EXHIBIT 10.50
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of the 13th day of September, 1999 (the "Effective Date") by and
between System Software Associates, Inc., a Delaware corporation (the
"Employer"), and Xxxxxx X. Xxxxxxxxx (the "Executive").
RECITALS
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A. The Employer desires that the Executive provide services for the benefit
of the Employer and its affiliates and the Executive desires to accept such
employment with the Employer.
B. The Employer and the Executive acknowledge that the Executive will be a
member of the senior management team of the Employer and, as such, will
participate in creating and implementing the Employer's business plan.
C. In the course of employment with the Employer, the Executive will have
access to certain confidential information that relates to or will relate to the
business of the Employer and its affiliates.
D. 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 employ the Executive beginning on the
Effective Date. On September 15, 1999, the Employee shall become the Chief
Executive Officer. In addition to the foregoing, the Employer covenants and
agrees that, as soon as reasonably practicable on or after September 15, 1999,
the Executive will be elected as a Director of the Employer and as Chairman of
the Board of Directors (the "Board"). The Executive hereby accepts such
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 of the Board, 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 consistent
with his position as Chairman of the Board and Chief Executive Officer. 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 (i) 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, or (ii) to manage his personal investments or financial affairs.
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, or to otherwise
manage his personal investments and financial affairs.
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 September 12, 2003.
5. Compensation.
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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. Guaranteed Bonus. The Employer shall pay the Executive the sum of
$600,000 within fifteen (15) business days of the execution of this Agreement.
If the Executive is terminated for "Cause," as defined in Paragraph 7C, or
terminates his employment for other than "Good Reason," as defined in Paragraph
7D, the Executive shall return to the Employer an amount equal to $320,000,
multiplied by a fraction, with the numerator being equal to six (6) less the
number of full calendar months that the Executive has been employed by the
Employer, and the denominator being equal to six (6).
C. Fiscal Year 2000 Bonus. For the fiscal year ending October 31,
2000, the Executive shall participate in a bonus program, which program shall
provide the Executive with
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an opportunity to achieve a targeted bonus of up to $1,000,000. The Executive
shall be entitled to receive fifty percent (50%) of the targeted bonus of
$1,000,000, or $500,000, if the Employer attains a positive Operating Income as
reflected in the Employer's audited financial statements for such fiscal year
(prepared in accordance with the current accounting practices of the Employer).
If the Operating Income of the Employer is at least $1.00 per share based on the
number of shares outstanding as of the date of this Agreement without giving
effect to the options granted hereunder (Operating Income equal to 12.5 million
dollars), the Executive shall receive an additional $500,000, so that, in the
aggregate, his fiscal year 2000 bonus shall be $1,000,000. If the Operating
Income of the Employer is greater than $0 and less than $1.00 per share, the
Executive shall receive a bonus of $5,000 for each $.01 per share (based on the
number of shares outstanding as of the date of this Agreement without giving
effect to the options granted hereunder) in Operating Income. Any bonus earned
hereunder shall be payable on or before December 31, 2000, or, if later, within
ten (10) days of the completion of the audited financial statements for fiscal
year 2000, but in no event later than January 15, 2001 based on the Employer's
year-end unaudited financial statements (if audited financial statements are
unavailable at that time). In the event the number of shares of the Employer's
common stock outstanding as of the date hereof is increased or decreased, the
formula in this Xxxxxxxxx 0X xxxxx xx adjusted proportionately.
D. Incentive Bonus. For all fiscal years subsequent to the fiscal
year ending October 31, 2000, 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 shall be payable no later than sixty
(60) days following the end of the Employer's fiscal year in which the bonus is
earned.
E. Stock Options. Effective on the date hereof, the Employer shall
grant the Executive an option to purchase one million (1,000,000) shares of the
common stock of the Employer. Fifty thousand (50,000) 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. Nine hundred fifty thousand
(950,000) of such shares shall be granted in accordance with and pursuant to the
terms of the Option Agreements attached hereto as Exhibits B and C.
F. 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, upon
satisfaction of any applicable physical examination, with a death
benefit of $3,000,000 and with the beneficiar(ies) to be designated by
the Executive), disability insurance (including,
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but not limited to, a supplemental individual disability policy with
monthly disability payments of $10,000 per month), medical, dental or
health insurance, vacation of twenty-five (25) days per year, 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:
A. At the end of the term of this Agreement.
B. 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 is absent from his duties with the Employer on a full-time basis
for one-hundred eighty (180) consecutive calendar days, due to mental or
physical illness. 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.
