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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1998
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SYSTEM SOFTWARE ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3144515
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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. WILLIAM M. STUEK
CHIEF EXECUTIVE OFFICER
SYSTEM SOFTWARE ASSOCIATES, INC.
500 WEST MADISON STREET, 32ND FLOOR
CHICAGO, ILLINOIS 60661
(312) 258-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WILLIAM N. WEAVER, JR., ESQ.
SACHNOFF & WEAVER, LTD.
30 SOUTH WACKER DRIVE, 29TH FLOOR
CHICAGO, ILLINOIS 60606
(312) 207-1000
---------------
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 filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF SHARES TO AMOUNT OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF
BE REGISTERED TO BE REGISTERED(1) SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.0033 par value 50,522 $5.1875(2) $262.083(2) $73
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</TABLE>
(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(c), based on the average of the high and
low reported price of the Company's Common Stock on February 1, 1999.
--------------------------------------
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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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED FEBRUARY 3, 1999
50,522 SHARES
SYSTEM SOFTWARE ASSOCIATES, INC.
COMMON STOCK
$.0033 PAR VALUE
This Prospectus covers 50,522 shares (the "Shares") of common stock, par value
$0.0033 per share (the "Common Stock"), of System Software Associates, Inc., a
Delaware Corporation ("SSA", the "Company" or "We"). All of the Shares are being
offered by Riz Shakir, or by pledgees, donees, transferees or other successors
in interest and permitted assigns of Riz Shakir. The Company will not receive
any of the proceeds from the sale of the Shares.
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 February 1, 1999, the last sale price reported was $5.0625.
This Prospectus is to be used in connection with the sale of the Shares from
time to time by Riz Shakir. The Shares may be sold from time to time by Riz
Shakir, 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 Riz Shakir or by any broker-dealer who may participate
in sales of securities covered hereby. See "Plan of Distribution and Offering
Price, Page 16. "
The Company will pay the legal and other expenses of this offering (estimated
to be $33,000), except that Riz Shakir 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 Riz Shakir against certain liabilities,
including liabilities arising under the Securities Act. See "Plan of
Distribution and Offering Price."
-----------
THIS INVESTMENT INVOLVES RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
-----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
The date of this Prospectus is February __,1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Risk Factors.................................................. 3
Available Information......................................... 13
Incorporation of Certain Documents by Reference............... 13
The Company................................................... 14
Use of Proceeds............................................... 15
Selling Stockholder........................................... 15
Plan of Distribution and Offering Price....................... 16
Validity of Stock............................................. 17
Experts....................................................... 17
</TABLE>
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The information in this prospectus is not complete and may be changed. Riz
Shakir may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should carefully consider
these risk factors, together with all of the other information included in this
prospectus, before you decide whether to purchase shares of our common stock.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
such statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully because they (i) discuss our
future expectations, (ii) contain projections of our future results of
operations or of our financial condition or (iii) state other "forward-looking"
information. We believe it is important to communicate our expectations to our
investors. However, there may be events in the future which we are not be able
to accurately predict or over which we have no control. The risk factors listed
in this section, as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events which may cause our actual results
to differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of the events described in these risk factors and elsewhere in this
prospectus could have a material adverse effect on our business, operating
results and financial condition.
In addition to the other information in this Prospectus, the following
factors should be carefully considered in evaluating an investment in the Shares
offered by this Prospectus:
NET LOSSES; UNCERTAINTY OF FUTURE RESULTS
We have experienced net losses for the fiscal years ended October 31, 1997
and October 31, 1998. We may continue to incur operating and net losses. Our
future operating results will depend upon a number of business factors,
including:
. the other factors discussed in these "Risk Factors,"; and
. general economic conditions.
In addition, before a given year or other fiscal period, we may hire sales
and product development personnel and make other fixed cost decisions which
would result in increased expenses in such year or other period, based upon
anticipated revenues for such year or other period. If we do not achieve such
anticipated revenues, operating results would be materially adversely effected.
Due to the seasonality and concentration of our revenues at the end of fiscal
periods (particularly from August 1st to October 31st of each year) and our cost
structure, if
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revenue targets are not met, any or all of our business, operating results and
financial condition could be materially adversely affected. See "--Variability
of Quarterly Operating Results; Seasonality, Page 6."
Since the initial release of version 6.0 of our BPCS Client/Server software
product, we have performed services for certain early adopter clients for which
we have not been compensated (or we have been only partially compensated) in
order to insure the successful implementation of BPCS Client/Server for these
clients. In addition, in certain implementations, we have experienced delays in
payments of license fees owed and, in certain circumstances, have incurred
settlement costs. We have established reserves related to warranty services and
accounts receivable which we believe are adequate at present. We periodically
review the adequacy of these reserves in light of our experience and, we may
adjust the level of these and other reserves. Charges related to increases in
reserves could have a material adverse affect on our results of operations for
the quarter in which they are taken.
In the third fiscal quarter of 1998, we initiated a financial restructuring
of our Company consisting of a $120 million write-off broken down as follows: a
$60 million write-off of capitalized software and affiliated tools; a reserve of
$30 million to cover space reductions and severance pay for up to 300 employees
that were terminated; and a $30 million reserve set up for warranties and
support comprised of accounts receivable write-offs, refunds, hardware upgrades
and the cost of free services. In conjunction with this restructuring, we
discontinued both the sale and support of ERP UNIX platforms associated with the
IBM-Risc 6000 and the Digital Equipment Corporation Alpha. We believe that the
reserves set up are sufficient to cover the restructuring costs contemplated,
but if they prove to be insufficient, our business, operating results and
financial condition could be materially adversely effected. Further, the
restructuring write-off has resulted in our being considerably higher leveraged.
See "Leverage, Page 4."
LEVERAGE
As of October 31, 1998, the ratio of our total debt to equity (including
the Series A Preferred Stock outstanding as equity) (expressed as a percentage)
is approximately 82%. Annual dividends on our Series A Preferred Stock are $1.2
million. Our annual interest expense on $138 million in convertible notes (the
"Convertible Notes") will be $9.7 million. Approximately $1.7 million in capital
lease obligations remain outstanding as of October 31, 1998.
Our outstanding debt load could (i) adversely affect our ability to obtain
additional financing, (ii) make us more vulnerable to general economic and
market conditions, industry downturns and competitive pressures, (iii) impair
our ability to fund research and development and respond to technological
changes, and (iv) result in us having to dedicate a significant amount of any
cash generated from operating activities to the payment of debt service and
other financing obligations, thereby reducing funds available for operations,
our existing markets and our future business opportunities. Our ability to meet
our debt service and other obligations will be dependent on our future
performance, which will be subject to financial, business and other factors
affecting our operations, many of which are beyond our control.
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COMPETITION
The ERP application software market is highly competitive, rapidly changing
and significantly affected by the introduction of new products and other market
activities of our competitors. Our BPCS Client/Server product line is targeted
at both the market for open systems, client/server ERP software solutions and
the IBM AS/400 ERP market. Our current and potential future competitors offer a
variety of products and solutions to address these markets. Our primary
competition comes from a large number of independent software vendors and other
sources including:
. companies offering products that run on UNIX-based systems in a client/server
environment such as Oracle Corporation, Baan Company N.V. and, in particular,
SAP AG; and
. companies offering products that run on AS/400 and other mid-range computers,
including J.D. Edwards, QAD and JDA.
We also face competition from a variety of other vendors of ERP software.
