SPSS INC
10-Q, 1998-08-14
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                        
                                   FORM 10-Q
                                        
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended June 30, 1998
                                        
                                        
                        Commission file Number: 33-64732
                                        
                                        
                                   SPSS Inc.
                                        
             (Exact name of registrant as specified in its charter)



               Delaware                                  36-2815480
    (State or other jurisdiction             (IRS Employer Identification No.)
  of incorporation or organization)

                444 N. Michigan Avenue, Chicago, Illinois 60611
             (Address of principal executive offices and zip code)


       Registrant's telephone number including area code: (312) 329-2400


     Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.  Yes X   No
                          ---     ---

     As of August 10, 1998, there were 9,023,304 shares of common stock
outstanding, par value $.01, of the registrant.

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<PAGE>   2
                                        
                                   SPSS Inc.
                                   Form 10-Q
                          QUARTER ENDED JUNE 30, 1998
                                        
                                     INDEX

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                 PAGE
                                                                               ----
<S>      <C>                                                                    <C>
          
         Item 1.    Financial Statements

                    Independent Auditors' Review Report                         3
                    

                    Consolidated Balance Sheets 
                    as of December 31, 1997 and 
                    June 30, 1998 (unaudited)                                   4

                    Consolidated Statements of Income
                    for the three and six months ended June 30, 1997
                    (unaudited) and 1998 (unaudited)                            5

                    Consolidated Statements of Comprehensive
                    Income for the three and six months ended
                    June 30, 1997 (unaudited) and 1998 (unaudited)              6

                    Consolidated Statements of Cash Flows
                    for the six months ended June 30, 1997
                    (unaudited) and 1998 (unaudited)                            7

                    Notes to Consolidated Financial Statements                  8

         Item 2.    Management's Discussion and Analysis of
                    Financial Condition and Results of Operation                9

PART II - OTHER INFORMATION

         Item 1.    Legal Proceedings                                          15

         Item 2.    Changes in Securities                                      15

         Item 4.    Submission of Matters to a Vote of
                    Security-Holders                                           15

         Item 6.    Exhibits and Reports on Form 8-K                           16

</TABLE>                                       2
<PAGE>   3
Item 1.   FINANCIAL STATEMENTS


                      Independent Auditors' Review Report


The Board of Directors
SPSS Inc.:

We have reviewed the consolidated balance sheet of SPSS Inc. and subsidiaries as
of June 30, 1998, and the related consolidated statements of income and
comprehensive income for the three and six-month periods ended June 30, 1997 and
1998 and cash flows for the six-month periods ended June 30, 1997 and 1998.
These consolidated financial statements are the responsibility of SPSS Inc.'s
management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above, for them to
be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of SPSS Inc. and subsidiaries as of
December 31, 1997, and the related consolidated statements of income,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated February 18, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 1997, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.



                                     /s/ KPMG Peat Marwick LLP

Chicago, Illinois
July 31, 1998

                                       3
<PAGE>   4

                           SPSS Inc. and Subsidiaries
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except for share data)
<TABLE>
<CAPTION>

                                                                             December 31,            June 30,
                                                                                 1997                  1998
                                                                           -----------------     -----------------
                                                                                                    (unaudited)
<S>                                                                   <C>                      <C>   
CURRENT ASSETS:
          Cash and cash equivalents                                      $            8,079    $           10,010
          Accounts receivable, net of allowances                                     27,872                29,450
          Inventories                                                                 2,520                 2,974
          Prepaid expenses and other current assets                                   2,811                 2,735
                                                                           -----------------     -----------------

            Total current assets                                                     41,282                45,169
                                                                           -----------------     -----------------

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost:
          Land and building                                                           1,700                 1,727
          Furniture, fixtures and office equipment                                    6,044                 6,569
          Computer equipment and software                                            18,032                20,316
          Leasehold improvements                                                      2,627                 4,737
                                                                           -----------------     -----------------

                                                                                     28,403                33,349
          Less accumulated depreciation and amortization                             18,974                20,735
                                                                           -----------------     -----------------

Net equipment and leasehold improvements                                              9,429                12,614
                                                                           -----------------     -----------------

Capitalized software development costs,
  net of accumulated amortization                                                     6,703                 7,655
Goodwill, net of accumulated amortization                                             1,062                   979
Deferred income tax assets                                                            2,588                 2,588
Other assets                                                                          1,681                 1,638
                                                                           -----------------     -----------------

                                                                         $           62,745    $           70,643
                                                                           =================     =================

