated Employment Agreement (the "EMPLOYMENT AGREEMENT") as executed by and
between the Company and the Optionee effective of even date herewith, the
Company desires to grant to the Optionee an option to purchase shares of its
common capital stock (the "Shares"); and
WHEREAS, the grant hereunder shall not be under the Company's Long-Term
Incentive Plan.
NOW, THEREFORE, in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:
1. GRANT OF OPTION
The Company grants to the Optionee the right and option to purchase all
or any part of an aggregate of 1,240,000 Shares (the "OPTION") on the
terms and conditions and subject to all the limitations set forth
herein. The Optionee acknowledges that the definitive records
pertaining to the grant of this Option, and exercises of rights
hereunder, shall be retained by the Company. The Option granted herein
is intended to be a nonstatutory option.
2. PURCHASE PRICE
The purchase price of the Shares subject to the Option shall be Four
Dollars ($4.00) per Share, the fair market value of the Shares on
October 16, 1998.
3. EXERCISE OF OPTION
Subject to this Agreement, the Option shall be exerciseable as follows:
1
EXERCISE PERIOD
Commencement Expiration
Number of Shares Date Date
------------------ ------------ -----------
94,722 October 16, 1998 April 5, 2008
286,319 April 6, 1999 April 5, 2008
286,319 April 6, 2000 April 5, 2008
286,320 April 6, 2001 April 5, 2008
286,320 April 6, 2002 April 5, 2008
Notwithstanding anything in this Paragraph 3 to the contrary, the
Shares subject to the Option shall be exercisable, as described below,
upon the following events:
A. Upon a "CHANGE IN CONTROL," as such term is defined in
Paragraph 7C(6) of the Employment Agreement, all Shares not
then exercisable shall immediately become exerciseable and
shall be exercisable through April 5, 2008.
B. (i) Upon the first date that the closing sales price of
the Common Stock as reported on the NASDAQ National Market
System shall have been equal to or in excess of $15.00 per
share, as adjusted for stock splits or stock dividends, for
any sixty (60) Trading Days (as defined below) out of any
consecutive ninety (90) calendar days during the period
beginning on April 6, 1998 and ending on January 4, 2002
(the "OPTION ACCELERATION PERIOD"), 381,041 Shares in the
aggregate shall be exerciseable, whether or not they were
previously exercisable in accordance with the Exercise Period
set forth above. Such adjustment to the Exercise Period
shall occur only upon the initial attainment of such
sixty-day share price during any ninety (90) consecutive
calendar day period. A "TRADING DAY" shall be defined
as any day on which the principal national securities
exchange or market quotation system on which the Common
Stock is then listed or admitted for trading is open.
(ii) Upon the first date that the closing sales price of
the Common Stock as reported on the NASDAQ National Market
System shall have been equal to or in excess of $20.00 per
share, as adjusted for stock splits or stock dividends, for
sixty (60) Trading Days out of any consecutive ninety (90)
calendar days during the Option Acceleration Period, 667,360
Shares in the aggregate shall be exerciseable, whether or
not they were previously exercisable in accordance with
the Exercise Period set forth above. Such adjustment to the
Exercise Period shall occur only upon the initial attainment
of such sixty-day share price during any ninety (90)
consecutive calendar day period.
2
(iii) Upon the first date that the closing sales price of
the Common Stock as reported on the NASDAQ National Market
Systems shall have been equal to or in excess of $25.00 per
share, as adjusted for stock splits or stock dividends, for
sixty (60) Trading Days out of any consecutive ninety (90)
calendar days during the Option Acceleration Period, the
remaining Shares of the Option, if otherwise unexercisable at
such time, shall become exerciseable.