In addition, we face 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. We
also face indirect competition from proprietary systems developed by the
internal Management Information Systems departments of large organizations.
Competition in our industry is primarily based on sales ability, quality of the
products, scope of product line and quality of support. To date, there has not
been any significant price competition in this market, but price competition
could become a factor in the future.
Other advantages that our competitors may have over us include:
. historical market presence;
. greater financial, technical, marketing and other resources;
. greater name recognition; and
. more customers who have their UNIX-based or client/server products already
installed.
In our client/server ERP systems, we and our customers rely on a number of
consulting and systems integration companies for implementation of our products,
and other customer support services, as well as recommendations of our products
during the evaluation stage of our customers' purchase process. Many of these
third parties have similar, and usually more established, relationships with our
main competitors. If we are unable to develop and retain effective, long-term
relationships with a sufficient number of these third parties, our competitive
position could be materially adversely affected.
We believe that our future success will depend in part on our ability to
expand sales of our BPCS Client/Server products. Many of our competitors
currently offer similar products for client/server systems. We may not be able
to compete successfully with existing or new competitors and this competition
could have a material adverse effect on our business, operating results and/or
financial condition.
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VARIABILITY OF QUARTERLY OPERATING RESULTS; SEASONALITY
Our revenues and operating results have varied, sometimes significantly,
from quarter to quarter. We anticipate that our revenues in general, and our
license fee revenues in particular, will continue to fluctuate and will be
difficult to forecast due to a number of reasons, many of which are beyond our
control. The factors affecting these fluctuations include:
. delays in sales due to the our relatively long sales cycles for our BPCS
Client/Server product line;
. the size, timing and complexity of individual license transactions;
. delays in customer orders resulting from our customers' anticipation of
product enhancements or new product offerings by us or our competitors;
. market acceptance of new or enhanced versions of our product and hardware
platforms, operating systems and RDBMS with which our products operate;
. customer cancellation of major planned software implementation programs;
. foreign currency exchange rate fluctuations;
. changes in our, or our competitors, pricing policies;
. delays in modifying or customizing our product for use in new markets; and
. general economic factors.
A significant portion of our revenues in any quarter may be derived from a
limited number of large, one-time license sales. This may cause significant
variations in quarterly license fees. We also believe that the purchase of our
product by our customers is somewhat discretionary and generally involves a
significant commitment of a customers' capital resources. Therefore, a downturn
in the business of any of our potential customers' business could result in
order cancellations which could have a significant adverse impact on our revenue
and quarterly results. Moreover, declines in general economic conditions could
cause significant reductions in corporate spending for information technology,
which could result in delays or cancellations of orders for our product.
We have experienced a seasonal pattern in our operating results, with the
fourth quarter typically having the highest revenues and operating income. We
believe that fourth quarter revenues are better than the other quarters'' due to
our sales compensation plans. We believe that this seasonality is common in the
computer software industry, typically resulting in first quarter revenues in any
year being lower than revenues in the immediately preceding fourth quarter. In
addition, our European operations generally provide lower revenues during the
summer months as a result of the generally reduced economic activity in Europe
during that time. This seasonal factor could materially adversely affect third
quarter revenues.
Historically, we have also recognized a substantial portion of our revenues
from sales booked and shipped in the last month of a quarter. As a result, the
magnitude of quarterly fluctuations in license fees may not become evident until
late in a particular quarter. If sales forecasted from a specific customer for a
particular quarter are not realized in that quarter, we are unlikely to be able
to generate revenues from alternate sources in time to compensate for this
shortfall. As a result, a lost or delayed sale could have a material adverse
effect on our quarterly operating results. To the extent that significant sales
occur earlier than expected, operating results for subsequent quarters may be
adversely affected. In addition, we have also historically operated with little
backlog because our products are generally shipped as orders are received.
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As a result, revenues from license fees in any quarter depend largely on orders
booked and shipped in that quarter.
Based upon the factors described above, we believe that:
. our quarterly revenues and operating results are likely to vary significantly
in the future;
. that period-to-period comparisons of our results of operations are not
necessarily meaningful; and
. as a result, such comparisons should not be relied upon as indications of
future performance.
Moreover, we do not know if revenues will grow in future periods, or that we
will be profitable on a quarterly or annual basis. In future periods, our
operating results may be below the expectations of stock market analysts and
investors. In such event, the price of the our common stock could be materially
adversely affected.
RISKS ASSOCIATED WITH LENGTHY SALES CYCLE
Because the license of our BPCS Client/Server products generally involves a
significant capital commitment by the customer (ranging from approximately
$100,000 to tens of millions of dollars), the sales cycle associated with a
customer's purchase of BPCS Client/Server product line is generally lengthy
(with a typical duration between three and 18 months), varies from customer to
customer and is subject to a number of significant risks over which we have
little or no control. These risks include:
. customers' budgetary constraints;
. timing of the customer's budget cycle;
. customer concerns about our, or our competitor's, introduction of new
products; and
. general economic downturns which can result in delays or cancellations of
information systems investments.
Due in part to the strategic nature of the BPCS Client/Server products,
potential customers are typically cautious when making decisions relating to the
purchase or our products. Our customers' decision to license a BPCS
Client/Server product from us generally requires us to provide a significant
level of education to prospective customers regarding the uses and benefits of
the BPCS Client/Server product, and we must frequently commit substantial
resources to presales support. We often rely upon third parties to perform
implementation and systems integration services relating to our BPCS
Client/Server products. The scheduling and coordination of such services with
these third parties cause our sales cycles to be lengthened and can result in
the loss of sales. The uncertain outcome of our sales efforts and the length of
our sales cycles could result in substantial fluctuations in operating results.
SEC INVESTIGATION
Since October 1995, the Company has been the subject of a private
investigation by the Securities and Exchange Commission (the "Commission"). The
inquiry primarily relates to revenue recognition issues. The Staff of the
Enforcement Division has advised the Company that it has tentatively concluded
that in past years the Company improperly recognized revenue on software
contracts for UNIX based software products and software reseller contracts, and
in so doing violated various provisions of the federal securities laws. Although
the Company believes that there are meritorious defenses in connection with the
issues, the Company is unable to predict at this time the consequences to the
Company of the Commission's investigation. There can be no assurance that any
actions taken by the Commission may not have a material adverse effect on the
business, financial condition or results of operations of the Company.
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RAPID TECHNOLOGICAL CHANGE; PRODUCT ROLLOUT DELAYS
The market for our software products is characterized by:
. rapid technological advances;
. evolving industry standards in computer hardware and software technology;
. changes in customer requirements and preferences; and
. frequent new product introductions and enhancements.
Customer requirements for products can change rapidly as a result of
innovations or changes within the computer hardware and software industries, the
introduction of new products and technologies (including new hardware platforms
and programming languages) and the emergence, evolution or widespread adoption
of industry standards. For example, increasing commercial use of the Internet
may give rise to new customer requirements and new industry standards. Our
future success will depend upon our ability to continue to improve our current
product line and to develop and introduce new products that keep pace with
technological developments, satisfy increasingly sophisticated customer
requirements and achieve market `acceptance. In particular, we must continue to
anticipate and respond adequately to advances in RDBMS software and desktop
computer operating systems such as Windows. We do not know if we 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 our new products 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. We have, in the past, experienced delays, as is common throughout
the software industry, in the scheduled introduction of new and enhanced product
functions. In addition, complex software programs, including those introduced by
us, usually contain undetected errors or "bugs" when first introduced or as new
versions are released. These bugs are often discovered only after the product
has been installed and used by customers. We do not know if these bugs will be
found in future releases of our software. Often such bugs may impair the market
acceptance of the product and adversely affect our business, operating results
and financial condition.