CURRENT LIABILITIES:
          Notes payable                                                  $               71    $               --
          Accounts payable                                                            5,013                 6,459
          Accrued royalties                                                             482                   442
          Accrued rent                                                                  428                   612
          Other accrued liabilities                                                   9,912                 8,244
          Income taxes and value added taxes payable                                  1,299                 2,036
          Customer advances                                                             208                   337
          Deferred revenues                                                           9,715                 9,365
                                                                           -----------------     -----------------

            Total current liabilities                                                27,128                27,495
                                                                           -----------------     -----------------

Deferred income taxes                                                                 1,936                 1,936
Other noncurrent liabilities                                                          1,219                 1,217

STOCKHOLDERS' EQUITY:
          Common stock, $.01 par value; 50,000,000 shares
            authorized; 8,811,644 and  9,015,553 shares issued and
            outstanding in 1997 and 1998, respectively                                   88                    90
          Additional paid-in capital                                                 44,313                45,768
          Accumulated other comprehensive income --
            cumulative foreign currency translation adjustments                     (1,065)               (1,066)
          Accumulated deficit                                                      (10,874)               (4,797)
                                                                           -----------------     -----------------

            Total stockholders' equity                                               32,462                39,995
                                                                           -----------------     -----------------

                                                                         $           62,745    $           70,643
                                                                           =================     =================
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5
                           SPSS Inc. and Subsidiaries
                       CONSOLIDATED STATEMENTS OF INCOME
                     (in thousands, except for share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended                  Six Months Ended
                                                               June 30,                           June 30,
                                                     -----------------------------      -----------------------------

                                                         1997           1998                1997           1998
                                                     -------------  --------------      -------------  --------------

<S>                                               <C>               <C>               <C>            <C>            
Net revenues:
      Desktop products                             $       19,834 $        21,544     $       39,685 $        42,159
      Large System products                                 3,564           3,692              7,891           7,992
      Other products and services                           3,328           3,922              6,462           7,507
                                                     -------------  --------------      -------------  --------------

Net revenues                                               26,726          29,158             54,038          57,658
Cost of revenues                                            2,426           2,574              5,015           5,009
                                                     -------------  --------------      -------------  --------------

Gross profit                                               24,300          26,584             49,023          52,649
                                                     -------------  --------------      -------------  --------------

Operating expenses:
      Sales and marketing                                  13,613          15,259             26,295          29,540
      Product development                                   4,251           4,787              8,596           9,741
      General and administrative                            3,203           2,221              6,469           4,005
      Acquisition-related charges                           1,065              --              1,065              --
                                                     -------------  --------------      -------------  --------------
Operating expenses                                         22,132          22,267             42,425          43,286

Operating income                                            2,168           4,317              6,598           9,363
                                                     -------------  --------------      -------------  --------------

Other income (expense):
      Net interest income                                     101              59                210              86
      Other income (expense)                                    6            (37)               (16)            (199)
                                                     -------------  --------------      -------------  --------------

Other income (expense)                                        107              22                194           (113)
                                                     -------------  --------------      -------------  --------------

Income before income taxes                                  2,275           4,339              6,792           9,250
Income tax expense                                            998           1,488              2,601           3,173
                                                     -------------  --------------      -------------  --------------

Net income                                         $        1,277 $         2,851     $        4,191 $         6,077
                                                     =============  ==============      =============  ==============

Basic earnings per share                           $         0.15 $          0.32     $         0.48 $          0.68
                                                     =============  ==============      =============  ==============

Shares used in computing basic earnings per share       8,759,005       8,978,576          8,747,078       8,911,628
                                                     =============  ==============      =============  ==============

Diluted earnings per share                         $         0.13 $          0.30     $         0.44 $          0.64
                                                     =============  ==============      =============  ==============

Shares used in computing diluted earnings per share     9,623,522       9,582,100          9,618,610       9,552,675
                                                     =============  ==============      =============  ==============

</TABLE>
          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>   6

                                        
                           SPSS Inc. and Subsidiaries
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                Three Months Ended                  Six Months Ended
                                                                     June 30,                           June 30,
                                                           -----------------------------      -----------------------------

                                                               1997            1998               1997            1998
                                                           --------------  -------------      --------------  -------------

<S>                                                      <C>             <C>                <C>             <C>
       Net income                                        $         1,277 $        2,851     $         4,191 $        6,077

       Other comprehensive income (loss):
            Foreign currency translation adjustment                (100)          (217)               (726)            (1)
                                                           --------------  -------------      --------------  -------------

       Comprehensive income                              $         1,177 $        2,634     $         3,465 $        6,076
                                                           ==============  =============      ==============  =============















