<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SYSTEM SOFTWARE ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3144515
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
500 WEST MADISON STREET, 32ND FLOOR
CHICAGO, ILLINOIS 60661
(312) 641-2900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MR. JOSEPH J. SKADRA
CHIEF FINANCIAL OFFICER
SYSTEM SOFTWARE ASSOCIATES, INC.
500 WEST MADISON STREET, 32ND FLOOR
CHICAGO, ILLINOIS 60661
(312) 641-2900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WILLIAM E. DORAN, ESQ.
SACHNOFF & WEAVER, LTD.
30 SOUTH WACKER DRIVE, 29TH FLOOR
CHICAGO, ILLINOIS 60606
(312) 207-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filer pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.0033 par
value(3).............. 775,000 $10.1167 $7,840,442.50 $2,587.35
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</TABLE>
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(1) In accordance with Rule 416 under the Securities Act of 1933, Common Stock
offered hereby shall also be deemed to cover additional securities to be
offered or issued to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(g), based on the exercise price per
share of warrants pursuant to which such shares may be issued by the
Registrant.
(3) Includes certain stock purchase rights issued pursuant to a Rights
Agreement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 16, 1997
775,000 SHARES
SYSTEM SOFTWARE ASSOCIATES, INC.
COMMON STOCK
$.0033 PAR VALUE
All of the shares of the Common Stock, par value $0.0033 per share (the
"Common Stock"), of System Software Associates, Inc., a Delaware corporation
("SSA" or the "Company"), offered hereby (the "Shares") are issuable by the
Company upon the exercise of warrants (collectively, the "Warrants") to
purchase Common Stock. All of the Shares are being offered by the
Warrantholders who are named herein under "Selling Stockholders" or by
pledgees, donees, transferees or other successors in interest and permitted
assigns of such selling stockholders (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of the Shares, however, the
Company could receive up to $7,840,442.50 upon exercise of the Warrants, which
will be used for working capital and other general corporate purposes.
The Company has not made any underwriting arrangements with respect to the
Shares. SSA's Common Stock is quoted on the Nasdaq National Market under the
symbol SSAX. On June 13, 1997, the last sale price reported was $7.81.
This Prospectus is to be used in connection with the sale of the Shares from
time to time by the Selling Stockholders. The Shares may be sold from time to
time by the Selling Stockholders, directly or through underwriters, dealers or
agents, in market transactions, including block trades or ordinary brokers
transactions or in privately-negotiated transactions. The price at which any of
the Shares may be sold, and the commissions, if any, paid in connection with
any sale, may be privately negotiated, may be based on then prevailing market
prices and may vary from transaction to transaction and as a result are not
currently known. This Prospectus may be used by the Selling Stockholders or by
any broker-dealer who may participate in sales of securities covered hereby.
See "Plan of Distribution and Offering Price."
The Company will pay certain of the legal and other expenses of this offering
(not to exceed $30,000), except that the Selling Stockholders will bear the
cost of any brokerage commissions or discounts incurred in connection with the
sale of their Shares. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities arising under
the Securities Act. See "Plan of Distribution and Offering Price."
-----------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
(SEE "RISK FACTORS" BEGINNING ON PAGE 2.)
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1997.
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained, or incorporated by
reference, in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company or the Selling Stockholders. This Prospectus does not constitute an
offer to sell or the solicitation of any offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that the information herein is correct as of any time subsequent
to the date hereof or that there has been no change in the affairs of the
Company since such date.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be carefully considered in evaluating the Company and its
business before purchasing the Shares offered hereby:
NET LOSSES; UNCERTAINTY OF FUTURE RESULTS
Although the Company had an operating profit for the quarter ended April
30, 1997, the Company has experienced operating and net losses in 1996 and in
its six months ended April 30, 1997. There can be no assurance that the
Company will not continue to incur operating and net losses. The Company's
future operating results will depend upon a number of business factors,
including other factors discussed in these "Risk Factors," as well as general
economic conditions. Furthermore, prior to a given year or other fiscal
period, the Company hires sales and product development personnel and makes
other decisions which will result in increased expenses in such year or other
period, based upon anticipated revenues for such year or other period. Due to
the seasonality and concentration of the Company's revenues at the end of
fiscal periods, particularly the fourth quarter, and the Company's cost
structure, if revenue targets are not met, any or all of the Company's
operating results, financial position and liquidity and capital resources
would be materially adversely affected. See "--Variability of Quarterly
Operating Results; Seasonality." The Company has already made many of its
hiring and other decisions with respect to expenditures for 1997.
The Company recently raised $12 million through the issuance of a
convertible subordinated promissory note to a private investor to meet
anticipated cash requirements in the near term. Management believes that, with
an anticipated return to profitability within the current fiscal year, cash
generated from operations combined with current working capital will provide
sufficient liquidity to meet the Company's ordinary capital requirements
through the end of the 1997 fiscal year. However, there can be no assurance
that the Company's actual financial results will be as expected and the
failure to meet such financial expectations (and its resulting impact on the
Company's capital resources) could have a material adverse effect on the
Company's financial position, business and operations.
At April 30, 1997, $46 million was outstanding under the Company's multi-
bank line of credit and $25.8 million was outstanding on the Company's Senior
Notes. The maturity date of the multi-bank line of credit and the Senior Notes
is November 1, 1997. The Company is presently exploring the possibility of a
public or private sale of additional debt or equity securities to refinance
existing debt and provide needed working capital to fund an accelerated growth
strategy for the Company's new version of its client/server software product.
However, there can be no assurance that the Company will be able to raise
sufficient funds to refinance its existing indebtedness by its stated maturity
date or negotiate acceptable extensions of such maturities. The failure to do
so will have a material adverse effect on the Company's business, operations
and financial position.
VARIABILITY OF QUARTERLY OPERATING RESULTS; SEASONALITY
The Company's net revenues and operating results can vary, sometimes
substantially, from quarter to quarter. The Company's revenues in general, and
in particular its license fee revenues, are relatively difficult to forecast
due to a number of reasons, including (i) the relatively long sales cycles for
the Company's products, (ii) the size and timing of individual license
transactions, (iii) the timing of the introduction of new product
2
<PAGE>
functionality by the Company or its competitors, (iv) the potential for delay
or deferral of customer purchases of the Company's software, (v) changes in
customer budgets and (vi) seasonality of technology purchases and other
general economic conditions. In recent years, the Company has realized an
increasingly high portion of total net revenues from individually large
licenses which contributes to greater quarterly variability.
The Company has experienced a seasonal pattern in its operating results,
with the fourth quarter typically having the highest total revenues and
operating income. The Company believes that fourth fiscal quarter revenues are
positively impacted by the Company's sales compensation plans. This factor,
which the Company believes is common in the computer software industry,
typically results in first quarter revenues in any year being lower than
revenues in the immediately preceding fourth quarter. In addition, the
Company's European operations generally provide lower revenues in the summer
months as a result of the generally reduced economic activity in Europe at
such time. This seasonal factor could adversely affect third quarter revenues.
The Company's business planning and control software product (BPCS)
generally is shipped as software licenses are finalized. As a result, license
fee revenues in any quarter are substantially dependent on software license
agreements finalized in that quarter. Because a high percentage of the
Company's expenses are relatively fixed, a delay in the recognition of revenue
from a limited number of license transactions could cause significant
variations in operating results from quarter to quarter and could result in
losses and an adverse effect on the Company's liquidity and financial
position.
COMPETITION
The enterprise resource planning ("ERP") application software market is
highly competitive, is changing rapidly, and is significantly affected by new
product introductions and other market activities of industry participants.
The Company's BPCS product is targeted at the market for open systems,
client/server ERP software solutions, and the IBM AS/400 ERP market. The
Company's current and prospective competitors offer a variety of products and
solutions to address these markets. The Company's primary competition comes
from a large number of independent software vendors and other sources
including (i) companies offering products that run on AS/400 and other mid-
range computers including J.D. Edwards, and (ii) companies offering products
that run on Unix-based systems in a client/server environment such as Oracle
Corporation (Oracle), Baan Company N.V. (Baan) and SAP AG. In addition, the
Company faces indirect competition from suppliers of custom-developed business
application software that have focused mainly on proprietary mainframe- and
minicomputer-based systems with highly customized software, such as the
systems consulting groups of major accounting firms and systems integrators.
The Company also faces indirect competition from "home-grown" systems
developed by the internal MIS departments of large organizations.
Some of the Company's competitors have longer operating histories, greater
financial, technical, marketing and other resources than the Company, greater
name recognition, and a larger installed base of customers in the Unix-based,
client/server ERP market. Further, because the Company's product runs on
relational database management systems (RDBMS) and Oracle has the largest
market share for RDBMS software, Oracle may have a competitive advantage in
selling its application products to its RDBMS customer base. The Company may
also face market resistance from its large installed base of legacy systems
because of the reluctance of these customers to commit the time and effort
necessary to convert to an open systems-based client/server software solution.
Furthermore, as the client/server computing market develops, companies with
significantly greater resources than the Company could attempt to increase
their presence in the ERP market by acquiring or forming strategic alliances
with competitors of the Company.
3
<PAGE>
In the market for client/server ERP systems, the Company and its customers
rely on a number of systems consulting and systems integration firms for
implementation and other customer support services, as well as recommendations
of the Company's product during the evaluation stage of the purchase process.
Although the Company seeks to maintain close relationships with these third
party implementation providers, many of these third parties have similar, and
usually more established, relationships with the Company's principal
competitors. If the Company is unable to develop and retain effective, long-
term relationships with a sufficient number of these third parties, it would
adversely affect the Company's competitive position. Further, there can be no
assurance that these third parties, some of which have significantly greater
financial, technical and marketing resources than the Company, will not market
software product in competition with the Company in the future or will not
otherwise reduce or discontinue their relationships with or support of the
Company and its product.
The Company believes that its future strength will depend in part on its
ability to expand sales of BPCS Client/Server. Many of the Company's
competitors currently offer applications products for client/server systems.
There can be no assurance that the Company will be able to compete
successfully with existing or new competitors or that competition will not
have a material adverse effect on the Company's business.