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DEPENDENCE ON AS/400 USERS
Although we have developed new versions of our BPCS Client/Server product
line for the UNIX/Oracle/Informix open systems marketplace, a substantial
portion of our revenues relate to licenses of BPCS Client/Server for IBM AS/400
installations in the industrial sector. We recently discontinued UNIX Risc 6000
and DEC Alpha product lines thereby increasing our reliance on the AS/400
marketplace. In fiscal 1997, over 75% of our software license fee revenue was
derived from the AS/400 market. Therefore, even as we continue to innovate and
market versions of the BPCS Client/Server product line for the open systems
environment, a substantial portion of our future revenues will be derived from
and will be dependent upon the continued widespread use of the AS/400 and the
continued support of IBM's AS/400 platform and proprietary DB/2 database system.
We do not know if our customers will continue to use or if IBM will continue to
support the AS/400 and DB/2. We will be required and intend to continue to
devote substantial resources to supporting our installed base of AS/400
customers and the versions of the BPCS Client/Server product line used by them.
In order to retain our AS/400 customers, we may be required to adapt our BPCS
Client/Server product line to conform to any changes made in the AS/400
operating system in the future. If we do not adapt to future changes in the
AS/400 and/or DB/2 systems, or experience delays in doing so, our business may
be adversely affected.
RISKS FROM INTERNATIONAL OPERATIONS
We currently operate directly and through our other companies affiliated
with us in over 90 countries. In the fiscal year ended October 31, 1997,
approximately 66% of our total revenues were generated from sales outside of the
United States. In the fiscal year ended October 31, 1998 approximately 71% of
our total revenues were generated from sales outside of the United States. Our
operations are subject to risks inherent in international business activities,
including:
. 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.
We do not know if geographic, time zone, language and cultural differences
between our international personnel and operations will result in problems that
materially adversely affect our business, operation results and financial
condition. In the past, we have experienced and may continue to experience
operating losses in one or more regions of the world for one or more periods.
Our ability to manage such operational fluctuations and the failure to sustain
or increase
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international revenue could have a material adverse effect on the our business,
operating results and financial condition.
We generate a significant portion of our revenue and expenses from foreign
operations in currencies other than United States dollars. As a result,
fluctuations in the values of the respective currencies in which we generate
revenue and incur expenses could materially adversely affect our business,
operating results and financial condition. For example, an increase in the value
of the United States dollar relative to foreign currencies could make our
products more expensive and, therefore, less competitive in other markets.
Fluctuations in currencies relative to the United States dollar will affect
period-to-period comparisons of our reported results of operations. Due to the
constantly changing currency exposures and the volatility of currency exchange
rates, we do not know if we will experience currency losses in the future, and
we can also not predict the effect of exchange rate fluctuations upon future
operating results. We do not currently undertake hedging transactions.
CONTROL BY EXISTING STOCKHOLDER; POTENTIAL CONTROL BY PREFERRED STOCKHOLDER
Roger E. Covey, our former Chairman and Chief Executive Officer, currently
beneficially owns approximately 20.5% of the our 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 our Board and the approval of significant change in control
transactions, and may be deemed to have control over our and affairs. Mr.
Covey's significant equity interest in our 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 us.
For so long as at least 2,500 shares of Series A Preferred Stock remain
outstanding, we may not take certain actions without the prior written consent
of the holder(s) of a majority of the outstanding shares of Series A Preferred
Stock, including the payment of dividends or any other distribution with respect
to the Common Stock, the incurrence of additional debt (other than a working
credit facility of up to $40.0 million and certain other exceptions), the
entering into of any merger, consolidation, sale, assignment, lease or transfer
of any material portion of the our assets and certain other material
transactions. The private investor holding the Series A Preferred Stock also has
the right either to designate one new member of the our Board of Directors or
one observer who may attend board meetings. The terms of the Series A Preferred
Stock may have the effect of making certain transactions more difficult absent
the support of the holders of the Series A Preferred Stock or the redemption of
the Series A Preferred Stock.
VOLATILITY OF STOCK PRICE
The trading price of our common stock has fluctuated widely. It could
continue to fluctuate due to a variety of factors, including:
. quarterly fluctuations in our results of operations;
. demand for our products and services;
. the size, timing and structure of significant licenses with our customers;
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. the degree of market acceptance of new or enhanced versions of our BPCS
Client/Server product line;
. the public opinions of analysts about us and/or our products and technology;
. new competitors;
. technological advances by competitors;
. delays in sales as a result of lengthy sales cycles;
. changes in operating expenses;
. foreign currency exchange rate fluctuations;
. changes in our pricing policies or the pricing policies or our competitors;
. customer order deferrals in anticipation of product enhancements by the us or
our competitors;
. customer cancellation of major planned software development programs; and
. general economic factors and other factors, many of which are beyond our
control.
In future quarters, our operating results may be below expectations of
public market analysts and investors. If so, or if adverse conditions prevail or
are perceived to prevail generally or with respect to our business, the price of
our common stock would likely be immediately materially adversely affected. In
addition, the stock market has experienced volatility that has particularly
affected the market prices of equity securities of many technology companies.
Often, this volatility has been unrelated or disproportionate to the operating
performance of such companies. These broad market fluctuations, as well as
general economic, political and market conditions, such as recessions or
international currency fluctuations, may adversely affect the market price of
our common stock.
ANTI-TAKEOVER CONSIDERATIONS
We are 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. We have also adopted a
stockholders' rights plan, which can have a significant anti-takeover effect by
discouraging a potential acquiror from acquiring our shares, by substantially
diluting the value of the acquired shares. Upon a Change in Control, we will
also be obligated to pay dividends on the Series A Preferred Stock at an annual
rate equal to 14% multiplied by the then-applicable Liquidation Price for the
Series A Preferred Stock. A Change in Control under similar circumstances would
most likely also constitute an event of default under any new bank credit
facility we would enter into. These provisions could serve to impede or prevent
a change of control or have a depressive effect on the price of our common stock
and securities convertible or exchangeable into common stock.
11
<PAGE>
NEW EXECUTIVE MANAGEMENT TEAM
During the fiscal year ended October 31, 1998, William M. Stuek was elected
our Chief Executive Officer, Lawrence A. Zimmerman was elected to the position
of Chief Financial Officer, Lorraine Fenton became our Vice President of
Development, Robert Nussbaum was hired as Vice-President of Product Management
and William Noble became Vice-President of Business Development and Distribution
Channels. All of the new members of our management team have joined our Company
within the last fiscal year and all of them came from the IBM Corporation. It is
too early to tell whether this new executive management team will be successful
in managing our business affairs. Should they not be successful, our business
could be adversely effected.
12
<PAGE>
AVAILABLE INFORMATION
We file reports, proxy statements and other information with the
Commission. Those reports, proxy statements and other information may be
obtained:
. At the Public Reference Room of the Commission, Room 1024 - Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549;
. At the public reference facilities at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 or
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661;
. By writing to the Commission, Public Reference Section, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549;
. At the offices of the National Association of Securities Dealers, Inc.,
Reports Section, 1735 K Street, N.W., Washington, DC 20006; or
. From the Internet site maintained by the Commission at http://www.sec.gov.
which contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission.