</TABLE>


          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>   7
                                        
                           SPSS Inc. and Subsidiaries
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                              Six Months Ended
                                                                                  June 30,
                                                                          --------------------------
                                                                             1997          1998
                                                                          ------------  ------------
        <S>                                                           <C>              <C>
         Cash flows from operating activities:
             Net income                                                 $       4,191 $       6,077
             Adjustments to reconcile net income to net cash
               (used in) provided by operating activities:
                   Depreciation and amortization                                3,141         3,101
                   Changes in assets and liabilities, net of effects of
                       acquisitions:
                       Deferred income taxes                                    (107)             -
                      Accounts receivable                                     (3,274)       (1,578)
                      Inventories                                               (253)         (454)
                      Prepaid income taxes                                    (1,824)             -
                      Accounts payable                                            970         1,446
                      Accrued royalties                                          (45)          (40)
                      Accrued expenses                                        (3,054)       (1,436)
                      Income taxes and value added taxes payable              (1,493)           737
                      Other                                                   (1,799)         (405)
                                                                          ------------  ------------

         Net cash (used in) provided by operating activities                  (3,547)         7,448
                                                                          ------------  ------------

         Cash flows from investing activities:
              Capital expenditures, net                                       (1,780)       (4,935)
              Capitalized software development costs                          (1,639)       (1,920)
              Net payments for acquisitions                                     (934)          (48)
                                                                          ------------  ------------

         Net cash used in investing activities                                (4,353)       (6,903)
                                                                          ------------  ------------

         Cash flows from financing activities:
              Net borrowings (repayments) on notes payable                        465          (71)
              Net proceeds from issuance of common stock                          308         1,235
              Income tax benefit from stock option exercises                      300           222
                                                                          ------------  ------------

         Net cash provided by financing activities                              1,073         1,386
                                                                          ------------  ------------

         Net change in cash and cash equivalents                              (6,827)         1,931
         Cash and cash equivalents at beginning of period                      13,491         8,079
                                                                          ------------  ------------
         Cash and cash equivalents at end of period                     $       6,664 $      10,010
                                                                          ============  ============

         Supplemental disclosures of cash flow information:
              Interest paid                                             $         101 $          91
              Income taxes paid                                                 5,570         3,122
                                                                          ============  ============

</TABLE>
          See accompanying notes to consolidated financial statements.

                                       7
<PAGE>   8
                           SPSS Inc. and Subsidiaries
                   
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

     The accompanying unaudited interim consolidated financial statements
reflect all adjustments which, in the opinion of management, are necessary for a
fair presentation of the results of the interim periods presented. All such
adjustments are of a normal recurring nature.

     These consolidated financial statements should be read in conjunction with
the Company's audited consolidated financial statements and notes thereto for
the year ended December 31, 1997, included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission. The results of
operations for the interim periods presented are not necessarily indicative of
the results to be expected for the year ending December 31, 1998.

Note 2 - Earnings Per Share

     In the fourth quarter of 1997, the Company adopted SFAS No. 128, "Earnings
Per Share," which established new methods for computing and presenting earnings
per share ("EPS") and replaced the presentation of primary and fully-diluted EPS
with basic and diluted EPS. Basic earnings per share is based on the weighted
average number of shares outstanding and excludes the dilutive effect of
unexercised common stock equivalents. Basic shares outstanding for each period
were 8,759,005 for the three months ended June 30, 1997 and 8,978,576 for the
comparable period in 1998 and 8,747,078 for the six months ended June 30, 1997
and 8,911,628 for the comparable period in 1998. Dilutive earnings per share is
based on the weighted average number of shares outstanding and includes the
dilutive effect of unexercised common stock equivalents. Diluted shares
outstanding for each period were 9,623,522 shares for the three months ended
June 30, 1997 and 9,582,100 shares for the comparable period in 1998 and
9,618,610 for the six months ended June 30,1997 and 9,552,675 for the comparable
period in 1998.

                                       8
<PAGE>   9
Item 2.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations.