C. 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 willfully refused to, or willfully failed to,
perform his material duties hereunder, provided, however, that no
termination under this
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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, 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.
D. 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 within five (5) business days after receipt
of notice thereof from the Executive, or as soon thereafter as may be
commercially practicable;
(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;
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(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;
(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 directors constituting a majority of the
number of directors of the Employer then in office;
(7) the entry against the Employer of any material, adverse
finding or judgment (either from a financial reputation or other
business perspective), in connection with any lawsuit, arbitration,
regulatory action or investigation by any governmental agency or body
based on any alleged act, omission, cause or thing occurring prior to
the date of this Agreement;
(8) the failure of the Employer to register Shares to be issued
under Section 6 of Exhibits B and C within six (6) months after this
Agreement is executed; or
(9) the failure by the Employer to make provision for, or to
timely pay or deposit, any federal, state or local employment or other
taxes.
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 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. In the event of a termination by
the Executive for Good Reason following a Change in Control, the Executive shall
provide the Employer with written notice within six (6) months of such Change in
Control that he has decided to terminate his employment. 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).
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E. On the date the Executive terminates his employment for any
reason, other than for the reason set forth in Paragraph 7D, provided that the
Executive shall give the Employer ninety (90) days written notice prior to such
date of his intention to terminate this Agreement.
F. On the date the Employer terminates the Executive's employment for
any reason, other than a reason set forth in Paragraph 7C, 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, 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 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
7D or 7F, 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 present value of his current base salary (as set
forth in Paragraph 5A) for a period of twenty-four (24) months, payable in a
single lump sum within thirty (30) calendar days of such termination (based upon
a five percent (5%) discount rate), provided 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 (other than for
compensation or indemnification provided under this Agreement). 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.
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
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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 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;
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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, and that, but for his association with the Employer, the
Executive will not have had access to said Confidential Information. 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 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;
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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 six (6) months 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, solicit, 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, provided,
however, the Executive may hire employees of the Employer who initiated contact
with the Executive and have announced their intent to terminate their employment
with the Employer;
E. 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;
F. 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;
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G. 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 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;
H. 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
I. 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
11
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. The Executive acknowledges the truthfulness of all
factual statements in this Agreement and agrees that he is estopped from and
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. 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
12
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 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. Fees. The Employer agrees to reimburse the Executive for any
reasonable attorneys' fees or other expenses incurred by the Executive in
connection with the negotiation, preparation and review of this Agreement.
18. Indemnification. To the fullest extent permitted by law, the Employer
agrees to indemnify the Executive against, and to hold the Executive harmless
from any and all claims, lawsuits, losses, damages, assessments, penalties,
expenses, costs and liabilities of any kind or nature, including without
limitation, court costs and attorneys' fees, which the Executive may sustain
directly as a result of, or in connection with, the Employer's breach or
violation of any provision of this Agreement or any other act or omission by
Employer or its employees or any suit or other proceeding brought by a third
party (including but not limited to governmental or regulatory agencies or
bodies) in connection with the foregoing or in connection with any act or
omission of the Executive while he was employed or serves as an officer or
director of the Employer or any affiliate thereof, unless such claim, lawsuit,
loss, damage, assessment, penalty, expense, cost or liability is the result of
the Executive's gross negligence or willful misconduct.
13
19. 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,
INC.,
a Delaware corporation
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
Its: Director/Assistant Secretary
14
EXHIBIT A
---------
SYSTEM SOFTWARE ASSOCIATES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective this 13th day of September, 1999 between
System Software Associates, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxxxxx (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 50,000 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 at the close
of business on September 13, 1999.
3. EXERCISE OF OPTION
Subject to the Plan and this Agreement, the Option shall be exerciseable in
its entirety effective immediately. The Option shall expire on, and shall
be exercised (if at all) prior to the first to occur of:
(a) September 12, 2009;
(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 Optionee's Employment
Agreement (the "Employment Agreement") with the Company made and
entered into effective as of the 13th day of September, 1999; or
(d) Twelve months from the date the Optionee's employment is terminated,
if it is terminated pursuant to Paragraph 7B 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, 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 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,
2
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.