Some locations may charge prescribed or modest fees for copies.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act covering the shares of common stock offered
hereby. As permitted by the Commission, this Prospectus, which constitutes a
part of the Registration Statement, does not contain all the information
included in the Registration Statement. Such additional information may be
obtained from the locations described above. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete. You should refer to the contract or other document for
all the details.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
are incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended October
31, 1998, filed on January 29, 1999;
(b) the Company's Current Reports on Form 8-K, filed on January 12, 1998;
13
<PAGE>
(c) 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
(d) the Company's Proxy Statement on Form 14A, filed on March 13, 1998.
All documents filed by us pursuant to Section 13(a), 13 (c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of this offering are incorporated by reference and become a part of
this Prospectus and to be a part hereof from their date of filing. Any statement
contained in this Prospectus or in a document incorporated by reference are
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in any such document 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.
On request, we will provide anyone who receives a copy of this Prospectus
with a copy of any or all of the documents incorporated in this Prospectus by
reference. Written or telephone requests for such copies should be directed to
our principal office: Investor Relations Department, System Software Associates,
Inc., 500 West Madison Street, 32nd Floor, Chicago IL 60661, Telephone: (312)
641-2900.
THE COMPANY
System Software Associates, Inc. ("SSA" the "Company, or "We") is a leading
provider of cost-effective business enterprise information systems to the
industrial sector worldwide. Our BPCS (Business Planning and Control System)
Client/Server product line provides business process re-engineering and
integration of an enterprise's operations, including multi-mode manufacturing
processes, supply chain management and global financial solutions. The BPCS
Client/Service product line delivers scalability, interoperability and
reconfigurability in a comprehensive product suite to meet changing market
demands. The distributed object computing architecture ("DOCA") of BPCS
Client/Service produces the benefits of next generation technology in conformity
with industry standards. We market, sell and service our product lines to large
and intermediate sized industrial sector firms primarily through its own world-
wide sales organization and, to a much lesser extent, through a network of over
100 independent software companies ("Affiliates"). The Company has strategic
relationships with major computer hardware manufacturers, such as IBM, Hewlett
Packard and Digital Equipment; supply chain management software companies, such
as i2 and Manugistics; and major systems integrators, such as CAP Gemini and the
Big Five consulting firms.
Our executive offices are located at 500 West Madison Street, 32nd Floor,
Chicago, IL 60661. The Company's telephone number is (312) 258-6000.
14
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of any of the Shares by
Riz Shakir herein.
SELLING STOCKHOLDER
We issued 50,522 shares of its Common Stock to Riz Shakir pursuant to a
Consulting Agreement and General Release dated as of September 1, 1998 between
the Company and Mr. Shakir. Until August 31, 1998, Mr. Shakir had been employed
by us as our Executive Vice President of Research and Development.
The following table sets forth the number of Shares Mr. Shakir beneficially
owned prior to this offering, the number of shares being offered by Mr. Shakir
in this offering and the number of shares to beneficially owned by Mr. Shakir
after the offering, assuming that Mr. Shakir sells 100% of the shares being
offered in this offering. The number of shares which he sells will be in his
discretion. Accordingly, after the offering, Riz Shakir could hold any number of
shares between 0 and the full number indicated below. Only the Consulting
Agreement shares held by Mr. Shakir prior to this offering are being offered by
this Prospectus. The percentage of outstanding Shares held by Riz Shakir prior
to and after this offering represents less than one percent of our outstanding
Shares.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OWNED NUMBER OF NUMBER OF
SELLING PRIOR TO SHARES BEING SHARES AFTER
STOCKHOLDER OFFERING (1) (2) OFFERED THE OFFERING
- --------------- ------------------ -------------- ---------------
<S> <C> <C> <C>
Riz Shakir 141,535 50,522 91,013
</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.
(2) Mr. Shakir beneficially owns 137,803 shares of the Company's common stock.
Included in Mr. Shakir's beneficially owned shares are options, exercisable
within sixty (60) days from the date hereof, to purchase 46,569 shares of the
Company's common stock. Beneficial ownership is determined in accordance with
the rules of the Commission, and includes voting and investment power with
respect to the shares shown as beneficially owned.
15
<PAGE>
PLAN OF DISTRIBUTION AND OFFERING PRICE
Mr. Shakir may sell the Shares from time to time, or by his pledgees,
donees, transferees or other successors in interest. Such sales may be made on
one or more exchanges or in the 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, Mr.
Shakir may engage brokers or dealers to arrange for other brokers or dealers to
participate. Brokers and dealers will receive commissions or discounts from Mr.
Shakir in amounts to be negotiated prior to the sale. Mr. Shakir 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. Mr. Shakir 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 Riz Shakir 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 Riz Shakir to the public. Such expenses (estimated to be
$33,000), include legal and accounting expenses, 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 Mr. Shakir.
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 Mr. Shakir 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 Mr.
Shakir, or his agent.
16
<PAGE>
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 $4.625 per
share 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 and in June 1997, the Company granted S&W additional options to purchase
36,000 shares. The later options are also exercisable at $4.625 and $7.8125 per
share, respectively, and become exercisable in equal portions on the five
anniversaries of the grant date. Mr. Weaver disclaims beneficial ownership of
all but his pro rata portion of the shares covered by the options. Mr. Weaver
personally owns 300,000 shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements of the Company as of October 31,
1998, 1997 and 1996 and for the three years then ended have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
17
<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...................... $ 73
Accounting Fees............................................... 5,000*
Legal Fees and Expenses....................................... 20,000*
Printing...................................................... 5,000*
Miscellaneous................................................. 2,927*
---------
Total....................................................... $ 33,000*
=========
</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
<PAGE>
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:
4.1 Certificate of Incorporation, as amended to date (1)
4.2 By-Laws, as amended to date (2)
4.3 Consulting Agreement and General Release Dated as of September 1, 1988
5 Opinion of Sachnoff & Weaver, Ltd. regarding the legality of the
securities being registered
23.1 Consent of KPMG LLP
23.3 Consent of Sachnoff & Weaver, Ltd. (included in Exhibit 5)
24 Powers of Attorney (included on the Signature Page of this Registration
Statement)
- --------
(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).
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;
<PAGE>
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.
(c) 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.
<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 FEBRUARY 3, 1999.
System Software Associates, Inc.
By /s/ William M. Stuek
----------------------------------
William M. Stuek,
Chief Executive Officer
THE UNDERSIGNED OFFICERS AND DIRECTORS OF SYSTEM SOFTWARE ASSOCIATES, INC.,
HEREBY SEVERALLY CONSTITUTE AND APPOINT LAWRENCE ZIMMERMAN AND DOUGLAS R.
NEWKIRK, 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.
<PAGE>
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.
SIGNATURE TITLE DATE
--------- ----- ----
Chief Executive Officer,
Chief Operating Officer,
President and Chairman of
/s/ William M. Stuek the Board of Directors February 3, 1999
- ---------------------------
William M. Stuek
Executive Vice President,
Chief Financial Officer and
Director (Principal
/s/ Lawrence Zimmerman Financial Officer) February 3, 1999
- ---------------------------
Lawrence Zimmerman
Vice President of Finance
and Controller (Principal
/s/ Joseph Skadra Accounting Officer) February 3, 1999
- ---------------------------
Joseph Skadra
/s/ William N. Weaver, Jr. Secretary and Director February 3, 1999
- ---------------------------
William N. Weaver, Jr.