     The following table sets forth the percentages that selected items in the
Consolidated Statements of Income bear to net revenues:


<TABLE>
<CAPTION>
                                                      Percentage of Net Revenues         Percentage of Net Revenues
                                                     -----------------------------      -----------------------------
                                                          Three Months Ended                  Six Months Ended
                                                               June 30,                           June 30,
                                                     -----------------------------      -----------------------------
                                                         1997           1998                1997           1998
                                                     -------------  --------------      -------------  --------------
<S>                                               <C>               <C>                 <C>             <C>
Statement of Income Data:
Net revenues:
      Desktop products                                        74%             74%                73%             73%
      Large System products                                   14%             13%                15%             14%
      Other products and services                             12%             13%                12%             13%
                                                     -------------  --------------      -------------  --------------

Net revenues                                                 100%            100%               100%            100%
Cost of revenues                                               9%              9%                 9%              9%
                                                     -------------  --------------      -------------  --------------

Gross profit                                                  91%             91%                91%             91%

Operating expenses:
      Sales and marketing                                     51%             52%                49%             51%
      Product development                                     16%             16%                16%             17%
      General and administrative                              12%              8%                12%              7%
      Acquisition-related charges                              4%              --                 2%              --
                                                     -------------  --------------      -------------  --------------

Operating expenses                                            83%             76%                79%             75%
                                                     -------------  --------------      -------------  --------------

Operating income                                               8%             15%                12%             16%
Other income (expense):
      Net interest income                                      --              --                 1%              --
      Other income (expense)                                   --              --                 --              --
                                                     -------------  --------------      -------------  --------------

Other income (expense)                                         --              --                 1%              --
                                                     -------------  --------------      -------------  --------------

Income before income taxes                                     8%             15%                13%             16%
Income tax expense                                             3%              5%                 5%              5%
                                                     -------------  --------------      -------------  --------------

Net income                                                     5%             10%                 8%             11%
                                                     =============  ==============      =============  ==============
</TABLE>

                                       9
<PAGE>   10
Comparison of Three Months Ended June 30, 1997 to Three Months Ended June 30,
1998.

Net Revenues. Net Revenues were $26,726,000 and $29,158,000 in the three months
ended June 30, 1997 and 1998, respectively, an increase of 9%. Revenues from
products designed for desktop computers ("Desktop products") increased
$1,710,000 (9%) over the corresponding period in 1997. In addition, revenues
from annual license renewals of Desktop products increased by $960,000,
reflecting a $463,000 increase in annual license renewals for SPSS for Windows.
Revenues from products designed for mainframes, minicomputers, and UNIX
workstations ("Large System products") increased 4% over the corresponding
period in 1997 primarily due to new sales of SPSS software on mainframes
domestically and new sales of Quantime software. Other products and services
revenues increased 18% due to growth in training and consulting revenues
domestically, as well as the return of payments from Prentice Hall related to
their distribution agreement for certain SPSS products and student software.
Revenues for the second quarter of 1998 were adversely effected by changes in
foreign currency exchange rates.

Cost of Revenues. Cost of revenues consists of costs of goods sold, amortization
of capitalized software development costs, and royalties paid to third parties.
Cost of revenues was $2,426,000 and $2,574,000 in the three months ended June
30, 1997 and 1998, respectively, an increase of 6%. Such costs increased due to
higher cost of goods sold resulting from increased sales. As a percentage of net
revenues, cost of revenues remained constant at 9%.

Sales and Marketing. Sales and marketing expenses were $13,613,000 and
$15,259,000 in the three months ended June 30, 1997 and 1998, respectively, an
increase of 12%. This increase was due to the expansion of the domestic and
international sales organizations and increased media placement and promotional
costs. These expenses were partially offset by changes in foreign currency
exchange rates. As a percentage of net revenues, such expenses increased from
51% to 52%.

Product Development. Product development expenses were $4,251,000 and $4,787,000
(net of capitalized software development costs of $319,000 and $511,000) in the
three months ended June 30, 1997 and 1998, respectively, an increase of 13%. In
the corresponding periods in 1997 and 1998, the Company's expense for
amortization of capitalized software and product translations, included in cost
of revenues, was $424,000 and $518,000, respectively. The increase in product
development expenses was primarily due to the higher cost of development
personnel and additions to the product development staff. As a percentage of net
revenues, product development expenses remained constant at 16%.

General and Administrative. General and administrative expenses were $3,203,000
and $2,221,000 in the three months ended June 30, 1997 and 1998, respectively, a
decrease of 31%. Such expenses decreased primarily due to reduction in
administrative staff and other efficiencies gained in connection with the
acquisitions of the Quantime Limited and In2itive Technologies A/S entities. As
a percentage of net revenues, general and administrative expenses decreased from
12% to 8%.

                                       10
<PAGE>   11
Acquisition-related Charges. Charges related to the acquisition of DeltaGraph
software from DeltaPoint, Inc. in the three months ended June 30, 1997
totaled $1,065,000 and represented one-time write-offs of in-process
technology and other acquisition related charges.