5. 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.
6. 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: Xxxxxx X. Xxxxxxxxx
c/o System Software Associates, Inc.
000 X. Xxxxxxx Xx.
Xxxxxxx, XX 00000
3
With a copy to: Xxxxx X. Xxxxxxx
Xxxxxxx and Xxxxxx
000 X. Xxxxxx Xx.
Xxxxxxx, XX 00000
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.
7. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the laws
of the State of Illinois.
8. 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/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------
Its: Director/Assistant Secretary
----------------------------
OPTIONEE
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxxx
4
EXHIBIT B
---------
SYSTEM SOFTWARE ASSOCIATES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective this 13th day of September, 1999 between
System Software Associates, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxxxxx (the "Optionee").
WHEREAS, in accordance with the terms of that certain 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 750,000 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 at the close
of business on September 13, 1999.
3. EXERCISE OF OPTION
Subject to this Agreement, the Option shall be exerciseable as follows:
EXERCISE PERIOD
Vesting Expiration
Number of Shares Date Date
---------------- ------------------ ------------------
150,000 September 13, 1999 September 12, 2009
150,000 September 13, 2000 September 12, 2009
150,000 September 13, 2001 September 12, 2009
150,000 September 13, 2002 September 12, 2009
150,000 September 13, 2003 September 12, 2009
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 (if such events occur sooner than the dates set forth
above):
(a) Upon a "Change in Control," as such term is defined in Paragraph 7D(6)
of the Employment Agreement, all Shares not then exercisable shall
immediately become exerciseable and shall be exercisable in accordance
with the terms of the Plan.
(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 $7.00 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 September 13, 1999 and ending on September 12, 2003 (the
"Option Acceleration Period"), 300,000 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 $15.00 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, 450,000 Shares in the aggregate shall be exerciseable, whether
or not they were previously exercisable in accordance with the
Exercise
2
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.
(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 $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, 600,000 Shares in the aggregate shall be exercisable, 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.
(iv) 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, any Option, to the extent not yet vested in accordance with the
Exercise Period set forth above, shall expire on the date the Optionee's
employment is terminated. Any Option that is vested in accordance with the
Exercise Period set forth above shall expire on, and shall be exercised (if
at all) prior to the first to occur of:
(a) September 12, 2009;
(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 7B 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
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.
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
4
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.
(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
5
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 two (2) months after the date of this Agreement.
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,
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.
6
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
To the Optionee: Xxxxxx X. Xxxxxxxxx
c/o System Software Associates, Inc.
000 X. Xxxxxxx Xx.
Xxxxxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxxx
Xxxxxxx and Xxxxxx
000 X. Xxxxxx Xx.
Xxxxxxx, XX 00000
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.
7
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/ Xxxxxxx X. Xxxxxx, Xx.
------------------------------------
Its: Director/Assistant Secretary
-----------------------------------
OPTIONEE
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxxx
8
EXHIBIT C
---------
SYSTEM SOFTWARE ASSOCIATES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective this 13th day of September, 1999 between
System Software Associates, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxxxxxx (the "Optionee").
WHEREAS, in accordance with the terms of that certain 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 200,000 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 Ten Dollars
($10.00) per Share.
3. EXERCISE OF OPTION
Subject to this Agreement, the Option shall be exerciseable as follows:
EXERCISE PERIOD
Vesting Expiration
Number of Shares Date Date
---------------- ------------------ ------------------
200,000 September 13, 2003 September 12, 2009
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 7D(6)
of the Employment Agreement, all Shares not then exercisable shall
immediately become exerciseable and shall be exercisable in accordance
with the terms of the Plan.
(b) 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 $40.00 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 September 13, 1999 and ending on September 12, 2003 (the
"Option Acceleration Period"), all Shares subject to the option 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.
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) September 12, 2009;
(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 7B 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)
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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.
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.
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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.
(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
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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 two (2) months after the date of this Agreement.
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,
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.
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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
To the Optionee: Xxxxxx X. Xxxxxxxxx
c/o System Software Associates, Inc.
000 X. Xxxxxxx Xx.
Xxxxxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxxx
Xxxxxxx and Xxxxxx
000 X. Xxxxxx Xx.
Xxxxxxx, XX 00000
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.
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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/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------------
Its: Director/Assistant Secretary
-------------------------------
OPTIONEE
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxxx
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