/s/ Douglas Smith Director February 3, 1999
- ---------------------------
Douglas Smith
Director February 3, 1999
- ---------------------------
Casey G. Cowell
Director February 3, 1999
- ---------------------------
Andrew J. Filipowski
<PAGE>
EXHIBIT 4.3
CONSULTING AGREEMENT AND GENERAL RELEASE
THIS CONSULTING AGREEMENT AND GENERAL RELEASE (the "AGREEMENT") is made and
entered into effective September 1, 1998 by and between System Software
Associates, Inc., a Delaware corporation, including its affiliates,
subsidiaries, subdivisions, facilities and related organizations (collectively,
"SSA"), and Riz Shakir ("SHAKIR").
RECITALS
--------
A. Shakir has been employed by SSA as Executive Vice President, Research
and Development.
B. SSA and Shakir agree that his employment terminated effective August
31, 1998.
C. SSA and Shakir agree that he will be engaged as a consultant to SSA
from and after September 1, 1998 through July 31, 1999, subject to the terms and
limitations of this Agreement.
D. SSA and Shakir acknowledge that Shakir will be available to perform
services as hereafter mutually agreed upon between Shakir and SSA and as
directed by SSA's Vice President of Product Management and, in consideration of
his consulting engagement and the other terms and conditions herein, Shakir will
release any and all claims and causes of action he may have against SSA and will
be governed by the confidentiality and non-competition agreement set forth
herein.
NOW, THEREFORE, in consideration of the above premises and the following
mutual covenants and conditions, the parties agree as follows:
I. Termination of Employment. Effective the close of business on August
-------------------------
31, 1998, SSA and Shakir agree that his employment with SSA terminated. Shakir
agrees to resign his employment and all appointments he holds with SSA and its
affiliates effective as of such date. Shakir's termination shall be deemed to
have occurred by virtue of his voluntary resignation under mutually amicable
circumstances. From September 1, 1998 through July 31, 1999, Shakir shall be
engaged as a consultant to SSA. Shakir agrees that he will not hereinafter seek
reinstatement, recall or re-employment with SSA.
II. Consulting Services. Through July 31, 1999, Shakir agrees to make
-------------------
available to SSA his services, experience and knowledge with respect to
manufacturing, marketing and selling of products produced by SSA. SSA shall
make available to Shakir such information in the possession of SSA, as well as
access to SSA's employees and equipment, as determined by SSA and Shakir to be
reasonably necessary for Shakir to perform his services hereunder. Nothing
contained in this Agreement shall be deemed to create an employment relationship
between SSA and Shakir. In providing such consulting services, Shakir shall be
an independent contractor and shall not have the authority to bind SSA with
respect to any matter. SSA may terminate the consulting engagement at any time
for "cause" or for "non-performance." For purposes of this Agreement, Shakir
shall be deemed terminated "for cause" if Shakir shall have committed any felony
including, but not limited to, a felony involving fraud, theft,
misappropriation, dishonesty, or embezzlement, or shall have committed
intentional acts that materially impair the goodwill or business of SSA or cause
significant material damage to its property, goodwill, or business. For
purposes of this Agreement, Shakir shall be deemed terminated for "non-
performance" if SSA terminates Shakir after Shakir shall have refused to, or
failed to, perform his material duties hereunder, or shall have violated any
written SSA policies or procedures; provided, however, that no termination for
such non-performance shall be effective unless Shakir does not cure such
refusal, failure, or violation to SSA's satisfaction as soon as
<PAGE>
practicable after SSA gives Shakir written notice identifying such refusal,
failure or violation (and, in any event, within thirty (30) days after receipt
of such written notice).
III. Duties. Through July 31, 1999, Shakir shall be available to perform
------
projects to be mutually agreed upon by SSA and Shakir, such projects to be
performed at the direction of the Vice President of Product Management and
during such times as shall be mutually agreed upon. Shakir shall diligently,
competently, and faithfully perform all such assigned projects, which
assignments shall be performed, unless otherwise agreed upon by SSA and Shakir,
in the same manner as SSA provides consulting services to its customers under
SSA's "Client Solutions Policies and Practices." SSA shall provide to Shakir
for the term of this Agreement the personal computer currently in the possession
of Shakir, which computer shall be returned to SSA on the date this Agreement
terminates.
IV. Compensation for Consulting Services. SSA and Shakir shall agree upon
------------------------------------
the level of compensation for each assigned project at the time of such
assignment. SSA will promptly reimburse Shakir for all expenses reasonably
incurred by him in the scope of his engagement as a consultant under this
Agreement upon submission of an expense report and request for reimbursement in
accordance with SSA policies for reimbursement of expenses for senior officers.
As an independent contractor, the payments will not be subject to any payroll
taxes or withholding and a Form 1099-MISC will be issued at year end by SSA.
V. Release Payments.
----------------
A. As a settlement payment hereunder, SSA shall pay Shakir in a
single sum the sum of $167,500, such amount to be paid to Shakir upon the
date this Agreement becomes effective as set forth in Paragraph 13C.
B. SSA and Shakir hereby agree that, in consideration of the release
of any claims Shakir may have for the delayed registration of certain
shares of common stock of SSA owned by him, SSA shall issue and deliver to
him 50,522 shares of SSA's common stock (the "SHARES"). Shakir understands
that the Shares are not currently being registered under the Securities Act
of 1933 ("SECURITIES ACT") by reason of their contemplated issuance in a
transaction exempt from the registration and prospectus delivery
requirements of the Securities Act pursuant to Section 4(2) thereof.
Shakir further agrees that he will not sell or otherwise dispose of the
Shares unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered
or qualified or is exempt from registration or qualification under
applicable securities law of any State. Shakir understands that a
restrictive legend consistent with the foregoing has been or will be placed
on the certificates evidencing the Shares, and related stop transfer
instructions will be noted in the stock transfer records of SSA and/or its
stock transfer agent for the Shares. The foregoing notwithstanding, SSA
agrees that it will prepare and file with the Securities and Exchange
Commission a registration statement for an offering to be made on a
continuous basis pursuant to Rule 415 of the Securities Act of 1933,
registering the resale from time to time by Shakir of the Shares on Form S-
3. The filing will be made within forty-five (45) calendar days of the
date SSA receives a written notice from Shakir requesting such a filing.
The Company, however, may restrict disposition of such Shares, in which
event Shakir agrees not to dispose of such Shares, provided that the
Company shall have delivered a notice in writing to Shakir stating that a
delay in the disposition of Shares is necessary because the Company, in its
reasonable judgment, exercised in good faith, has determined that such
sales of Shares would require public disclosure by the Company of material
nonpublic information that the Company deems advisable not to disclose.
C. Ten percent (10%) of the payments made in Paragraph 5A shall be in
consideration of the release of any claim under the Age Discrimination in
Employment Act of 1967, as amended, and as described in Paragraph 7, and
Shakir agrees that such consideration is in addition to anything of value
to which he already is entitled. The remainder of the payments shall be in
<PAGE>
consideration of the duties described above in Paragraph 3, the release of
all other claims described below in Paragraph 7, and the Protective
Agreement described in Paragraph 10.