Except as set forth in subparagraph 3(a) above in the event of a Change
in Control, the Option shall expire on, and shall be exercised (if at
all) prior to the first to occur of:
A. April 5, 2008;
B. Ninety (90) days after the date on which the Optionee shall
cease, for any reason or cause whatsoever, and without regard
to such reason or cause (except as set forth in (c) and (d)
below) to be an employee of, or consultant to, the Company or
any affiliate or subsidiary thereof;
C. The date the Optionee's employment is terminated, if it is
terminated for "Cause" as that term is defined in the
Employment Agreement; or
D. Twelve months from the date the Optionee's employment is
terminated, if it is terminated pursuant to Paragraph 7A of
the Employment Agreement, in which case the Option, to the
extent it is otherwise exerciseable on the date the Optionee's
employment is terminated, may be exercised by the Optionee or
his legal representative or estate within such twelve month
period.
Upon expiration of the Option without it having been duly exercised,
the Option shall be and become null, void, and of no further effect.
4. EXERCISE OF OPTION AND ISSUANCE OF STOCK
The Option may be exercised in whole or in part (to the extent that it
is exerciseable in accordance with its terms) by giving written notice
(or any other approved form of notice) to the Company. Such written
notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being
exercised, and shall specify a date (other than a Saturday, Sunday or
legal holiday) not less than five (5) nor more than ten (10) days after
the date of such written notice, as the date on which the Shares will
be purchased, at the principal office of the Company during ordinary
business hours, or at such other hour and place agreed upon by the
Company and the person or persons exercising the Option, and shall
otherwise comply with the terms and conditions of this Agreement. On
the date specified in such written notice (which date may be extended
by the Company if any law or regulation requires the Company to take
any action with respect to the Shares prior to the issuance thereof),
the Company shall accept payment for the Shares and shall deliver to
the Optionee an appropriate certificate or certificates for the Shares
as to which the Option was exercised.
3
The Option price of any Shares shall be payable at the time of exercise
as determined by the Company in its sole discretion either:
A. in cash, by certified check or bank check, or by wire
transfer; or
B. in whole shares of the Company's common stock, provided,
however, that if such shares were acquired pursuant to an
incentive stock option plan (as defined in Code Section
422) of the Company or Affiliate, then the applicable
holding period requirements of said Section 422 have been
met with respect to such shares, and, provided further,
that if the Optionee is subject to the reporting requirements
of Section 16 of the Securities Exchange Act of 1934, as
amended from time to time, then, if (i) such shares were
granted pursuant to an option, then such option must have
been granted at least six (6) months prior to the exercise
of the Option hereunder, and (ii) such shares were purchased
other than through the grant and exercise of an option,
such shares were owned by the Optionee for more than six
(6) months prior to the exercise of the Option hereunder; or
C. in any combination of (a) or (b) above.
The fair market value of the stock to be applied toward the purchase
price shall be determined as of the date of exercise of the Option. Any
certificate for shares of outstanding stock of the Company used to pay
the purchase price shall be accompanied by a stock power duly endorsed
in blank by the registered holder of the certificate, with signature
guaranteed in the event the certificate shall also be accompanied by
instructions from the Optionee to the Company's transfer agent with
respect to disposition of the balance of the shares covered thereby.
The Company shall pay all original issue taxes with respect to the
issuance of Shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith. The holder
of this Option shall have the rights of a stockholder only with respect
to those Shares covered by the Option which have been registered in the
holder's name in the share register of the Company upon the due
exercise of the Option.
5. REPRESENTATIONS AND COVENANTS OF THE OPTIONEE
In connection with the grant of the Option hereunder, the Optionee represents
and warrants to the Company that:
A. The Shares subject to the Option under this Agreement shall be
acquired for the Optionee's own account and not with a view
to, or present intention of, distribution in violation of the
Securities Act of 1933 (the "1933 ACT") or any applicable
state securities laws, and the Shares will not be disposed of
in contravention of the 1933 Act or any applicable state
securities laws.
B. The Optionee is sophisticated in financial matters and is able
to evaluate the risks and benefits of the Option and the
Shares.