RAPID TECHNOLOGICAL CHANGE
The market for the Company's software product is characterized by rapid
technological advances, evolving industry standards in computer hardware and
software technology, changes in customer requirements and preferences, and
frequent new introductions and enhancements. The Company's future success will
depend upon its ability to continue to enhance its current product and to
develop and introduce new product functionality that keeps pace with
technological developments, satisfies increasingly sophisticated customer
requirements and achieves market acceptance. In particular, the Company must
continue to anticipate and respond adequately to advances in RDBMS software
and desktop computer operating systems such as Windows. There can be no
assurance that the Company will be successful in developing and marketing, on
a timely and cost-effective basis, fully functional product enhancements or
new product functionality that respond to technological advances by others, or
that its new product functionality will achieve market acceptance.
As a result of the complexities inherent in both the RDBMS and client/server
environments and the broad functionality and performance demanded by customers
for ERP products, major new product enhancements and new product functionality
can require long development and testing periods to achieve market acceptance.
In addition, software programs as complex as those offered by the Company may
contain undetected errors or "bugs" when first introduced or as new versions
are released that, despite rigorous testing by the Company, are discovered
only after product has been installed and used by customers. The Company has
on occasion experienced delays in the scheduled introduction of new and
enhanced product functionality. There can be no assurance that errors will not
be found in future releases of the Company's software, or that any such errors
will not impair the market acceptance of the product and adversely affect
operating results. Problems encountered by customers installing and
implementing new releases or with performance of the Company's product can be
expected to occur, given the inherent complexities of its client/server based
product. To the extent that the customer, its third party integrator and/or
the Company are unable to adequately resolve such issues, it could have a
material adverse effect on the Company's business, operating results and
financial position. In April 1996, the Company first introduced (Version 6.0)
of its Business Planning and Control System applications product line. Due to
SSA's relatively limited experience with fully implemented operations
installations of Version 6.0 at customer sites, and due to the inherent
complexities of the client/server based product, there can be no assurance
that releases of Version 6.0 will not require software modifications to
satisfy performance requirements of customers or to fix previously undetected
errors. If customers were to experience significant problems with the
implementation and installation of this release or are dissatisfied with
product functionality or performance, the Company's business, financial
condition and results of operations could be materially adversely affected.
4
<PAGE>
DEPENDENCE ON AS/400 USERS
At the same time that the Company has developed new versions of its BPCS
product for the open systems marketplace, the Company remains a leading
supplier of ERP applications for IBM AS/400 installations in the industrial
sector. In fiscal 1996, over 75% of the Company's software license fee revenue
was derived from the AS/400 market. Therefore, even as the Company continues
to innovate and market versions of BPCS for the open systems environment, a
substantial portion of the Company's future revenues will be derived from and
dependent upon the continued widespread use of the AS/400 and the continued
support of the AS/400 by IBM. While the Company believes that customers will
continue to use and IBM will continue to support the AS/400 there can be no
assurance of such continued use and/or support. The Company will be required
and intends to continue to devote substantial resources to supporting its
installed base of AS/400 customers and the version of BPCS used by them. In
order to retain its AS/400 customers, the Company may be required to adapt its
BPCS product to any changes made in the AS/400 operating system in the future.
The Company's inability to adapt to future changes in the AS/400 operating
system, or delays in doing so, could have a material adverse effect on the
Company's business, operating results and financial condition.
ENTRY INTO UNIX MARKET; HIGHLY COMPLEX SALES ENVIRONMENT
The Company has only recently developed and begun to market BPCS
Client/Server for Unix operating environments. The market for open systems
based applications differs in many respects from the market for AS/400 based
applications which historically had been the Company's exclusive focus. Among
other things, the Unix market is characterized by numerous database vendors,
hardware vendors, systems integrators and consultants, all of whom can
influence the purchase of enterprise applications such as those marketed by
the Company. There can be no assurance that the Company's sales and marketing
efforts will be successful in this highly complex sales environment. The
Company's inability to implement successful sales and marketing efforts in the
Unix market could have a material adverse effect on the Company's business,
operating results and financial condition.
LAWSUITS
In January 1997, class action lawsuits were filed in state court in Illinois
and in the federal court in Chicago, Illinois against the Company and certain
of its officers. The federal actions allege damages to persons who purchased
the Company's Common Stock during the period August 22, 1994 through January
7, 1997 arising from alleged violations of the federal securities laws and
associated common laws. The state court action alleges damages to persons who
purchased the Company's Common Stock during the period November 21, 1994
through January 7, 1997 arising from alleged violations of the Illinois
securities laws and associated statutory and common law. The lawsuits name the
Company and several of its officers and directors as defendants, and allege
violations of securities laws, fraud and negligence in connection with the
restatement of the Company's financial statements for the fiscal years ended
1994 and 1995. The complaints do not specify the amounts of damages sought.
Although the outcome of these proceedings cannot be determined with
certainty, the Company intends to defend the actions vigorously, and, in
consultation with its legal counsel, believes that the allegations are without
merit and that the final outcomes should not have a material adverse effect on
the Company's operations or financial position.
INTERNATIONAL OPERATIONS
The Company currently operates in 50 countries. The Company's operations are
subject to risks inherent in international business activities, including, in
particular, general economic conditions in each country, overlap of different
tax structures, management of an organization spread over various countries,
exposure to currency fluctuations, unexpected changes in regulatory
requirements, compliance with a variety of foreign laws and regulations, and
longer accounts receivables payment cycles in certain countries. Other risks
associated with international operations include import and export licensing
requirements, trade restrictions and changes in tariff rates.
5
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RELIANCE ON CERTAIN RELATIONSHIPS
In the Unix-based marketplace, the Company relies on a number of consulting
and systems integration firms to enhance its marketing, sales and customer
support efforts, particularly with respect to implementation and support of its
product as well as lead generation and assistance in the sales process. As the
Company continues to implement its strategy of focusing on the licensing of its
product in the Unix-based marketplace, the Company will become increasingly
dependent upon third party implementation providers for product implementation,
end user training and sales support. Although the Company seeks to maintain
close relationships with these firms, many such firms have similar, and usually
more established, relationships with the Company's principal competitors. There
can be no assurance that these third party service firms will provide the level
and quality of service required to meet the needs of the Company's end users,
nor can there be any assurance that such service firms will recommend the
Company's product to their clients when assisting their clients in product
selection decisions.
ABILITY TO ENFORCE THE COMPANY'S INTELLECTUAL PROPERTY RIGHTS
The Company relies on a combination of the protections provided under
applicable copyright and trade secret laws, as well as on confidentiality
procedures and licensing arrangements, to establish and protect its rights in
its software. Despite the Company's efforts, it may be possible for
unauthorized third parties to copy certain portions of the Company's product or
to reverse engineer or obtain and use information that the Company regards as
proprietary. In addition, the laws of certain countries do not protect the
Company's proprietary rights to the same extent as do the laws of the United
States. Accordingly, there can be no assurance that the Company will be able to
protect its proprietary software against unauthorized third party copying or
use, which could adversely affect the Company's competitive position.
CONTROL BY EXISTING STOCKHOLDER
Roger E. Covey, Chairman and Chief Executive Officer of the Company,
currently beneficially owns approximately 31.3% of the Company's outstanding
Common Stock. Accordingly, Mr. Covey may have the effective power to influence
significantly the outcome of matters submitted for stockholder action,
including the election of members of the Company's Board and the approval of
significant change in control transactions, and may be deemed to have control
over the management and affairs of the Company. This significant equity
interest in the Company may have the effect of making certain transactions more
difficult absent the support of Mr. Covey and may have the effect of delaying
or preventing a change in control of the Company.
VOLATILITY OF STOCK PRICE
The market prices for securities of technology companies have been volatile.
Announcements of technological innovations by the Company or its competitors,
developments concerning proprietary rights and economic or other external
factors may have a significant impact on the Company's business and on the
market price of the Common Stock. Fluctuations in financial performance from
period to period also may have a significant impact on the market price of the
Common Stock.
ANTI-TAKEOVER CONSIDERATIONS
The Company is subject to Section 203 of the Delaware General Corporation Law
which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in any of a broad range of business combinations with an "interested
stockholder" for a period of three years following the date that such
stockholder became an interested stockholder. The Company has also adopted a
stockholders rights plan, which can have a significant anti-takeover effect by
inhibiting a potential offeror, the value of whose acquired shares would be
substantially diluted by the operation of the plan. A change of control, as
defined in the Company's principal credit facilities, constitutes an event of
default in such credit facilities. These provisions could serve to impede or
prevent a change of control or have a depressive effect on the price of the
Company's equity securities.
6
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AVAILABLE INFORMATION
SSA is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and copies of such material may be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates. Copies of reports, proxy and information statements
and other information are available on the Commission's Web site at
http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Shares offered hereby. In accordance with the rules and regulations of the
Commission, this Prospectus omits certain of the information contained in the
Registration Statement. Reference is hereby made to the Registration Statement
and related exhibits for further information with respect to the Company and
the Company's Common Stock. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement, including the exhibits and schedules thereto, is also available on
the Commission's Web site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The Company incorporates herein by reference the following documents it has
previously filed with the Commission (File No. 0-15322) pursuant to the
Exchange Act:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1996, as amended;
(b) the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 31, 1997;
(c) the Company's Proxy Statement for the Annual Meeting of Stockholders
held on May 28, 1997;
(d) the Company's Current Report on Form 8-K filed April 30, 1997;
(e) the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended April 30, 1997;
(f) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, declared effective February
12, 1987; and
(g) the description of the Company's Common Stock Purchase Rights
contained in the Company's Registration Statement on Form 8-A, filed May
18, 1988.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Shares shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
7
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The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of such person, a copy of any or all the documents incorporated
herein by reference, other than exhibits to such documents unless such exhibits
are specifically incorporated by reference in such documents, and any other
documents specifically identified herein as incorporated by reference into the
Registration Statement to which this Prospectus relates or into such other
documents. Requests should be addressed to: Investor Relations Department,
System Software Associates, Inc., 500 West Madison Street, 32nd Floor, Chicago
IL 60661, Telephone: (312) 641-2900.
THE COMPANY
SSA is a leading provider of cost-effective business enterprise information
systems to the industrial sector worldwide. SSA's BPCS (Business Planning and
Control System) product provides business process reengineering and integration
of an enterprises' operations, including multi-mode manufacturing processes,
supply chain management and global financial solutions. The BPCS Client/Server
solution delivers scaleability, interoperability and reconfigurability in its
comprehensive product suite to meet changing market demands. The distributed
object computing architecture of BPCS Client/Server provides the benefits of
next generation technology in conformity with industry standards. The Company
markets, sells and services its product to intermediate and large size
enterprises through its own worldwide sales organization and a worldwide
network of approximately 90 independent software companies and major systems
integrators.