D. Shakir agrees that he is owed $12,000 for all earned but unused
vacation pay, which amount shall be paid to him upon the date this Release
becomes effective as set forth in Paragraph 13C. Shakir acknowledges that
he has been paid the $10,000 to which he was entitled under the SSA
Management Bonus Plan. Except as set forth in this Agreement, no other
sums (contingent or otherwise) shall be paid to Shakir in respect of his
employment, or consulting relationship, with SSA, and any such sums
(whether or not owed) are hereby expressly waived by Shakir, provided,
however, that Shakir (i) may elect to continue his health insurance
coverage, as mandated by COBRA, which may continue to the extent required
by applicable law, and (ii) shall be entitled to receive his account
balance, if any, under SSA's 401(k) Plan in accordance with the terms of
such Plan.
VI. Stock Options. During the period in which Shakir is engaged as a
-------------
consultant to SSA, and through July 31, 1999, if later, stock options previously
granted to Shakir under SSA's Long-Term Incentive Plan shall continue to vest in
accordance with their vesting schedule and the other terms of the Long-Term
Incentive Plan. Shakir also shall continue to vest in stock options granted to
him under SSA's Nonstatutory Stock Option Plan so long as he is engaged as a
consultant to SSA, and his rights with respect to the options granted under such
Nonstatutory Stock Option Plan shall be governed by the terms of the
Nonstatutory Stock Option Plan. In addition to the foregoing, Shakir shall be
entitled to exercise any options previously granted to him under SSA's Incentive
Stock Option Plan in accordance with the terms of such plan. In recognition of
the limitations of such Incentive Stock Option Plan, Shakir shall be given a
non-qualified stock option hereunder to purchase an additional 9,897 Shares
under SSA's Long-Term Incentive Plan, on the effective date hereof, exercisable
at 4-5/8 per Share, which options shall vest as follows:
Number of Shares Vesting Date
---------------- ------------
1,631 January 14, 1999
2,266 March 14, 1999
6,000 June 1, 1999
The terms of such grant shall be governed by the provisions of the Long-Term
Incentive Plan.
VII. General Release.
---------------
A. As a material inducement to SSA to enter into this Agreement and
in consideration of the payments to be made by SSA to Shakir in Paragraphs
5 and 6 above, Shakir, with full understanding of the contents and legal
effect of this Agreement, and having the right and opportunity to consult
with his counsel, releases and discharges SSA, its stockholders, officers,
directors, supervisors, managers, employees, agents, representatives,
attorneys, divisions, subsidiaries and affiliates, and its and their
predecessors, successors, heirs, executors, administrators, and assigns
(collectively, the "SSA RELEASED PARTIES") from any and all claims,
actions, causes of action, grievances, suits, charges, or complaints of any
kind or nature whatsoever, that he ever had or now has, whether fixed or
contingent, liquidated or unliquidated, known or unknown, suspected or
unsuspected, and whether arising in tort, contract, statute, or equity,
before any federal, state, local, or private court, agency, arbitrator,
mediator, or other entity, regardless of the relief or remedy. Without
limiting the generality of the foregoing, it being the intention of the
parties to make this Agreement as broad and as general as the law permits,
this Agreement specifically includes any and all claims arising from any
alleged violation by SSA Released Parties under the Age Discrimination in
Employment Act of 1967, as amended; Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1866, as amended by the Civil
Rights Act of 1991 (42 U.S.C. (S) 1981); the Rehabilitation Act of 1973, as
amended; the Employee Retirement Income Security Act of 1974, as amended;
the Illinois Wage Payment and Collection Act; the Illinois Human Rights
Act, the Chicago
<PAGE>
Human Rights Ordinance, the Cook County Human Rights Ordinance, and other
similar state or local laws; the Americans with Disabilities Act; the
Family and Medical Leave Act; the Equal Pay Act; Executive Order 11246;
Executive Order 11141; and any other statutory claim, employment or other
contract claim or implied contract claim, or common law claim for wrongful
discharge, defamation, or invasion of privacy arising out of or involving
his employment or engagement with SSA, the termination of his employment or
engagement with SSA, or involving any continuing effects of his employment
or engagement with SSA or termination of his employment or engagement with
SSA. Shakir further acknowledges that he is aware that statutes exist that
render null and void releases and discharges of any claims, rights,
demands, liabilities, action and causes of action which are unknown to the
releasing or discharging party at the time of execution of the release and
discharge. Shakir hereby expressly waives, surrenders and agrees to forego
any protection to which he otherwise would be entitled by virtue of the
existence of any such statute in any jurisdiction including, but not
limited to, the State of Illinois. The foregoing notwithstanding, this
Paragraph 7A does not release SSA Released Parties from any claims Shakir
may have with respect to the enforcement of the terms of this Agreement nor
does this Agreement release SSA from any statutory or common law obligation
to defend, indemnify and hold harmless Shakir from any claims against him
which arose or are related to any actions taken by Shakir in the scope of
his employment for SSA.
B. As a material inducement to Shakir to enter into this Agreement
and in consideration of his releases and other items of value provided by
him hereunder, SSA, on behalf of itself and all of SSA Released Parties,
with full understanding of the contents and legal effect of this Agreement,
and having the right and opportunity to consult with its counsel, releases
and discharges Shakir and his successors, heirs, executors, administrators,
representatives and assigns (collectively, the "SHAKIR RELEASED PARTIES")
from any and all claims, actions, causes of action, grievances, suits,
charges, or complaints of any kind or nature whatsoever, that it and/or
they ever had or now has or have, whether fixed or contingent, liquidated
or unliquidated, known or unknown, suspected or unsuspected, and whether
arising in tort, contract, statute, or equity, before any federal, state,
local, or private court, agency, arbitrator, mediator, or other entity,
regardless of the relief or remedy. Without limiting the generality of the
foregoing, it being the intention of the parties to make this Agreement as
broad and as general as the law permits, this Agreement specifically
includes any and all claims arising from any alleged violation by the
Shakir Released Parties under any statute, law, ordinance, regulation, or
contract, and any other statutory claim, employment or other contract claim
or implied contract claim, or common law claim for defamation, or invasion
of privacy, or arising out of or involving his employment or engagement
with SSA, the termination of his employment or engagement with SSA, or
involving any continuing effects of his employment or engagement with SSA
or termination of his employment or engagement with SSA. SSA, on behalf of
SSA Released Parties, further acknowledges that it and they are aware that
statutes exist that render null and void releases and discharges of any
claims, rights, demands, liabilities, action and causes of action which are
unknown to the releasing or discharging party at the time of execution of
the release and discharge. SSA, on behalf of itself and SSA Released
Parties, hereby expressly waives, surrenders and agrees to forego any
protection to which it or they otherwise would be entitled by virtue of the
existence of any such statute in any jurisdiction including, but not
limited to, the State of Illinois. The foregoing notwithstanding, this
Paragraph 7B does not release the Shakir Released Parties from any claims
SSA may have with respect to the enforcement of the terms of this Agreement
nor does this Agreement release Shakir from any claims SSA may have with
respect to acts of negligence or misconduct by Shakir while employed or
engaged by SSA.
<PAGE>
VIII. Covenant Not to Sue.
-------------------
A. Shakir, for himself, his heirs, executors, administrators,
successors and assigns covenants and agrees not to bring, file, charge,
claim, sue or cause, assist, or permit to be brought, filed, charged or
claimed any action, cause of action, or proceeding based upon any of the
claims released under Paragraph 7A hereof, and further covenants and agrees
that this Agreement is, will constitute and may be pleaded as, a bar to any
such claim, action, cause of action or proceeding. If any government
agency or court assumes jurisdiction of any charge, complaint, or cause of
action released by this Agreement, Shakir will not seek and will not accept
any personal equitable or monetary relief in connection with such
investigation, civil action, suit or legal proceeding.