Net Interest Income. Net interest income was $101,000 and $59,000 in the three
months ended June 30, 1997 and 1998, respectively, a decrease of 42%. This
unfavorable variance was primarily due to lower interest earned on short-term
investments resulting from lower cash balances maintained in the three months
ended June 30, 1998 compared to June 30, 1997.

Other Income (Expense). Other income (expense) was $6,000 and ($37,000) in the
three months ended June 30, 1997 and 1998, respectively. Such transactions
consist of foreign currency transactions.

Provision for Income Taxes. The provision for income taxes was $998,000 and
$1,488,000 in the three months ended June 30, 1997 and 1998, respectively,
reflecting effective tax rates of 43.9% and 34.3%, respectively. The rate
difference reflects a higher effective tax rate for Quantime in 1997.

Comparison of Six Months Ended June 30, 1997 to Six Months Ended June 30, 1998

Net Revenues. Net Revenues were $54,038,000 and $57,658,000 in the six months
ended June 30, 1997 and 1998, respectively, an increase of 7%. Revenues from
Desktop products increased 6% over the corresponding period in 1997 and revenues
from Large System products increased 1%. Revenues from annual license renewals
of Desktop products increased by $1,661,000 reflecting a $671,000 increase in
annual license renewals for SPSS for Windows. Other products and services
revenues increased 16% due to the increase in training and consulting revenues
and revenues received from publications and student products. Revenues in the
first six months of 1998 were adversely effected by changes in foreign currency
exchange rates.

Cost of Revenues. Cost of revenues were $5,015,000 and $5,009,000 in the six
months ended June 30, 1997 and 1998, respectively. Such costs decreased due to
lower publication cost of goods sold, lower fulfillment charges and lower
royalties paid to third parties. As a percentage of net revenues, cost of
revenues remained constant at 9%.

Sales and Marketing. Sales and marketing expenses were $26,295,000 and
$29,540,000 in the six months ended June 30, 1997 and 1998, respectively, an
increase of 12%. This increase was due to the expansion of the domestic and
international sales organizations and increased media placement and promotional
costs. As a percentage of net revenues, sales and marketing expenses increased
from 49% to 51%.

Product Development. Product development expenses were $8,596,000 and $9,741,000
(net of capitalized software development costs of $723,000 and $1,027,000) in
the six months ended June 30, 1997 and 1998, respectively, an increase of 13%.
In the corresponding periods in 1997 and 1998, the Company's expense for
amortization of capitalized software and product translations, included in cost
of revenues, was $883,000 and $969,000, respectively. The increase

                                       11
<PAGE>   12
in product development expense was primarily due to the higher cost of
development personnel and additions to the product development staff. As a
percentage of net revenues, product development expense increased from 16% to
17%.

General and Administrative. General and administrative expenses were $6,469,000
and $4,005,000 in the six months ended June 30, 1997 and 1998, respectively, a
decrease of 38%. Such expenses decreased primarily due to reduction in the
administrative staff and other efficiencies gained in connection with the
acquisitions of the Quantime Limited and In2itive Technologies A/S entities. As
a percentage of net revenues, general and administrative expenses decreased from
12% to 7%.

Acquisition-related Charges. Charges related to the acquisition of DeltaGraph
software from DeltaPoint, Inc. in the six months ended June 30, 1997
totaled $1,065,000 and represented one-time write-offs of in-process
technology and other acquisition-related charges.

Net Interest Income. Net interest income was $210,000 and $86,000 in the six
months ended June 30, 1997 and 1998, respectively. The unfavorable variance was
primarily due to lower interest earned on short-term investments resulting from
lower cash balances maintained in 1998.

Other Income (Expense). Other (expense) was ($16,000) and ($199,000) in the
six months ended June 30, 1997 and 1998, respectively. Such transactions
consist of foreign currency transaction losses.

Provision for Income Taxes. The provision for income taxes was $2,601,000 and
$3,173,000 in the six months ended June 30, 1997 and 1998, reflecting effective
tax rates of 38.3% and 34.3%, respectively. The rate difference reflects a
higher effective tax rate for Quantime in 1997.

Liquidity and Capital Resources

The Company had no long-term debt as of June 30, 1998 and held approximately
$10,010,000 in cash and cash equivalents.

Funds in the first six months of 1998 were used in operations and for payments
related to the Company's acquisitions of Quantime Limited and In2itive
Technologies A/S. Capital expenditures included, among other things, new
computer systems for use in internal product development and leasehold
improvements and furnishings for the Company's new office space in the Sears
Tower in Chicago, Illinois.