4
C. The Optionee acknowledges that he is able to bear the economic
risk of the exercise of the Option for an indefinite period of
time, because the Shares have not been registered under the
1933 Act and, therefore, cannot be resold unless subsequently
registered under the 1933 Act or an exemption from such
registration is available.
D. The Optionee has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the
grant of the Option and has had full access to such
information concerning the Company as he has requested.
E. The Optionee has the full right, power and authority to
execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid
and legally binding obligations of the Optionee enforceable
against him in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or
affecting the enforcement of creditors' rights generally, now
or hereafter in effect and subject to the application of
equitable principles and the availability of equitable
remedies.
F. The Optionee is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body
which would prevent the execution or delivery of this
Agreement by him or the consummation of the transactions
contemplated hereby.
6. REGISTRATION
The Optionee understands that the Shares are not currently being
registered under the 1933 Act by reason of their contemplated issuance
in a transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act pursuant to Section 4(2) thereof. The
Optionee further agrees that he will not sell or otherwise dispose of
the Shares unless such sale or other disposition has been registered or
is exempt from registration under the 1933 Act and has been registered
or qualified or is exempt from registration or qualification under
applicable securities laws of any state. The Optionee understands that
a restrictive legend consistent with the foregoing, and as set forth in
Paragraph 8, will be placed on the certificates evidencing the Shares,
and related stop transfer instructions will be noted in the stock
transfer records of the Company and/or its stock transfer agent for the
Shares. The foregoing notwithstanding, the Company agrees that it will
use all reasonable efforts to cause a registration of the Shares
obtained by the Optionee through the exercise of all or any portion of
the Option to be declared effective within six (6) months after the
Optionee provides written notice requesting such registration to the
Board of Directors.
7. WITHHOLDING
The Company shall have the power and right to deduct or withhold, or
require the Optionee to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes required by law to be withheld
with respect to any grant made under or as a result of this Agreement.
In the alternative, upon any taxable event hereunder, the Optionee may
elect,
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subject to Company approval, to satisfy the withholding requirement in
whole or in part, by having the Company withhold Shares that would
otherwise be transferred to the Optionee having a fair market value, on
the date the tax is to be determined, equal to the minimum marginal tax
that could be imposed on the transaction. All elections shall be made
in writing and signed by the Optionee.
8. LEGEND
The Optionee shall be bound by the provisions of the following legend
(or similar legend) which shall be endorsed upon the certificate(s)
evidencing the Shares issued pursuant to the grant of the Option
hereunder.
"The shares represented by this certificate have been acquired
for investment and they may not be sold or otherwise
transferred by any person in the absence of an effective
registration statement for the shares under the Securities Act
of 1933 or an opinion of counsel satisfactory to the Company
that an exemption from registration is then available."
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event that the outstanding Shares of the Company are changed
into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization,
reclassification, change in par value, stock split-up, combination of
shares or dividends payable in capital stock, or the like, appropriate
adjustments to prevent dilution or enlargement of the Shares granted
to, or available for, the Optionee shall be made in the manner and kind
of Shares granted hereunder.
10. NON-ASSIGNABILITY
This Option shall not be transferable by the Optionee and shall be
exerciseable only by the Optionee, except as the Board of Directors may
otherwise provide.
11. NOTICES
Any notices required or permitted by the terms of this Agreement shall
be given by registered or certified mail, return receipt requested,
addressed as follows:
To the Company: System Software Associates, Inc.
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Board of Directors
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To the Optionee: Xxxxxxx X. Xxxxx
--------------------------
--------------------------
or to such other address or addresses of which notice in the same
manner has previously been given. Any such notice shall be deemed to
have been given when mailed in accordance with the foregoing
provisions.
12. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.
13. BINDING EFFECT
This Agreement shall (subject to the provisions of Section 10 hereof)
be binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed on their behalf, by their duly authorized
representatives, all on the day and year first above written.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-----------------------------------
Its: Executive Vice President & C.F.O.
---------------------------------
OPTIONEE
/s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx
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