The Company's executive offices are located at 500 West Madison Street, 32nd
Floor, Chicago, IL 60661. The Company's telephone number is (312) 641-2900.
SELLING STOCKHOLDER
On March 4, 1997, the Company issued Warrants to the Selling Stockholders
named below exercisable for an aggregate of 775,000 Shares of Common Stock. As
of the date hereof all of the Shares obtainable upon exercise of the Warrants
are being offered by the Selling Stockholders by means of this Prospectus. The
percentage of outstanding shares of the Company's Common Stock held by each
Selling Stockholder prior to and after the offering to which this Prospectus
relates represents less than one percent (1%) of the outstanding shares of the
Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF
BENEFICIALLY MAXIMUM SHARES
OWNED PRIOR NUMBER OF BENEFICIALLY
TO SHARES OWNED AFTER
SELLING STOCKHOLDER OFFERING(1) OFFERED(1) OFFERING
------------------- ------------ ---------- ------------
<S> <C> <C> <C>
Bank of America Illinois............ 250,000 250,000 0
American National Bank and Trust
Company of Chicago................. 250,000 250,000 0
Massachusetts Mutual Life Insurance
Company............................ 89,904 89,904 0
Principal Mutual Life Insurance
Company............................ 185,096 185,096 0
</TABLE>
- --------
(1) The shares to be sold shall include, in addition to the numbers indicated,
any additional shares of Common Stock of SSA that become issuable in
connection with the Shares by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration that results in an increase in the number of outstanding
shares of the Company's Common Stock.
PLAN OF DISTRIBUTION AND OFFERING PRICE
The Shares may be sold from time to time by the Selling Stockholders, or by
their respective pledgees, donees, transferees or other successors in interest.
Such sales may be made on one or more exchanges or in the
8
<PAGE>
over-the-counter market, or otherwise at prices and at terms then prevailing or
at prices related to the then current market price or in negotiated
transactions. The Shares may be sold by any one or more of the following: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may purchase and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) an exchange distribution in accordance with the rules of such
exchange; and (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers. In effecting sales, brokers or dealers engaged by
the Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers and dealers will receive commissions or discounts from the
Selling Stockholders in amounts to be negotiated prior to the sale. The Selling
Stockholders and any brokers or dealers participating in the distribution of
the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales, and any commissions received by
such broker-dealers and any profits realized on the resale of Shares by them
may be deemed to be underwriting discounts and commissions under the Securities
Act. The Selling Stockholders may agree to indemnify such broker-dealers with
respect to the Shares offered hereby against certain liabilities, including
certain liabilities under the Securities Act. In addition, the Company has
agreed to indemnify the Selling Stockholders with respect to the Shares offered
hereby against certain liabilities, including certain liabilities under the
Securities Act or, if such indemnity is unavailable, to contribute toward
amounts required to be paid in respect of such liabilities. In addition, any
securities covered by this Prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus.
The Company will pay the registration expenses incident to the offering and
sale of the Shares by the Selling Stockholders to the public. Such expenses
include legal and accounting expenses (not to exceed $30,000), filing fees
payable to the Commission, applicable state "blue sky" filing fees and printing
expenses. The Company, however, will not pay for any expenses, commissions or
discounts of underwriters, dealers or agents for the Selling Stockholders.
Any underwriters, brokers, dealers and agents who participate in any such
sale may also be customers of, engage in transactions with or perform services
for SSA or one or more of the Selling Stockholders in the ordinary course of
business.
SSA Common Stock is currently traded on the Nasdaq National Market. The
public offering price for any Shares that are sold will be determined by the
price indicated on such system at the time such sale occurs, or at such price
as shall be determined through private negotiations between the buyer and the
particular Selling Stockholder, or its agent.
VALIDITY OF STOCK
The validity of the Shares will be passed upon for the Company by Sachnoff &
Weaver, Ltd., Chicago, Illinois ("S&W"). In October 1992, in consideration for
the continued and future services on the Company's Board of Directors of
William N. Weaver, Jr., the Company granted a stock option to S&W, of which Mr.
Weaver is a member. This option covers 33,750 shares, is exercisable at
$10.3889 per share (the fair market value of the Company's Common Stock on
October 12, 1992, the date the options were granted) and becomes exercisable in
equal portions on the five anniversaries of the grant date. In consideration of
the option grant, S&W agreed to waive its fees for Mr. Weaver's time expended
attending meetings of the Board of Directors. In December 1994, the Company
granted S&W additional options to purchase 22,500 shares. The later options are
exercisable at $9.83 per share, the fair market value of the Company's Common
Stock on the date of grant, and become exercisable in equal portions on the
five anniversaries of the grant date. In addition to his beneficial ownership
of the shares subject to the foregoing options, Mr. Weaver personally owns
300,000 shares of the Company's Common Stock.
9
<PAGE>
EXPERTS
The financial statements as of October 31, 1996 and for the year then ended
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
of System Software Associates, Inc. for the year ended October 31, 1996 have
been so incorporated in reliance on the report of KPMG Peat Marwick LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements as of October 31, 1995 and 1994 and for each of the
two fiscal years in the period ended October 31, 1995 incorporated in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
SEC Filing Fee for Registration Statement........................ $ 2,588
Accounting Fees.................................................. 5,000*
Legal Fees and Expenses.......................................... 20,000*
Miscellaneous.................................................... 2,412*
-------
Total........................................................ $35,000
=======
</TABLE>
- --------
*Estimated Amount
All of the expenses listed above will be borne by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of the Registrant provide that the Registrant shall indemnify
its officers and directors to the fullest extent permitted by applicable law.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides, in
general, that each director and officer of a corporation may be indemnified
against expenses (including attorneys' fees, judgments, fines and amounts paid
in settlement) actually and reasonably incurred in connection with the defense
or settlement of any threatened, pending or completed legal proceedings in
which he is involved by reason of the fact that he is or was a director or
officer if he acted in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, if he had no reasonable cause to
believe that his conduct was unlawful. If the legal proceeding, however, is by
or in the right of the corporation, the director or officer may not be
indemnified in respect of any claim, issue or matter as to which he shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the company unless a court determines otherwise.
The Certificate of Incorporation of the Registrant, as amended to date,
provides that the personal liability of the directors of the Registrant shall
be eliminated to the fullest extent permitted by applicable law. The DGCL
permits a corporation's certificate of incorporation to provide that no
director of the corporation shall be personally liable to the corporation or
its stockholders for monetary damages for any breach of his fiduciary duty as
a director; provided, however, that such provision shall not apply to any
liability of a director (1) for any breach of a director's duty of loyalty to
the corporation or its stockholders, (2) for acts or omissions that are not in
good faith or involve intentional misconduct or a knowing violation of the
law, (3) under Section 174 of the DGCL or (4) for any transaction from which
the director derived an improper personal benefit.
ITEM 16. EXHIBITS.
(a) Exhibits:
<TABLE>
<C> <S>
4.1 Certificate of Incorporation, as amended to date (1)
4.2 By-Laws, as amended to date (2)
4.3 Rights Agreement Dated as of May 3, 1988 (3)
4.4 Registration Rights Agreement dated as of March 4, 1997, among the
Registrant, Bank of America Illinois, American National Bank and
Trust Company of Chicago, Massachusetts Mutual Life Insurance Company
and Principal Mutual Life Insurance Company.
4.5 Form of Warrants issued to Bank of America Illinois, American
National Bank and Trust Company of Chicago, Massachusetts Mutual Life
Insurance Company and Principal Mutual Life Insurance Company.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
5.1 Opinion of Sachnoff & Weaver, Ltd. regarding the legality of the
securities being registered
23.1 Consent of Price Waterhouse LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Sachnoff & Weaver, Ltd. (included in Exhibit 5)
Powers of Attorney (included on the Signature Page of this
24 Registration Statement)
</TABLE>
- --------
(1) Incorporated by reference from the Registrant's Form 10-K Annual Report for
the fiscal year ended October 31, 1987 (File No. 0-15322).
(2) Incorporated by reference from the Registrant's Form 10-K Annual Report for
the fiscal year ended October 31, 1989 (File No. 0-15322).
(3) Incorporated by reference from the Registrant's Form 8-K Current Report
filed on May 18, 1988 (File No. 0-15322).
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
the indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF ILLINOIS, ON JUNE 16, 1997.
System Software Associates, Inc.
/s/ Joseph J. Skadra
By___________________________________
Joseph J. Skadra, Vice President
and Chief Financial Officer
June 16, 1997
THE UNDERSIGNED OFFICERS AND DIRECTORS OF SYSTEM SOFTWARE ASSOCIATES, INC.,
HEREBY SEVERALLY CONSTITUTE AND APPOINT JOSEPH J. SKADRA AND WILLIAM E. DORAN,
AND EACH OF THEM SINGLY, OUR TRUE AND LAWFUL ATTORNEYS AND AGENTS, WITH FULL
POWER TO THEM, AND EACH OF THEM, TO SIGN FOR US AND IN OUR NAMES IN THE
CAPACITIES INDICATED BELOW, THE REGISTRATION STATEMENT ON FORM S-3 FILED
HEREWITH AND ANY AND ALL PRE-EFFECTIVE AND POST-EFFECTIVE AMENDMENTS TO SAID
REGISTRATION STATEMENT, AND GENERALLY TO DO ALL SUCH THINGS IN OUR NAMES AND
ON OUR BEHALF IN OUR CAPACITIES AS OFFICERS AND DIRECTORS TO ENABLE SYSTEM
SOFTWARE ASSOCIATES, INC. TO COMPLY WITH THE PROVISIONS OF THE SECURITIES ACT
OF 1933, AS AMENDED, AND ALL REQUIREMENTS OF THE SECURITIES AND EXCHANGE
COMMISSION, HEREBY RATIFYING AND CONFIRMING OUR SIGNATURES AS THEY MAY BE
SIGNED BY OUR SAID ATTORNEYS, OR ANY OF THEM, TO SAID REGISTRATION STATEMENT
AND ANY AND ALL AMENDMENTS THERETO.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Roger E. Covey Chief Executive Officer and June 16, 1997
____________________________________ Chairman of the Board of
Roger E. Covey Directors (Principal
Executive Officer)
/s/ Joseph J. Skadra Chief Financial Officer, June 16, 1997
____________________________________ Vice President--Finance
Joseph J. Skadra and Secretary (Principal
Financial and Accounting
Officer)
/s/ Andrew J. Filipowski Director June , 1997
____________________________________
Andrew J. Filipowski
/s/ John W. Puth Director June 16, 1997
____________________________________
John W. Puth
/s/ William N. Weaver, Jr. Director June 16, 1997
____________________________________
William N. Weaver, Jr.