In May 1998, the Company entered into a new loan agreement (the "Agreement")
with American National Bank and Trust Company of Chicago ("American National")
to replace its existing agreement with Bank of America, N.T.S.A. Under the
Agreement, the Company has an available $10,000,000 unsecured line of credit
with American National, under which borrowings bear interest at either the prime
interest rate or the Eurodollar Rate, depending on the circumstances. As of June
30, 1998, the Company had no borrowings under this line of credit. The Company's

                                       12
<PAGE>   13
Agreement with American National requires the Company to comply with certain
specified financial ratios and tests, and, among other things, restricts the
Company's ability to (i) incur additional indebtedness, (ii) create liens on
assets, (iii) make investments, (iv) engage in mergers, acquisitions or
consolidations where the Company is not the surviving entity, (v) sell assets,
(vi) engage in certain transactions with affiliates and (vii) amend its
organizational documents or make changes in capital structure.

The Company anticipates that amounts available under its line of credit,
existing sources of liquidity and cash flows generated from operations will be
sufficient to fund the Company's operations and capital requirements for the
foreseeable future. However, no assurance can be given that changing business
circumstances will not require additional capital for reasons that are not
currently anticipated or that the necessary additional capital will then be
available to the Company on favorable terms, or at all.

International Operations

Revenues from international operations were 47% of total net revenues in the
three months ended June 30, 1998 compared to 49% in the three months ended June
30, 1997. For the first six months, revenues from international operations were
50% compared to 54% in 1997. The portion of revenues attributable to
international operations was negatively affected by changes in foreign currency
exchange rates. Net corporate revenues increased 9% in the three months ended
June 30, 1998 and 7% in the six months ended June 30, 1998 when compared to the
three and six months ended June 30, 1997. Net of the effects of changes in
foreign currency rates, the increases would have been approximately 12% for the
quarter and 9% for the first six months.

Safe Harbor

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Certain statements in this report constitute "forward-looking statements"
within the meaning of Section 21E of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"). Such statements involve known and unknown risks
and uncertainties which may cause the Company's actual results, performance or
achievements, or industry results, to be materially different than any future
results, performance or achievements expressed or implied in or by such
forward-looking statements. By way of example and not limitation, known risks
and uncertainties include the Company's ability to successfully integrate or
improve the performance of acquired businesses, changes in market conditions or
product demand, competition and currency fluctuations, changes in product
release schedules and product acceptance. In light of these and other risks and
uncertainties, the inclusion of forward-looking statements in this report should
not be regarded as a representation by the Company that any future results,
performance, or achievements will be attained.


                                       13

<PAGE>   14
Year 2000 Disclosure

Many computer systems and applications currently use two digits to define the
applicable year. As a result, date-sensitive systems may recognize the year 2000
as 1900 or not at all, which could cause miscalculations or system failures.

SPSS has not completed its assessment of its computerized systems to determine
their ability to correctly identify the year 2000, but currently believes that
costs of addressing this issue will not have a material adverse impact on SPSS'
financial position. However, if SPSS and third parties upon which it relies are
unable to address this issue in a timely manner, it could result in a material
financial risk to SPSS. In order to assure that this does not occur, SPSS plans
to devote all resources required to resolve any significant year 2000 issues in
a timely manner.

For information about SPSS products and the year 2000, visit SPSS' Web Site at
www.spss.com.

                                       14
<PAGE>   15
                          PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

           Currently there are no material pending legal proceedings to which
           the Company or any of its subsidiaries is a party or to which any of
           their property is subject.

Item 2.           Changes in Securities

           Reference is made to the Company's filing on Form 8-A, filed on June
           18, 1998, which discusses the Rights Agreement between the Company
           and Harris Trust and Savings Bank.

Item 4.           Submission of Matters to a Vote of Security-Holders

           The Company's Annual Meeting of Stockholders was held on June 17,
           1998. The following persons were nominated and elected to serve as
           Directors of the Company for a term of three years or until their
           successors have been duly elected and qualified:

<TABLE>
<CAPTION>
                     Nominee                   For               Withheld
                    ---------                 -----             ----------  
                  <S>                       <C>                   <C>    
                   Fredric Harman            6,840,125            173,107

                   Merritt Lutz              6,984,327             28,905
</TABLE>

           In addition,  Norman Nie, Jack Noonan,  Bernard Goldstein and Michael
           Blair remained as Directors of the Company after the Meeting

           The Second Amended and Restated 1995 Equity Incentive Plan was
           presented and adopted, at the Meeting, in accordance with the
           following vote:

<TABLE>
<CAPTION>                                                            Broker
                 For                Against            Abstain      Non-Votes
                -----              ---------          ---------    -----------
           <S>                   <C>                   <C>        <C>        
              4,862,783             777,981             18,452       1,354,016
</TABLE>

           Furthermore, the Company's appointment of KPMG Peat Marwick LLP to
           serve as its independent auditor for fiscal year 1998 was ratified,
           at the Meeting, in accordance with the following votes:
<TABLE>
<CAPTION>

                 For                Against            Abstain
                -----              ---------          ---------
           <S>                   <C>                   <C>
              7,007,153               5,486                593
</TABLE>
                                       15
<PAGE>   16

Item 6.           Exhibits and Reports on Form 8-K.

         (a)  Exhibits (Note:  Management contracts and compensatory plans or 
              arrangements are underlined in the following list.)
             
<TABLE>
<CAPTION>
                                                                  Incorporation
Exhibit                                                           by Reference
Number        Description of Document                            (if applicable)
- -------       -----------------------                            ---------------
<S>        <C>                                                    <C>

   3.1        Certificate of Incorporation of the Company           *   3.2

   3.2        By-Laws of the Company                                *   3.4

   4.1        Loan Agreement between the Company and
              American National Bank and Trust Company
              of Chicago

   4.2        Rights Agreement, dated June 18, 1998, between        ** Exhibit 1
              SPSS Inc. and Harris Trust and Savings Bank

  10.1        Agreement between SPSS Inc. and Prentice
              Hall, Inc., dated April 1, 1998

  15.1        Acknowledgment of Independent Certified
              Public Accountants Regarding Independent
              Auditors' Review Report

  27.1        Financial Data Schedule

  27.1a       Financial Data Schedule (Restated)
</TABLE>
- -------------------------------


  *      Previously filed with Amendment No. 2 to Form S-1 Registration
         Statement of SPSS Inc. filed on August 4, 1993 
         (Registration No. 33-64732)

 **      Previously filed with SPSS' Registration Statement on Form 8-A, filed
         on June 18, 1998

         (b)  Reports on Form 8-K

              There were no reports on Form 8-K filed by the Company during
              the fiscal quarter ended June 30, 1998


                                       16
<PAGE>   17
                                        
                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       SPSS Inc.



Date:        August 14, 1998           By:  /s/ Jack Noonan
                                       ----------------------------------- 
                                       Jack Noonan
                                       President and Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the undersigned, in his capacity as the principal
financial officer of the Registrant.


Date:        August 14, 1998           By:  /s/ Edward Hamburg
                                       ----------------------------------- 
                                       Edward Hamburg
                                       Executive Vice-President, Corporate
                                       Operations and Chief Financial Officer

                                       17
<PAGE>   18
                                        
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                                                                 Page
Number         Description of Document                                 Number
- -------        -----------------------                                 ------
<S>            <C>                                                    <C>

  4.1          Loan Agreement

 10.1          Agreement between SPSS Inc. and Prentice Hall, Inc.

 15.1          Acknowledgement of Independent Certified Public
               Accountants Regarding Independent Auditors' Review
               Report

 27.1          Financial Data Schedule

 27.1a         Financial Data Schedule (Restated)
</TABLE>

                                       18

<PAGE>   1
                                                                     Exhibit 4.1











                                 LOAN AGREEMENT
                                        
                                        
                                        
                                        
                                        
                             AMERICAN NATIONAL BANK
                                        
                          AND TRUST COMPANY OF CHICAGO
                                        
                              CREDIT FACILITY FOR
                                        
                                   SPSS, Inc.
                                        
                                        
                                  May 29, 1998
                                        
                                        



                                       
<PAGE>   2
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>       <C>                                                         <C>
     1.        DEFINITIONS AND TERMS...........................................1

1.1      Definitions...........................................................1

1.2      GAAP.................................................................11

1.3      Borrower.............................................................11

1.4      Rules of Construction................................................11

     2.        LOANS - GENERAL TERMS..........................................12

2.1      Revolving Loan.......................................................12

2.2      Maximum Principal Amount.............................................12

2.3      Maturity Date; Termination of Loans..................................12

2.4      Authorized Disbursement of Proceeds..................................13

2.5      Borrowing Procedure..................................................13

2.6      Interest Rate........................................................13

2.7      Change of Laws.......................................................14

2.8      Regulatory Changes...................................................14

2.9      Advances Prior to LIBOR Rate Determination...........................15

2.10     Eurodollar Advances and Conversion...................................15

2.11     Interest Period Election.............................................15

2.12     Libor Brokerage Fee..................................................16

2.13     Usury................................................................16

     3.        PAYMENT TERMS..................................................16

3.1      Loan Account; Method of Making Payments..............................16

3.2      Interest Payments....................................................17

3.3      Principal Payments...................................................17
</TABLE>

                                       i
<PAGE>   3
<TABLE>
<S>      <C>                                                              <C>
3.4      Place of Payment.....................................................17