B. SSA, on behalf of all SSA Released Parties, covenants and agrees
not to bring, file, charge, claim, sue or cause, assist, or permit to be
brought, filed, charged or claimed any action, cause of action, or
proceeding based upon any of the claims released under Paragraph 7B hereof,
and further covenants and agrees that this Agreement is, will constitute
and may be pleaded as, a bar to any such claim, action, cause of action or
proceeding. If any government agency or court assumes jurisdiction of any
charge, complaint, or cause of action released by this Agreement, SSA and
SSA Released Parties will not seek and will not accept any equitable or
monetary relief in connection with such investigation, civil action, suit
or legal proceeding.
IX. No Disparaging, Untrue Or Misleading Statements.
-----------------------------------------------
A. Shakir agrees that from and after July 31, 1998, he will not
make or authorize, to any third party any disparaging, untrue, or
misleading written or oral statements about or relating to SSA or its
products or services (or about or relating to any officer, director, agent,
employee, or other person acting on SSA's behalf). Shakir acknowledges that
his continuing entitlement to payments under Paragraphs 4, 5 and 6 of the
Agreement shall be conditioned upon his continuing compliance with
Paragraphs 9, 10, and 13 of the Agreement and any violation of Paragraphs
9, 10, or 13 by Shakir shall terminate SSA's obligation to continue to make
payments under Paragraphs 4, 5 and 6.
B. From and after July 31, 1998, SSA represents that it has taken
and will continue to take commercially reasonable efforts to ensure that it
has not made or authorized and will not make or authorize, to any third
party, any disparaging, untrue, or misleading written or oral statements
about or relating to Shakir or his job performance.
X. Protective Agreement.
--------------------
A. Shakir agrees that he will not, for any reason whatsoever,
whether voluntarily or involuntarily (other than as required by statute,
regulation, or a court of competent jurisdiction), use for himself or
disclose to any person any "CONFIDENTIAL INFORMATION" of SSA acquired by
Shakir during his relationship with SSA. Confidential Information includes
but is not limited to: (a) any financial, business, planning, operations,
services, potential services, products, potential products, technical
information and/or know-how, formulas, production, purchasing, marketing,
sales, personnel, customer, broker, supplier or other information of SSA;
(b) any papers, data, records, processes, methods, techniques, systems,
models, samples, devices, equipment, compilations, invoices, customer lists
or documents of SSA; (c) any confidential information or trade secrets of
any third party provided to SSA in confidence or subject to other use or
disclosure restrictions or limitations; and (d) any other information,
written, oral or electronic, whether existing now or at some time in the
future, which pertains to SSA's affairs or interests or with whom or how
SSA does business. SSA acknowledges and agrees that Confidential
Information does not include (i) information properly in the public domain
(through no fault of Shakir's), or (ii) information in Shakir's possession
prior to the date of his original employment with SSA. In addition to the
foregoing, Shakir agrees that he shall not, directly or indirectly,
contact, solicit or direct any person, firm, corporation, association, or
other entity to contact or solicit, any of SSA's
<PAGE>
customers or prospective customers (as hereinafter defined) for the purpose
of providing any products and/or services that are the same as or similar
to the products and services provided by SSA to its customers during or
prior to the term hereof. In addition, Shakir will not disclose the
identity of any such customers or prospective customers, or any part
thereof, to any person, firm, corporation, association, or other entity for
any reason or purpose whatsoever. For purposes of this paragraph "CUSTOMER"
shall be defined as any person, firm, corporation, association, or entity
that purchased any type of product and/or service from SSA or is or was
doing business with SSA or Shakir during the term of this Agreement or
within the twelve (12) month period immediately preceding termination of
Shakir's employment. For purposes of this paragraph, "PROSPECTIVE CUSTOMER"
shall be defined as any person, firm, corporation, association, or entity
contacted or solicited by SSA or Shakir (whether directly or indirectly) or
who contacted SSA or Shakir (whether directly or indirectly) during the
term of this Agreement or within the twelve (12) month period immediately
preceding termination of Shakir's employment for the purpose of having such
persons, firms, corporations, associations, or entities become a customer
of SSA. Shakir further expressly agrees that, during the term of this
Agreement, he will not, directly or indirectly, become employed by, or
engaged with, any of the following competitors of SSA, or with any other
enterprise resource planning business: SAP, BAAN, J.D. Edwards, QAD, Inc.,
PeopleSoft, Oracle, and JBA. For purposes of this paragraph, an "ENTERPRISE
RESOURCE PLANNING BUSINESS ("ERP")" is an entity in the business of
developing, marketing and distributing an integrated software suite that
balances manufacturing, distribution and financial business functions. ERP
is the technological evolution of MRP II through the introduction of the
RDBMSs, CASE, 4GL development tools and C/S architecture. When fully
implemented, ERP can enable enterprises to optimize their business
processes and allow for necessary management analysis and appropriate
decision-making in a quick and efficient manner. As more robust technology
is implemented, ERP improves an enterprise's ability to react to market
changes. Shakir further acknowledges and agrees that he is estopped from
and will not dispute in any proceeding the enforceability of this Paragraph
10(a).
B. It is agreed that breach of this Paragraph 10 will result in
irreparable harm and continuing damages to SSA and its business and that
SSA's remedy at law for any such breach or threatened breach, will be
inadequate and, accordingly, in addition to such other remedies as may be
available to SSA at law or in equity in such event, any court of competent
jurisdiction may issue a temporary and permanent injunction, without the
necessity of SSA posting bond and without proving special damages or
irreparable injury, enjoining and restricting the breach, or threatened
breach, of this Paragraph 10, including, but not limited to, any injunction
restraining the breaching party from disclosing, in whole or part, any
Confidential Information. If SSA does not prevail in any action it may
bring against Shakir, for which a final judgment has been rendered, SSA
will pay all of Shakir's costs and expenses, including reasonable
attorneys' and accountants' fees, incurred in any such action brought by
SSA to enforce this Paragraph 10. If SSA is the prevailing party in an
action to enforce this Paragraph 10, for which a final judgment has been
rendered, then Shakir will pay all of SSA's costs and expenses, including
reasonable attorneys' and accountants' fees, incurred in any such action
brought by SSA to enforce this Paragraph 10.
XI. Severability. If any provision of this Agreement shall be found by a
------------
court to be invalid or unenforceable, in whole or in part, then such provision
shall be construed and/or modified or restricted to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement, as the case may require, and this Agreement shall be
construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified or restricted,
or as if such provision had not been originally incorporated herein, as the case
may be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful; provided, that, if the parties are unable to agree upon a
lawful substitute, the parties desire and request that a court or other
authority called upon to decide the enforceability of this Agreement modify the
Agreement so that, once modified, the Agreement will be enforceable to the
maximum extent permitted by the law in existence at the time of the requested
enforcement.
<PAGE>
XII. Waiver. A waiver by either party of a breach of any provision of
------
this Agreement by the other party shall not operate or be construed as a waiver
or estoppel of any subsequent breach. No waiver shall be valid unless in writing
and signed by an authorized officer of SSA (if an SSA waiver) or by Shakir (if a
Shakir waiver).
XIII. Miscellaneous Provisions.
------------------------
A. Both parties agree they will keep the terms, contents, and
amounts set forth in this Agreement completely confidential and, other than
as required by statute, regulation, a court of competent jurisdiction, or
the rules of any governmental agency, will not disclose any information
concerning this Agreement's terms and amounts to any person other than each
party's attorney, accountants, tax advisors, or (if disclosed by Shakir)
Shakir's immediate family.