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
------- ----------------------- ------------
<C> <S> <C>
4.1 Certificate of Incorporation, as amended to date (1)
4.2 By-Laws, as amended to date (2)
4.3 Rights Agreement Dated as of May 3, 1988 (3)
4.4 Registration Rights Agreement dated as of March 4,
1997, among the Registrant, Bank of America Illinois,
American National Bank and Trust Company of Chicago,
Massachusetts Mutual Life Insurance Company and
Principal Mutual Life Insurance Company.
4.5 Form of Warrants issued to Bank of America Illinois,
American National Bank and Trust Company of Chicago,
Massachusetts Mutual Life Insurance Company and
Principal Mutual Life Insurance Company.
5.1 Opinion of Sachnoff & Weaver, Ltd. regarding the
legality of the securities being registered............
23.1 Consent of Price Waterhouse LLP........................
23.2 Consent of KPMG Peat Marwick LLP.......................
23.2 Consent of Sachnoff & Weaver, Ltd. (included in Exhibit --
5)
24 Powers of Attorney (included on the Signature Page of --
this Registration Statement)
</TABLE>
- --------
(1) Incorporated by reference from the Registrant's Form 10-K Annual Report for
the fiscal year ended October 31, 1987 (File No. 0-15322).
(2) Incorporated by reference from the Registrant's Form 10-K Annual Report for
the fiscal year ended October 31, 1989 (File No. 0-15322).
(3) Incorporated by reference from the Registrant's Form 8-K Current Report
filed on May 18, 1988 (File No. 0-15322).
II-4
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of March 4, 1997, by and among system Software Associates, Inc., a
Delaware corporation (the "Company"), and each of the other parties identified
on the signature page hereto (each, a "Warrant Holder" and collectively, the
"Warrant Holders").
RECITALS
--------
The parties hereto, intending legally to be bound, hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
-----------
meanings ascribed to them below:
(a) "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday
------------
that is not a day on which banking institutions in the City of Chicago,
Illinois, are authorized by law, regulation or executive order to
close.
(b) "Common Stock" means the common stock, par value $0.0033 per share, of
------------
the Company.
(c) "Funding Registration" means a registered underwritten public offering
--------------------
of Common Stock or equity or debt securities convertible into or exchangeable
for Common Stock, the proceeds of which are to be used to repay amounts
outstanding under the Credit Agreement dated as of June 19, 1995, by and among
the Company, Bank of America National Trust and Savings Association and the
other parties thereto (as amended through and after the date hereof, the "Credit
Agreement"), or the Note Purchase Agreement dated as of August 15, 1993 by and
among the Company, Massachusetts Mutual Life Insurance Company and Principal
Mutual Life Insurance Company (as amended through and after the date hereof, the
"Note Agreement").
(d) "Piggyback Prospectus" has the meaning set forth in Section 5.
--------------------
(e) "Piggyback Registration Statement" has the meaning set forth in Section
--------------------------------
5.
(f) "Prospectus" means, alternatively, a Piggyback Prospectus or the Shelf
----------
Prospectus, as the applicable context requires.
(g) "Registrable Securities" means (x) the shares of Warrant Stock and (y)
----------------------
any securities issued or issuable in respect of or in exchange for any of the
shares of Warrant Stock referred to in clause (x) by way of a stock dividend or
stock split or in connection with a combination of shares of Warrant Stock,
recapitalization, reclassification, merger, consolidation, or exchange offer
("Distribution Securities"). For purposes of this Agreement, a Registrable
Security ceases to constitute a Registrable Security (i) when such Registrable
Security shall have been effectively registered under the Securities Act and
disposed of in a public market
<PAGE>
transaction pursuant to the Registration Statement, (ii) when Such Registrable
Security shall have been sold pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) when such Registrable Security shall have been
otherwise transferred and a new certificate for such Registrable Security not
bearing a legend restricting further transfer shall have been delivered by the
Company following the Company's receipt of an opinion of inside or outside
counsel reasonably satisfactory to it that the issuance and delivery of such a
certificate is legal and proper under this Agreement and applicable law, (iv)
with respect to a particular Warrant Holder, on the date on which all of such
Warrant Holder's remaining Registrable Securities could be sold in a single
transaction in compliance with Rule 144 under the Securities Act, or (v) when
such Registrable Security shall have ceased to be outstanding.
(h) "Registration Statement" means, alternatively, a Piggyback Registration
----------------------
Statement or the Shelf Registration Statement, as the applicable context
requires.
(i) "Securities Act" means the Securities Act of 1933, as amended.
--------------
(j) "Shelf Prospectus" has the meaning given to such term in Section 5.
----------------
(k) "Shelf Registration Statement" shall have the meaning set forth in
----------------------------
Section 2.
(l) "Termination Date" means the first date on which no Registrable
----------------
Securities originally covered by the Registration Statement shall constitute
Registrable Securities.
(m) "Warrant Stock" means the shares of Common Stock obtainable upon
-------------
exercise of the Warrants.
(n) "Warrants" mean the warrants to purchase Common Stock issued pursuant to
--------
certain amendments to the Credit Agreement and the Note Agreement, and any new,
replacement, amended or modified Warrant issued therefor.
Other terms shall have the meaning ascribed to them in the caption, the recitals
and other sections of this Agreement.
2. Shelf Registration. As soon as practicable, but in any event within 45 days
------------------
following the date hereof, the Company shall prepare and file with the
Securities and Exchange Commission ("SEC") under the Securities Act a
registration statement on Form S-3, or such other registration form under the
Securities Act as the Company shall deem appropriate or as may be required if
Form S-3 is not available for use by the Company, covering the sale on a
continuous or delayed basis pursuant to Rule 415 thereunder (or any similar rule
that may be adopted by the SEC) of all Registrable Securities (the "Shelf
Registration Statement"). The Company shall use all commercially reasonable
efforts to cause the Shelf Registration Statement to be declared effective on or
prior to 120 days after the initial filing thereof and shall thereafter
2
<PAGE>
use all commercially reasonable efforts to keep the Shelf Registration Statement
continuously effective until the Termination Date.
3. Piggyback Registrations.
-----------------------
(a) Right to Piggyback. Whenever the Company proposes to register any of its
------------------
Common Stock under the Securities Act for sale in an underwritten public
offering, other than pursuant to a Funding Registration or a registration on
Form S-4 or any successor form thereto then in effect, (a "Piggyback
Registration"), not less than thirty (30) days prior to filing the Registration
Statement relating to such Piggyback Registration, the Company will give prompt
written notice to all holders of Registrable Securities of its intention to
effect such a registration and will, subject to paragraphs 3(b) and 3(c),
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within not more
than 20 days after the receipt of the Company's notice.
(b) Priority on Primary Registrations. If a Piggyback Registration is a
---------------------------------
primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration (i) first, the
securities the Company proposes to sell; (ii) second, the Registrable Securities
requested to be included in such registration by the Warrant Holders, pro rata
based on the respective number of shares requested to be included by the holders
of Registrable Securities; and (iii) third, all other Common Stock requested to
be included in such registration by all other Persons granted registration
rights by the Company, pro rata based on the respective number of shares
requested to be included by all such Persons.
(c) Priority on Secondary Registrations. If a Piggyback Registration is a
-----------------------------------
secondary registration on behalf of holders of the Company's securities, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company will include in such registration (i)
first, the securities requested to be included therein by the holders of the
Company's securities who have requested such registration pursuant to demand
registration rights granted to such persons; (ii) second, the Registrable
Securities requested to be included in such registration by the Warrant Holders,
pro rata based on the respective number of shares requested to be included by
the holders of Registrable Securities, and (iii) third, all other Common Stock
requested to be included in such registration by all other Persons granted
registration rights by the Company, pro rata based on the respective number of
shares requested to be included by all such Persons.
3
<PAGE>
4. Holdback Agreements. Each holder of Registrable Securities agrees not to
-------------------
effect any public sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 90-day period beginning on the effective date of any Funding
Registration or any Piggyback Registration in which Registrable Securities are
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
5. Registration Procedures and Information Rights.
-----------------------------------------------
(a) Company Procedures. In connection with the Company's registration
------------------
undertakings pursuant to Sections 2 and 3 and, except as otherwise provided
herein, the Company shall comply with each of the following:
(i) use all commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective for the period of time provided in Section 2,
to permit the sale of Registrable Securities pursuant to the Shelf Registration
Statement in accordance with the intended method or methods of distribution
thereof specified in the Shelf Registration Statement or in the related
prospectus(es) (the "Shelf Prospectus");
(ii) in connection with each Piggyback Registration, prepare and file with
the SEC a Registration Statement with respect thereto (each, a "Piggyback
Registration Statement") and use all commercially reasonable efforts to cause
such Piggyback Registration Statement to become effective;
(iii) prepare and file with the SEC such amendments and supplements to each
Piggyback Registration Statement and the Prospectus used in connection therewith
(each, a "Piggyback Prospectus") as may be necessary to keep such Piggyback
Registration Statement effective for a period of not less than one hundred
twenty (120) days after its original effective date;
(iv) comply with such provisions of the Securities Act as may be necessary
to facilitate the offer, sale or disposition of all Registrable Securities
covered by each Registration Statement during the applicable period in
accordance with the Securities Act and the intended method or methods of offer,
sale or disposition thereof set forth in such Registration Statement or the
Prospectus or any amendment or supplement thereto;
(v) notify the Warrant Holders, promptly (A) when each Registration
Statement, Prospectus, amendment or supplement thereto or further post-effective
amendment has been filed, and, with respect to such Registration Statement or
further post-effective amendment when it has become effective, (B) of any
request by the SEC for amendments or supplements to any Registration Statement
or Prospectus or for additional information, (C) of the issuance by the SEC of
any comments with respect to any filing (and copies thereof) and of any
4
<PAGE>
stop order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (D) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (E) of the happening of any
event that makes any statement made in any then effective Registration
Statement, any then effective Prospectus or any other document incorporated
therein by reference untrue or that requires the making of any changes in such
Registration Statement, Prospectus or any document incorporated therein by
reference in order that such documents not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (F) of the
Company's determination that a further post-effective amendment to any then
effective Registration Statement would be appropriate;
(vi) furnish to each Warrant Holder, without charge, as many conformed
copies as may reasonably be requested by such Warrant Holder, of each
Registration Statement, preliminary prospectus, Prospectus and each amendment or
supplement thereto and any further post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(vii) deliver to each Warrant Holder, without charge, as many copies of the
then effective Prospectus covering such Registrable Securities and any
amendments or supplements thereto as such Warrant Holder may reasonably request;
(viii) register, qualify, obtain an exemption therefrom, or cooperate with
the Warrant Holders and their respective counsel in connection with the
registration or qualification or exemption therefrom of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as may be reasonably requested in writing by the Warrant Holders
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
then-effective Registration Statement; provided, however, that the Company shall
not be required to (w) qualify as a foreign corporation or generally to transact
business in any jurisdiction where it is not then so qualified, (x) qualify as a
dealer (or other similar entity) in securities, (y) otherwise subject itself to
taxation in connection with such activities, or (z) take any action which would
subject it to general service of process in any jurisdiction where it is not
then so subject;
(ix) upon the occurrence of any event contemplated by clauses (E) or (F) of
paragraph (v) above with respect to any Registration Statement, promptly prepare
and file, if necessary, a further post-effective amendment to such Registration
Statement or a supplement to the related Prospectus or any document incorporated
therein by reference or file any other required document so that such
Registration Statement and the related Prospectus will not thereafter contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading;
5
<PAGE>
(x) promptly after the filing of any document that is to be incorporated by
reference into any Registration Statement or Prospectus, provide copies of such
document to the Warrant Holder;
(xi) exert commercially reasonable efforts to cause all Registrable Shares
covered by any Registration Statement to be listed on the Nasdaq National Market
or, if similar securities of the Company are not listed thereon, on the primary
exchange or market, if any, on which similar securities issued by the Company
are then listed, provided, that the applicable listing requirements are
satisfied (and the Company agrees to comply with such requirements); and
(xii) exert commercially reasonable efforts to take all actions required to
prevent the entry of any stop order by the Securities and Exchange Commission or
by any state securities regulators or to remove any such order if entered.
(xiii) exert commercially reasonable efforts to file post-effective
amendments to any Registration Statement or supplement the Prospectus, as
required, to permit sales of Registrable Securities thereunder to be made by
Permitted Transferees (as hereinafter defined) of the Warrant Holders and in
accordance with the Securities Act.
(b) Warrant Holder Procedures.
-------------------------
(i) In connection with any Registration Statement, the Company may require
each Warrant Holder to furnish to the Company such information regarding such
Warrant Holder and its proposed distribution of Registrable Securities, to the
extent necessary to comply with the Securities Act, as the Company may from time
to time reasonably request in writing.
(ii) Each Warrant Holder agrees to cooperate with the Company in all
reasonable respects in connection with the preparation and filing of each
Registration Statement and any amendment thereof, any Prospectus relating
thereto and any Prospectus supplement relating thereto with respect to the offer
and sale of Registrable Securities of such Warrant Holder.
(c) Information Deliveries. At all times prior to the Termination Date, the
----------------------
Company will provide each original Warrant Holder (as of the date hereof) with
copies of all public reports filed by the Company with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, and
such other information of the Company as such original Warrant Holder shall
reasonably request; provided, that the Company may refuse to comply with any
such latter request if the Company reasonably and in good faith believes that
providing the requested information to the requesting original Warrant Holder
would result in the disclosure of material nonpublic information in violation of
applicable law.
6. Shelf Selling Restrictions.
--------------------------
6
<PAGE>
(a) Each Warrant Holder agrees to notify the Company at least two (2)
Business Days prior to any disposition of Registrable Securities pursuant to the
Shelf Registration Statement of such Warrant Holder's intent to dispose of such
Registrable Securities. Such notice shall be in writing, by facsimile or by an
actual telephone conversation with either the Company's Chief Financial Officer,
General Counsel or Director of Investor Relations, at the address, facsimile
number or the phone number, as the case may be, of the Company, all as set forth
in Section 11(b)(ii) below. The Company will exert reasonable efforts to respond
to such notice by the next Business Day, but in any event, the Company shall
respond no later than the second Business Day following the date of receipt.
Such response shall consist of one of the following:
(i) an oral or written confirmation that the Company knows of no reason why
the Warrant Holder should not proceed with the proposed sale or disposition; or
(ii) a notification that the proposed disposition must be delayed for a
period of up to thirty (30) days as provided in Section 6(b) below; or
(iii) a confirmation from either the Chief Financial Officer or the General
Counsel of the Company that the Company requires a limited time, not to exceed
five (5) Business Days following the receipt of the Company's receipt of the
Warrant Holder's notice, within which to determine which of the foregoing
responses is appropriate under the circumstances.
Each Warrant Holder agrees not to sell or otherwise dispose of any Registrable
Securities until the expiration of the time period, if any, identified by the
Company in accordance with the foregoing. The failure by the Company to respond
by the end of the second Business Day shall be deemed to be no objection to the
proposed sale or disposition.
(b) The Company may restrict disposition of such Registrable Securities, in
which event such Warrant Holder agrees not to dispose of such Registrable
Securities; provided that:
(i) the Company shall have delivered a notice in writing to such Warrant
Holder stating that a delay in the disposition of Registrable Securities is
necessary because the Company, in its reasonable judgment, exercised in good
faith, has determined that such sales of Registrable Securities would require
public disclosure by the Company of material nonpublic information that the
Company deems advisable not to disclose;
(ii) in the event of the delivery of the notice described in (i) above by
the Company, the Company shall exert commercially reasonable efforts to amend
the Registration Statement or amend or supplement the Prospectus, if necessary
and to take all other actions necessary to allow the proposed disposition to
take place as promptly as practicable after the conditions referred to therein
have ceased to exist;
7
<PAGE>
(iii) the Company shall not restrict dispositions under (i) above for a
period exceeding thirty (30) days unless the Company shall have delivered to the
Warrant Holder a second notice in writing extending the restriction period up to
an additional fifteen (15) days (or such shorter period of time as specified in
the notice); and
(iv) in no event shall the Company be permitted to extend the restriction
period under (i) above beyond the forty-five (45) day period, and the Company
shall not restrict sales of such Registrable Securities under (i) above more
than a total of twice in any twelve (12) month period.
(c) Each Warrant Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in any of Sections
5(a)(v)(B)-(F), such Warrant Holder shall forthwith discontinue all sales and
distributions of Registrable Securities pursuant to the then-current Shelf
Prospectus until such Warrant Holder receives copies of a supplemental or
amended Shelf Prospectus as contemplated by Section 5(a)(ix), or until such
Warrant Holder is advised in writing by the Company that the use of the Shelf
Prospectus may be resumed, and, if so directed by the Company, such Warrant
Holder will deliver to the Company all copies then in the possession of such
Warrant Holder of the Shelf Prospectus in effect with respect to the Registrable
Securities at the time of such notice by the Company. The Company shall promptly
take all such action as may be necessary or appropriate, including, without
limitation, the filing of an amendment to the Shelf Registration Statement
and/or the filing of an amended Shelf Prospectus or a Shelf Prospectus
supplement, to limit the duration of any discontinuance with respect to the sale
and distribution of Registrable Securities pursuant to this Section 6(c).
(d) The restrictions described herein are in addition to, and not in
limitation of, any other restrictions that may be applicable to each of the
Warrant Holders, including, without limitation any restrictions under the terms
of the Warrants and under applicable securities laws (such as restrictions
against trading in Company securities while in possession of material non-public
information concerning the Company).
(e) Until each Registrable Security shall have been sold in a public market
transaction pursuant to Rule 144 (or any successor provision) under the
Securities Act or a Registration Statement, the certificates evidencing such
Registrable Securities shall bear on their face the following legend:
The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws. Such shares may not be transferred without such
registration and qualification unless the issuer has received an
opinion of inside or outside counsel satisfactory to it that a
proposed transfer or sale of such shares does not require
8
<PAGE>
registration or qualification under the Act and applicable state law.
Any transfer of such shares is also subject to the conditions
specified in the Warrant to purchase shares of Common Stock of System
Software Associates, Inc. (the "Company") dated as of March 4, 1997
(the "Warrant"), and the Registration Rights Agreement dated March 4,
1997, among the Company and the other parties thereto (the
"Registration Agreement"). The Registration Agreement and the Warrant
provide for, among other things, certain restrictions upon transfer of
the shares evidenced by this certificate. By accepting such shares,
the holder agrees to be bound by all such transfer restrictions in the
Registration Agreement and the Warrant. Copies of the form of such
Warrant and the Registration Agreement are on file with the Secretary
of the Company at 500 West Madison Street, 32nd Floor, Chicago,
Illinois 60661 and will be furnished without charge by the Company to
the holder of this certificate upon written request to the Secretary
of the Company at such address.
7. Registration Expenses.
---------------------
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with federal and state securities or blue sky
laws (including fees and disbursements of counsel to the Company in connection
with blue sky qualifications or registrations (or the obtaining of exemptions
therefrom) of the Registrable Securities), messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), fees and
disbursements of its counsel and its independent certified public accountants,
the fees (not to exceed $30,000) of a single counsel selected by the holders of
two-thirds (2/3) of the outstanding Registrable Securities then outstanding,
securities acts liability insurance (if the Company elects to obtain such
insurance), and reasonable fees and expenses of any special experts retained by
the Company in connection with any registration hereunder (all of such expenses
herein referred to as "Registration Expenses"), shall be borne by the Company;
provided, however, the Registration Expenses shall not include any sales or
underwriting discounts, commissions or fees attributable to the sale of the
Registrable Securities or the fees and expenses of counsel to the Warrant
Holders in excess of the amount specifically required to be paid by the Company
by the above provisions of this Section 7.