B. Shakir represents and certifies that he has carefully read and
fully understands all of the provisions and effects of this Agreement, has
knowingly and voluntarily entered into this Agreement freely and without
coercion, and acknowledges that on July 31, 1998, SSA advised him to
consult with an attorney prior to executing this Agreement and further
advised him that he had more than twenty-one (21) days (until October 9,
1998) within which to consider this Agreement. Shakir is voluntarily
entering into this Agreement and neither SSA nor its agents,
representatives, or attorneys made any representations concerning the terms
or effects of this Agreement other than those contained in the Agreement
itself.
C. Shakir acknowledges that he has seven (7) days from the date
this Agreement is executed in which to revoke his acceptance of this
Agreement, and this Agreement will not be effective or enforceable until
such seven (7)-day period has expired.
XIV. Complete Agreement. This Agreement sets forth the entire
------------------
agreement between the parties and fully supersedes any and all prior agreements
or understandings between the parties pertaining to actual or potential claims
arising from Shakir's employment or engagement with SSA or the termination of
Shakir's employment or engagement with SSA.
XV. Reimbursement. If Shakir or his heirs, executors, administrators,
-------------
successors or assigns (a) breaches Paragraphs 9, 10 or 13A of this Agreement, or
(b) attempts to challenge the enforceability of this Agreement, or (c) files a
charge of discrimination, a lawsuit, or a claim of any kind for any matter
released herein, Shakir or his heirs, executors, administrators, successors or
assigns shall be obligated to tender back to SSA all consideration made to him
or them for the release by Shakir under this Agreement.
XVI. Amendment. This Agreement may not be altered, amended, or
---------
modified except in writing signed by both Shakir and SSA.
XVII. Future Cooperation. In connection with any and all claims,
------------------
disputes, negotiations, investigations, lawsuits or administrative proceedings
involving SSA, Shakir agrees to make himself available, upon reasonable notice
from SSA, to provide information or documents, provide declarations or
statements to SSA, at reasonable times convenient to Shakir meet with attorneys
or other representatives of SSA, prepare for and give depositions or testimony,
and/or otherwise cooperate in the investigation, defense or prosecution of any
or all such matters. Shakir will be advanced all reasonable expenses he incurs
as a result of compliance with this Paragraph 17, including payment of
reasonable fees and expenses for retention by Shakir of independent legal
counsel for matters that are subject to this Paragraph 17, if he in good faith
deems legal counsel reasonably required.
XVIII. Joint Participation. The parties hereto participated jointly in
-------------------
the negotiation and preparation of this Agreement, and each party has had the
opportunity to obtain the advice of legal counsel and to review and comment upon
the Agreement. Accordingly, it is agreed that no rule of construction
<PAGE>
shall apply against any party or in favor of any party. This Agreement shall be
construed as if the parties jointly prepared this Agreement, and any uncertainty
or ambiguity shall not be interpreted against one party and in favor of the
other.
XIX. Headings. The headings in this Agreement are inserted for
-------
convenience only and are not to be considered a construction of the provisions
hereof.
XX. Execution of Agreement. This Agreement may be executed in several
----------------------
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one Agreement.
XXI. Recitals. The recitals to this Agreement are an integral part
--------
hereof and shall be considered as substantive and not precatory language.
XXII. Notices. Any notice to be given hereunder shall be in writing and
-------
shall be deemed given when mailed by Certified Mail, Return Receipt Requested,
addressed as follows to
Shakir: Riz Shakir
6731 Elaina Lane
Tuscaloosa, Alabama 35406
with a copy to: Richard L. Menson, Esq.
McGuire Woods Battle & Boothe LLP
77 West Wacker Drive
Suite 4500
Chicago, Illinois 60601
SSA: System Software Associates, Inc.
500 West Madison
32nd Floor
Chicago, Illinois 60661
Attention: William Stuek
with a copy to: Jeffrey L. London, Esq.
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
XXIII. Arbitration. Any controversy or claim arising out of or relating
-----------
to this Agreement or breach thereof, other than any controversy or claim arising
under Paragraph 10, shall be resolved by arbitration in accordance with the
National Rules for the Resolution of Employment Disputes ("RULES") of the
American Arbitration Association through a single arbitrator selected in
accordance with the Rules. The decision of the arbitrator shall be rendered
within thirty (30) days of the close of the arbitration hearing and shall
include written findings of fact and conclusions of law reflecting the
appropriate substantive law. Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof in the State of
Illinois. In reaching his or her decision, the arbitrator shall have no
authority (a) to authorize or require the parties to engage in discovery
(provided, however, that the arbitrator may schedule the time by which the
parties must exchange copies of the exhibits that, and the names of the
witnesses whom, the parties intend to present at the hearing), (b) to interpret
or enforce Paragraph 10 of the Agreement (for which Paragraph 24 shall provide
the exclusive venue), (c) to change or modify any provision of this Agreement,
(d) to base any part of his or her decision on the common law principle of
constructive termination, or (e) to award punitive damages or any other damages
not measured by the prevailing party's actual damages and may not make any
ruling, finding or award that does not conform to this Agreement.
<PAGE>
Each party shall bear all of his or its own legal fees, costs and expenses of
arbitration and one-half ( 1/2) of the costs of the arbitrator.
XXIV. Applicable Law. This Agreement shall be governed by, and construed
--------------
in accordance with, the laws of the State of Illinois, without reference to its
conflict of law provisions. Furthermore, as to Paragraph 10, Shakir agrees and
consents to submit to personal jurisdiction in the State of Illinois in any
state or federal court of competent subject matter jurisdiction situated in Cook
County, Illinois. Shakir further agrees that the sole and exclusive venue for
any suit arising out of, or seeking to enforce, the terms of Paragraph 10 of
this Agreement shall be in a state or federal court of competent subject matter
jurisdiction situated in Cook County, Illinois. In addition, Shakir waives any
right to challenge in another court any judgment entered by such Cook County
court or to assert that any action instituted by SSA in any such court is in the
improper venue or should be transferred to a more convenient forum.
PLEASE READ THIS AGREEMENT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS
BEFORE SIGNING IT. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS, INCLUDING THOSE UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT,
AND OTHER FEDERAL, STATE AND LOCAL LAWS PROHIBITING DISCRIMINATION IN
EMPLOYMENT.
IN WITNESS WHEREOF, the parties have set their signatures on the date first
written above.
SYSTEM SOFTWARE ASSOCIATES, INC. RIZ SHAKIR
By:__________________________________ ____________________________________
Its:_________________________________
<PAGE>
EXHIBIT 5
(312) 207-1000
February 3, 1999
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 50,522 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 had corporate authority to issue the shares of Common
Stock proposed to be offered as set forth in the Registration Statement; and
(ii) The shares of Common Stock registered for resale as set forth in the
Registration Statement have been duly authorized and were 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.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the December 10, 1998 incorporation by reference in this
registration statement on Form S-3 of our report dated December 10, 1998
relating to the consolidated balance sheets of System Software Associates, Inc.
and subsidiaries as of October 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended October 31, 1998, and the related schedule,
which report appears in the October 31, 1998 annual report on Form 10-K of
System Software Associates, Inc. and to the reference to our firm under the
heading "Experts" in the prospectus.
/s/ KPMG LLP
Chicago, Illinois
February 3, 1999