8. Indemnification; Contribution.
-----------------------------
(a) Indemnification by the Company. The Company shall indemnify and hold
------------------------------
harmless, to the full extent permitted by law, each Warrant Holder, and such
Warrant Holder's respective officers, directors, employees, representatives and
agents and each Person who
9
<PAGE>
controls (within the meaning of the Securities Act) such Warrant Holder, against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and legal expenses) resulting from any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus, or any amendment or supplement thereto, or any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except in each case insofar as the same arises out of or
is based upon an untrue statement or alleged untrue statement of a material fact
or an omission or alleged omission to state a material fact in such Registration
Statement, Prospectus, amendment or supplement, as the case may be, made or
omitted, as the case may be, in reliance upon and in conformity with written
information furnished to the Company by such Warrant Holder for use therein.
(b) Indemnification by the Warrant Holders. Each Warrant Holder shall
--------------------------------------
indemnify and hold harmless, to the full extent permitted by law, the Company,
its respective officers, directors, employees, representatives and agents, and
each Person who controls (within the meaning of the Securities Act) the Company,
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and legal expenses) resulting from any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any amendment or supplement thereto, and any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, to the extent the same arises out of or is
based upon any untrue statement or alleged untrue statement of a material fact
or any omission or alleged omission to state a material fact in such
Registration Statement, Prospectus, amendment or supplement, as the case may be,
made or omitted, as the case may be, in reliance upon and in conformity with
written information furnished to the Company by such Warrant Holder for use
therein. This indemnity is in addition to any liability that such Warrant Holder
may otherwise have. The liability of each Warrant Holder under the indemnity and
contributions provisions of this Paragraph 8 shall be limited to an amount equal
to the net proceeds from the stock sold by such Warrant Holder pursuant to the
Registration Statement.
(c) Conduct of Indemnification Proceedings. Each party entitled to
--------------------------------------
indemnification under this Section 8 (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided,
that counsel for the Indemnifying Party, who will conduct the defense of such
claim or litigation, is approved by the Indemnified Party (whose approval will
not be unreasonably withheld or delayed); and provided, further, that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations except to the extent that its
defense of the claim or litigation involved is prejudiced by such failure. The
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due
10
<PAGE>
to actual or potential conflicts of interest between the Indemnified Party and
any other party represented by such counsel and counsel for the Indemnified
Party so opines in writing. No Indemnifying Party, in the defense of any such
claim or litigation, except with the consent of each Indemnified Party, shall
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of any
claim or litigation, and no Indemnified Party will consent to entry of any
judgment or settle any claim or litigation without the prior written consent of
the Indemnifying Party. Each Indemnified Party shall furnish such information
regarding himself, herself or itself and the claim in question as the
Indemnifying Party may reasonably request and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(d) Contribution.
------------
(i) If for any reason the indemnification provided for in this Section 8
from an Indemnifying Party, although otherwise applicable by its terms, is
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Party hereunder, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by the Indemnified Parties as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of such Indemnifying Party and the Indemnified Parties in
connection with the actions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and the Indemnified Parties shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact,
has been made by, or relates to written information supplied by, such
Indemnifying Party or the Indemnified Parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
(e) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
9. Rule 144 Requirements.
---------------------
The Company agrees to:
11
<PAGE>
(a) use its commercially reasonable efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act;
(b) use its commercially reasonable efforts to file with the SEC in a
timely manner (as defined under the Exchange Act) all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Warrant Holder upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
and of the Securities Act and the Exchange Act and a copy of the most recent
annual or quarterly report of the Company.
10. Termination
-----------
This Agreement shall terminate at the Termination Date; provided, however,
that the provisions of Section 7 and 8 shall survive the termination of this
Agreement.
11. Miscellaneous.
-------------
(a) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company shall have obtained the prior written consent of the Warrant
Holders holding more than two-thirds (2/3) of the securities at the time
constituting Registrable Securities.
(b) Notices. All notices, requests, waivers, releases, consents, and other
-------
communications required or permitted by this Agreement (collectively, "Notices")
shall be in writing. Notices shall be deemed sufficiently given for all purposes
under this Agreement (i) when delivered in person, (ii) on the next business day
following the date when dispatched by telegram (upon written confirmation of
receipt), by electronic facsimile transmission (upon written confirmation of
receipt) or by a nationally recognized overnight courier service, or (iii) three
Business Days after being deposited in the United States certified or registered
mail, return receipt requested, and first class postage prepaid. All Notices
shall be delivered as follows:
(i) if to a Warrant Holder, at the address indicated on the Company's
register relating to the Registrable Securities held by such Warrant Holder or
at such other address as such Warrant Holder may have furnished to the Company
in writing
(ii) if to the Company, at:
System Software Associates, Inc.
500 West Madison Street
32nd Floor
12
<PAGE>
Chicago, Illinois 60661
Facsimile No.: (312) 474-7500
Attention: General Counsel
(c) Successors and Assigns. This Agreement shall be binding upon and shall
----------------------
inure to the benefit of the Company, each Warrant Holder and their respective
successors, heirs, legal representatives and permitted assigns. The rights
provided by this Agreement are transferable by a Warrant Holder solely in
accordance with the provisions of the Warrants and to transferees permitted
thereby (collectively, "Permitted Transferees").
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings; Construction. The Section numbers and headings in this
----------------------
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. Unless the context otherwise requires, all references
to Sections are to sections of this Agreement, "or" is inclusively disjunctive,
and words in the singular include the plural and vice versa. In computing any
period of time specified in this Agreement or in any Notices, the date of the
act or event from which such period of time is to be measured shall be included,
any such period shall expire at 5:00 p.m., Chicago time, on the last day of such
period, and any such period denominated in months shall expire on the date in
the last month of such period that has the same numerical designation as the
date of the act or event from which such period is to be measured; provided,
however, that if there is no date in the last month of such period that has the
same numerical designation as of the date of such act or event, such period
shall expire on the last day of the last month of such period.
(f) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Delaware, without regard to
the principles of conflicts of laws thereof.
(g) Severability. If one or more of the provisions hereof, or the
------------
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect, for any reason, the validity, legality and
enforceability of the remaining provisions hereof shall not be in any way
affected or impaired thereby, and the provisions held to be invalid, illegal or
unenforceable shall be reformed to the minimum extent necessary, and in a manner
as consistent with the purposes thereof as is practicable, so as to render it
valid, legal and enforceable.
(h) Entire Agreement. This Agreement is intended by the parties hereto to
----------------
be a final expression thereof and is intended to be a complete and exclusive
statement of the agreement and understanding of such parties in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings among the Company and any of the Warrant Holders with respect
to such subject matter; provided, however, the
13
<PAGE>
restrictions described herein are in addition to, and not in limitation of,
any other restrictions that may be applicable to each of the Warrant Holders,
including, without limitation, any restrictions applicable to officers and
directors generally under policies of the Company (including, if applicable and
without limitation, policies relating to executive officers and directors of the
Company in connection with Section (16)(a) of the Exchange Act).
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Agreement to be duly executed as of the day and year first above
written.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: /s/ Joseph J. Skada
----------------------------
Title: Chief Financial Officer
----------------------------
The Warrant Holders:
BANK OF AMERICA ILLINOIS
c/o Bank of America NT & SA
315 Montgomery Street
13th Floor, #15027
San Francisco, California 94104
Attention: Keith Pagan
By: /s/ Leslie Reuter
-----------------
Title: Attorney-in-Fact
----------------
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
33 North LaSalle Street
Chicago, Illinois 60690
Attn: Isra Z. Ekbel
By: /s/ Darren M. Snyder
--------------------
Title: Assistant Vice President
------------------------
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
By: /s/ Michael L. Klofas
---------------------
Title: Managing Director
-----------------
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
711 High Street
Des Moines, Iowa 50392
By: /s/ John D. Cleavenger
----------------------
Title: Counsel
-------
15
<PAGE>
By: /s/ John H. Bunz
-----------------
Title: Counsel
-------
16
<PAGE>
EXHIBIT 4.5
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
SUCH SECURITIES MAY NOT BE TRANSFERRED WITHOUT SUCH REGISTRATION AND
QUALIFICATION UNLESS THE ISSUER HAS RECEIVED AN OPINION OF INSIDE OR OUTSIDE
COUNSEL SATISFACTORY TO IT THAT A PROPOSED TRANSFER OR SALE DOES NOT REQUIRE
REGISTRATION OR QUALIFICATION UNDER THE ACT OR APPLICABLE STATE LAW. ANY
TRANSFER OF SUCH SECURITIES IS ALSO SUBJECT TO THE CONDITIONS SPECIFIED IN THIS
WARRANT AND THE REGISTRATION RIGHTS AGREEMENT DATED MARCH 4, 1997, AMONG SYSTEM
SOFTWARE ASSOCIATES, INC. (THE "COMPANY") AND THE OTHER PARTIES THERETO (THE
"REGISTRATION AGREEMENT"). THE REGISTRATION AGREEMENT AND THIS WARRANT PROVIDE
FOR, AMONG OTHER THINGS, CERTAIN RESTRICTIONS UPON TRANSFER OF THIS WARRANT AND
THE SHARES OF COMMON STOCK OF THE COMPANY ISSUABLE UPON EXERCISE HEREOF. BY
ACCEPTING THIS WARRANT OR SUCH SHARES, THE HOLDER AGREES TO BE BOUND BY ALL SUCH
TRANSFER RESTRICTIONS IN THE REGISTRATION AGREEMENT AND THE WARRANT. COPIES OF
THE REGISTRATION AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE COMPANY AT 500
WEST MADISON STREET, 32ND FLOOR, CHICAGO, ILLINOIS 60661 AND WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER OF THIS WARRANT UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY AT SUCH ADDRESS.
WARRANT
-------
VOID AFTER 5:00 P.M., Chicago Time, on March 4, 2002
WARRANT TO PURCHASE COMMON STOCK
OF
SYSTEM SOFTWARE ASSOCIATES, INC.
Date of Issuance: March 4, 1997 Certificate No.
--------
FOR VALUE RECEIVED, System Software Associates, Inc., a Delaware
corporation (the "Company"), hereby grants to
-----------------------------------
whose address is
-------------------------------------------------------------
("Holder"), or its registered assigns (collectively, the "Registered Holder"),
the right to purchase from the Company shares of Warrant Stock at
-------------
a price per share of $10.1167 (as adjusted from time to time hereunder, the
"Exercise Price"). This Warrant is one of several warrants (collectively, the
"Warrants") issued in connection with certain amendments to the Credit
Agreement, dated as of June 19, 1995, by and among the Company, Bank of America
National Trust and Savings Association, as Agent, and the other parties thereto
(as amended through and after the date hereof, the "Credit Agreement"), and the
Amended and Note Purchase Agreement dated as of August 15, 1993, among the
Company, Principal Mutual Life Insurance Company, and Massachusetts Mutual Life
Insurance Company (as amended through and after the date hereof, the "Note
Agreement"). Certain capitalized terms used herein are defined in Section 3 of
this Warrant. The amount and kind of securities purchasable pursuant to the
rights granted under this Warrant and the purchase price for such securities are
subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
<PAGE>
1. Exercise of Warrant
-------------------
a. Exercise Period. The Registered Holder may exercise, in
---------------
whole or in part (but not as to a fractional share of Warrant Stock), the
purchase rights represented by this Warrant at any time and from time to time
after the Date of Issuance to and including 5:00 p.m., Chicago time, on March 4,
2002 (the "Exercise Period").
b. Exercise Procedure.
------------------
(1) This Warrant shall be deemed to have been exercised when
the Company has received all of the following items (the "Exercise Time");
(a) a completed Exercise Agreement, in the form set
forth in Exhibit I hereto, executed by the Person exercising all or part of the
---------
purchase rights represented by this Warrant (the "Purchaser");
(b) this Warrant or, if this Warrant is not
registered in the name of the Purchaser, an Assignment or Assignments executed
by the Registered Holder and in the form set forth in Exhibit II hereto
----------
evidencing the assignment of this Warrant to the Purchaser, in which case the
Registered Holder shall have complied with the provisions set forth in Section 5
hereof; and
(c) Subject to the immediately following sentence, a
certified or cashier's check payable to, or a wire transfer of immediately
available funds to a United States account designated by the Company in an
amount equal to the product of the Exercise Price multiplied by the number of
shares of Warrant Stock being purchased upon such exercise (the "Aggregate
Exercise Price"). At any Exercise Date after the second anniversary of the Date
of Issuance (or such earlier date on which the Holder would be entitled to sell
Warrant Stock without registration under the Act, pursuant to an exemption under
Rule 144 of the Act or any successor rule then in force) and provided that there
is not then an effective Registration Statement under the Securities Act of
1933, as amended, covering the sale of Warrant Stock to be issued upon such
exercise, the Purchaser may either pay the Aggregate Exercise Price in cash or,
in lieu thereof, shall instruct and permit the Company in writing (as set forth
in the Exercise Agreement) to deduct from the number of shares of Warrant Stock
that would otherwise be issued upon such exercise a number of shares of Warrant
Stock equal to the quotient obtained by dividing (i) the Aggregate Exercise
Price, by (ii) the Market Price of a share of Warrant Stock at the Exercise
Time.
(2) Certificates for shares of Warrant Stock purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within three
(3) business days after the Exercise Time. Unless this Warrant has expired or
all of the purchase rights represented hereby have been exercised, the Company
shall prepare a new Warrant, substantially identical hereto, representing the
rights formerly represented by this Warrant
2
<PAGE>
which have not expired or been exercised and shall, within such three business
day period, deliver such new Warrant to the Person designated for delivery
thereof in the Exercise Agreement.
(3) The Warrant Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Warrant Stock as of the Exercise Time.
(4) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance or stamp tax in respect thereof or any other
cost incurred by the Company or the Registered Holder in connection with such
exercise and the related issuance of shares of Warrant Stock (and the Company
shall pay such costs).
(5) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Warrant
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(6) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with an underwritten public
offering of Warrant Stock, the exercise of any portion of this Warrant may, at
the election of the Registered Holder hereof, be conditioned upon the
consummation of such public offering, in which case such exercise shall not be
deemed to be effective until the consummation of such public offering and such
exercise may be limited to the number of shares of Warrant Stock included in
such public offering.
(7) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the exercise of this Warrant, such number of shares of Warrant
Stock issuable upon the exercise of this Warrant. All shares of Warrant Stock
which are so issuable shall, upon the Exercise Time of issuance thereof, be duly
and validly issued, fully paid and nonassessable. The Company shall take all
such actions as may be necessary to assure that all such shares of Warrant Stock
may be so issued without violation of any applicable law or governmental
regulation.
c. Exercise Agreement. Upon any exercise of this Warrant, the
------------------
Exercise Agreement shall be substantially in the form set forth in Exhibit I
---------
hereto, except that if the shares of Warrant Stock are not be issued in the name
of the Registered Holder, the Exercise Agreement shall also state the name of
the Person to whom the certificates for the shares of Warrant Stock are to be
issued, and if the number of shares of Warrant Stock to be issued does not
include all the shares of Warrant Stock
3
<PAGE>
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
d. Fractional Shares. If a fractional share of Warrant Stock
-----------------
would, but for the provisions of Section 1.a., be issuable upon exercise of the
rights represented by this Warrant, the Company shall, within three (3) business
days after the date of the Exercise Time, deliver to the Purchaser a check
payable to the Purchaser in lieu of such fractional shares in an amount equal to
the difference between the Market Price of such fractional share as of the date
of the Exercise Time and the Exercise Price of such fractional share.
2. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
shares of Warrant Stock obtainable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2.
a. Subdivision or Combination of Common Stock. If the Company at
------------------------------------------
any time subdivides (by way of stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of shares of Warrant Stock obtainable
upon exercise of this Warrant shall be proportionately increased. If the Company
at any time combines (by reverse stock split or otherwise) its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of shares of Warrant Stock obtainable upon exercise of this
Warrant shall be proportionately decreased.
b. Reorganization, Reclassification, Consolidation, Merger or
----------------------------------------------------------
Sale. Any recapitalization, reorganization, reclassification, consolidation,
- ----
merger, sale of all or substantially all of the Company's assets to another
Person or other transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as "Organic Change." Prior to the
consummation of any Organic Change, the Company shall make appropriate provision
(in form and substance reasonably satisfactory to the Registered Holders of the
Warrants representing at least two-thirds (2/3) of the Warrant Stock obtainable
upon exercise of all Warrants then outstanding) to insure that each of the
Registered Holders of the Warrants shall thereafter have the right to acquire
and receive in lieu of or in addition to (as the case may be) the shares of
Warrant Stock immediately theretofore acquirable and receivable upon the
exercise of such Registered Holder's Warrants, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for the
number of shares of Warrant Stock immediately theretofore acquirable and
receivable upon exercise of such Registered Holder's warrants had such organic
change not taken place.
4
<PAGE>
c. Notices
-------
(1) Immediately upon any adjustment of the Exercise Price per
Section 2(a) above, the Company shall give written notice thereof to the
Registered Holder, setting forth in reasonable detail and certifying the
calculation of such adjustment. Such calculation shall be determined in good
faith by the Company; provided, however, that if the Registered Holders
representing at least two-thirds (2/3) of the Warrant Stock obtainable upon
exercise of all Warrants then outstanding object to such determination within
ten (10) business days following such determination by the Company, and the
Company and such Registered Holders fail to agree on such determination after
good faith discussion, such determination shall be made by an independent firm
of certified public accountants reasonable acceptable to the Registered
representing at least two thirds (2/3) of the Warrant Stock then obtainable upon
exercise of all Warrants then outstanding. The cost of such accountants shall be
borne by the Registered Holders (pro rata on the basis of the number of shares
held by each such holder) or by the Company, depending upon which party's
determination is determined to be further from the determination of the
independent accountants and such accountant's determination shall be binding on
the Company and all Registered Holders.
(2) The Company shall give written notice to the Registered Holder
at least fifteen (15) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon
the Common Stock, (B) with respect to any pro rata subscription offer to all
holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation.
d. BHC Act Limitations. If any Registered Holder is prevented by
-------------------
the BHC Act from receiving any payment, dividend, distribution or other
consideration that the Company is required or permitted to make to such
Registered Holder under any provision of this Warrant, then, notwithstanding
anything to the contrary contained or implied herein, the Company (with the
assistance of such Registered Holder) shall structure the transaction so that
such Registered Holder receives substantially equivalent consideration that is
in a form not prohibited by the BHC Act (as determined in good faith by the
Company); provided that, if such Registered Holder does not agree with the
Company's determination, such substantially equivalent consideration shall be
determined by an independent firm of investment bankers mutually selected by the
Company and a majority of the Registered Holders so affected and paid for by
such Registered Holders.
3. Definitions. The following terms have meanings set forth below:
-----------
"BHC Act" means the Bank Holding Act of 1956, as amended, or any
similar or successor federal statute, and the rules and regulations promulgated
thereunder, including, without limitation, Regulation Y, all as the same shall
be in effect from time to time.
5
<PAGE>
"Common Stock" means the Company's common stock, par value $0.0033
per share.
"Market Price" means the average of the high and low sale price for
the Common Stock during normal trading hours over the fifteen (15) consecutive
trading days (exclusive of "ex-dividend" and similar dates) immediately prior to
the Exercise Time on the Nasdaq national market quotation system ("Nasdaq
National Market") as confirmed by Bloomberg Financial Market News, or if the
Exercise Time does not occur on a day on which the Common Stock is traded, as of
the close of the most recent day on which the Nasdaq National Market was open
for business.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, an insurance company, a bank, a trust,
an association, an unincorporated organization or a government or any department
or agency thereof.
"Warrant Stock" means the Company's Common Stock issuable upon
exercise of the Warrants; provided that if there is a change such that the
securities issuable upon exercise of the Warrants are issued by an entity other
than the Company or there is a change in the class of securities so issuable,
then the term "Warrant Stock" shall mean one share of the security issuable upon
exercise of the Warrants if such security is issuable in shares, or shall mean
the smallest unit in which such security is issuable if such security is not
issuable in shares.
4. No Voting Rights; Limitations of Liability. This Warrant shall not
------------------------------------------
entitle the Registered Holder hereof to any voting rights or other rights as a
stockholder of the Company prior to the Exercise Time.
5. Warrant Transferable; Restrictions. Subject to the transfer conditions
----------------------------------
and restrictions referred to in this Section 5, the legend endorsed hereon and
those set forth in Section 8, this Warrant and the Warrant Stock issuable upon
the exercise of this Warrant and all rights hereunder are transferable, in whole
or in part, without charge to the Registered Holder, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit II hereto)
----------
at the principal executive office of the Company. If all of the unexercised
purchase rights represented by this Warrant are not transferred pursuant to an
Assignment, the Company shall promptly execute and deliver to the Registered
Holder a new Warrant (bearing the original Date of Issuance) representing the
unexercised purchase rights not so transferred. Neither this Warrant nor the
Warrant Stock may be knowingly sold or otherwise disposed of by any Registered
Holder, directly or indirectly, to any Person whom the Company has designated in
writing to the Registered Holder to be a competitor of the Company (a
"Designated Competitor"), which designation may be made by the Company's Board
of Directors in its reasonable discretion; provided the Company shall include in
such writing the reasons evidencing the basis for such designation. The initial
list of Designated Competitors is attached as
6
<PAGE>
Exhibit A hereto. The Company shall be entitled to update the list of Designated
Competitors once prior to each anniversary of the Date of Issuance by notice in
writing to each Registered Holder.
6. Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable in compliance with Section 8, upon the surrender hereof by the
Registered Holder at the principal executive office of the Company, for new
Warrants of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion of such
rights as is designated by the Registered Holder at the time of such surrender.
The date the Company initially issues this Warrant shall be deemed to be the
"DATE OF ISSUANCE" hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued. All Warrants representing portions of the rights
hereunder are referred to herein as the "WARRANTS."
7. Replacement. Upon receipt of evidence reasonably satisfactory to the
-----------
Company of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of an indemnity undertaking from the Registered Holder
of such certificate or such other Person satisfactory to the Company (it being
acknowledged that an unsecured indemnity from any original Holder or an
affiliated transferee shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed, or mutilated
certificate.
8. Transfer in Compliance with Applicable Securities Laws
------------------------------------------------------
a. This Warrant may not be assigned or transferred, except as
provided herein, and in accordance with and subject to the provisions of the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder (said Act and such rules and regulations being hereinafter
collectively referred to as the "Act") and applicable State securities laws.
This Warrant and the shares of Warrant Stock obtainable hereunder have not been
registered under the Act or any other applicable securities laws, and,
accordingly, neither this Warrant nor any of such Warrant Stock may be offered,
sold, transferred, pledged, hypothecated or otherwise disposed of unless
registered pursuant to or in a transaction exempt from registration under
(evidenced by an opinion of inside or outside counsel reasonably satisfactory to
the Company or by such other means reasonably acceptable to the Company), the
Act and any other applicable state securities laws.
b. Each certificate for Warrant Stock or for any other security
issued or issuable upon exercise of this Warrant shall contain the following
legend on its face
7
<PAGE>
unless, in the opinion of counsel reasonably satisfactory to Company, such
legend is not required:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws. Such shares may not be transferred without such
registration and qualification unless the issuer has received an
opinion of inside or outside counsel satisfactory to it that a
proposed transfer or sale does not require registration or
qualification under the Act or applicable state law. Any transfer of
such securities is also subject to the conditions specified in the
warrant to purchase shares of common stock of System Software
Associates, Inc. (the "Company") dated as of March 4, 1997 (the
"Warrant"), and the Registration Rights Agreement dated March 4, 1997,
among the Company and the other parties thereto (the "Registration
Agreement"). The Registration Agreement and the Warrant provide for,
among other things, certain restrictions upon transfer of the shares
evidenced by this certificate. By accepting such shares, the holder
agrees to be bounded by all such transfer restrictions in the
Registration Agreement and the Warrant. Copies of the form of such
Warrant and the Registration Agreement are on file with the Secretary
of the Company at 500 West Madison Street, 32nd Floor, Chicago,
Illinois 60661 and will be furnished without charge by the Company to
the holder of this certificate upon written request to the Secretary
of the Company at such address.
c. Each Registered Holder of the Warrant, the Warrant Stock and any
other security issued or issuable upon exercise of this Warrant shall indemnify
and hold harmless the Company, its directors and officers, and each other
Person, if any, who controls the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer or any such Person may become subject under the Act, any applicable
state securities law or any other statute or at common law, insofar as such
losses, claims damages or liabilities (or actions in respect thereof) arise out
of or are based upon the disposition by such Registered Holder of the Warrant,
Warrant Stock or other such securities in violation of subparagraph a. above.
Notwithstanding the foregoing, no such indemnification shall be required under
this Section 8.c. with respect to any losses, claims, damages or liabilities
resulting from or arising out of the Company's acts or failure to act,
including, without limitation, any untrue statement or alleged untrue statement
of a material fact in any document publicly filed by the Company or delivered to
the Registered Holder in connection with such transfer, or any omission or
alleged omission to state a material act required to be stated.
8
<PAGE>
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
d. Any purported transfer or assignment of this Warrant or any
Warrant Stock made other than in accordance with this Section 8 shall be null
and void and of no effect.
e. Notwithstanding anything contained in this Section 8 to the
contrary, without the consent of the Company or the requirement for any opinion
of counsel, any Registered Holder or holder of Warrant Stock may, subject to
compliance with Section 5, transfer all or part of this Warrant or Warrant Stock
(i) to a Person who is an "accredited investor" as defined in Rule 501(a) of
Regulation D under the Act, or (ii) to any Person pursuant to an effective
Registration Statement or Rule 144 or Rule 144A under the Act.
9. Notices. All notices, requests, waivers, releases, consents, and other
-------
communications required or permitted by this Warrant (collectively, "Notices")
shall be in writing. Notices shall be deemed sufficiently given for all
purposes under this Warrant (i) when delivered in person, (ii) on the next
business day following the date when dispatched by telegram (upon written
confirmation of receipt), by electronic facsimile transmission (upon written
confirmation of receipt) or by a nationally recognized overnight courier
service, or (iii) three Business Days after being deposited in the United States
certified or registered mail, return receipt requested, first class postage
prepaid. All Notices shall be delivered (x) to the Company at its principal
executive office or (y) to the Registered Holder of this Warrant at such
Registered Holder's address as it appears in the records of the Company.
10. Amendment and Waiver. Except as otherwise provided herein, the
--------------------
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holders of Warrants representing at least two-thirds (2/3) of the shares of
Warrant Stock obtainable upon exercise of the Warrants at the time of such
approval.
11. Description Headings: Governing Law. The descriptive headings of the
-----------------------------------
several Sections of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The construction, validity and interpretation
of this Warrant shall be governed by the internal laws, without giving effect to
conflicts of law principles, of the State of Delaware.
12. Information Deliveries. During the term of this Warrant, the Company
----------------------
will provide each original Holder or their affiliated transferees with copies of
all public reports filed by the Company with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, and such other
information of the Company as such original Holder or their affiliated
transferees shall reasonably request;
9
<PAGE>
provided, that the Company may refuse to comply with any such latter request if
the Company reasonably and in good faith believes that providing the requested
information to the requesting original Holder or their affiliated transferees
would result in the disclosure of material nonpublic information in violation of
applicable law. This obligation shall survive the termination of the Credit
Agreement and the Note Agreement.
*****
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated as of the Date of
Issuance hereof.
SYSTEM SOFTWARE ASSOCIATES, INC.
By: /s/ Joseph J. Skadra
-----------------------------
Name: Joseph J. Skadra
---------------------------
Title: Chief Financial Officer
--------------------------
11
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
--------------------------- -------------------------
The undesigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-________________), hereby subscribes for the purchase
of shares of the Warrant Stock covered by such WArrant having an Aggregate
Exercise Price of $______________ and makes payment herewith in full therefor
either [(a) by check or a wire transfer in immediately available funds in the
amount of the Aggregate Exercise Price ($_____________)] or [(b) by instructing
and permitting the Company that _____ Shares of warrant Stock shall be withheld
in payment thereof]. [Select (a) or, where applicable, (b).]
Certificates for the shares of Warrant Stock subscribed for shall be issued to
the parties listed below:
Name of Issuee Address No. of Shares
-------------- ------- -------------
New Warrants for the rights not exercised hereunder shall be issued to the party
or parties listed below (with respect to such new Warrants, the "Registered
Holder(s)"):
Name of Issuee Address No. of Shares
-------------- ------- -------------
Signature
--------------------------
Address
--------------------------
<PAGE>
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers
all of the rights of the undersigned under the attached Warrant (Certificate No.
W-_________________) with respect to the number of shares of the Warrant Stock
covered thereby set forth below, unto, the following assignee (a "REGISTERED
HOLDER"):
Name of Assignee Address No. of Shares
---------------- ------- -------------
Dated Signature
------------------- ---------------------
---------------------
<PAGE>
EXHIBIT 5.1
(312) 207-1000
June 16, 1997
System Software Associates, Inc.
500 West Madison Street
32nd Floor
Chicago, Illinois 60661
Re: Registration Statement on Form S-3. ("Registration Statement")
Gentlemen and Ladies:
In connection with the proposed registration for resale of 775,000 shares of
Common Stock, $0.0033 par value (the "Common Stock"), of System Software
Associates, Inc. (the "Company"), covered by the above-referenced Registration
Statement, we have examined such documents and have reviewed such questions of
law as we have considered necessary and appropriate for the purposes of this
opinion. We have assumed the genuineness of all signatures, the authenticity
of all documents submitted to as originals, the conformity to original
documents of all the documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents.
Based upon such examination, we advise you that, in our opinion:
(i) The Company has corporate authority to issue the shares of Common
Stock proposed to be offered as set forth in the Registration Statement
when such shares are issued upon exercise of the Warrants described in the
Registration Statement.
(ii) The shares of Common Stock registered for resale as set forth in the
Registration Statement have been duly authorized and, when issued upon
exercise of the Warrants, will be validly issued and fully paid and
nonassessable, and will continue to be so when sold as set forth in the
Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the above-
referenced Registration Statement and the reference to this firm under the
caption "Validity of Stock" in the Prospectus constituting a part of such
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission.
Very truly yours,
/s/ Sachnoff & Weaver, Ltd.
_____________________________________
Sachnoff & Weaver, Ltd.
DRN/WED
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated January 7, 1997, except as to Notes 6, 7 and 11, which are as of January
29, 1997, appearing on page F-3 of System Software Associates, Inc. Annual
Report on Form 10-K for the year ended October 31, 1996. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
_____________________________________
Price Waterhouse LLP
Chicago, Illinois
June 16, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated January 7, 1997, except as to Notes 6, 7 and 11 which are as of January
29, 1997, appearing on page F-2 of System Software Associates, Inc. Annual
Report on Form 10-K for the year ended October 31, 1996. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
/s/ KPMG Peat Marwick LLP
- -------------------------------------
KPMG Peat Marwick LLP
Chicago, Illinois
June 16, 1997