3.5      Payment on Maturity and Prepayment...................................17

3.6      Advances to Constitute One Loan......................................17

3.7      Application of Payments and Collections..............................18

3.8      Monthly Statements...................................................18

     4.        LETTERS OF CREDIT..............................................20

4.1      Mechanics of Issuance................................................20

4.2      Letter of Credit Fees................................................20

4.3      Drawings and Reimbursement of Amounts Drawn Under Letters of Credit..21

4.4      Interest on Amounts Drawn Under Letters of Credit....................21

4.5      Obligations Absolute.................................................21

4.6      Indemnification; Nature of Bank's Dutie..............................22

4.7      Increased Costs and Taxes Relating to Letters of Credit..............23

4.8      Standard Letter of Credit Application................................24

     5.        GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS..............24

5.1      General Representations and Warranties...............................25

5.2      Reaffirmation of Warranties and Representations......................30

5.3      Survival of Warranties and Representations...........................31

     6.        COVENANTS AND CONTINUING AGREEMENTS............................31

6.1      Financial Covenants..................................................31

6.2      Affirmative Covenants................................................31

6.3      Negative Covenants...................................................35

6.4      Required Notices.....................................................36

6.5      Payment of Claims....................................................37

6.6      Year 2000 Compliance.................................................38

     7.        DEFAULT........................................................38
</TABLE>
                                       ii
<PAGE>   4
<TABLE>
<S>       <C>                                                              <C>
7.1      Events of Default....................................................38

7.2      Remedies Cumulative..................................................40

7.3      Acceleration.........................................................40

7.4      Remedies.............................................................40

7.5      Injunctive Relief....................................................40

7.6      Advances During Unmatured Default....................................41

     8.        CONDITIONS PRECEDENT TO DISBURSEMENT...........................41

8.       Checklist Items......................................................41

8.2      Necessary Actions....................................................41

8.3      Conditions Precedent.................................................41

     9.        GENERAL........................................................41

9.1      Compliance with ERISA................................................41

9.2      Costs................................................................42

9.3      Statement............................................................43

9.4      Notices..............................................................43

9.5      Amendments and Waivers...............................................44

9.6      No Implied Waiver; Remedies Cumulative...............................45

9.7      Severability.........................................................45

9.8      Incorporation of Other Agreements....................................45

9.9      Acceptance...........................................................46

9.10     Knowledge............................................................46

9.11     Waiver by Borrower...................................................46

9.12     Governing Law........................................................47

9.13     Waiver of Marshaling.................................................47

9.14     Limitation by Law....................................................47

9.15     Survival of Representations and Warranties...........................48
</TABLE>                                        
                                      iii
<PAGE>   5
<TABLE>
<S>       <C>                                                              <C>
9.16     Service of Process...................................................48

9.17     Representation by Counsel............................................48

9.18     Release of Bank......................................................48  

9.19     Invalidated Payments.................................................48

9.20     Designated Person....................................................48

9.21     Headings.............................................................49

9.22     Counterparts.........................................................49

9.23     Fax Execution........................................................49

9.24     No Third Party Beneficiaries.........................................49

9.25     Domicile of Loans....................................................50

9.26     Entire Agreement.....................................................50

9.27     Construction.........................................................50

9.28     Successors and Assigns...............................................50

9.29     Waiver of Trial by Jury..............................................50
</TABLE>
                                       iv
<PAGE>   6
                                 LOAN AGREEMENT


     THIS LOAN AGREEMENT (this "Agreement"), dated for reference purposes only
as of May 29, 1998 by and between American National Bank and Trust Company of
Chicago, ("Bank"), a national banking association with its principal place of
business at 120 South LaSalle Street, Chicago, IL 60603, and SPSS, Inc., a
Delaware corporation ("Borrower"), with its principal place of business at 233
South Wacker Drive, 11th Floor, Chicago, IL 60606.


                                   RECITALS:

     A.  Borrower has requested and Bank has agreed to provide Borrower
with a revolving credit facility in an amount not to exceed Ten Million Dollars
($10,000,000) (the "Loans").

     B.  Borrower intends to use the proceeds of the Loans for working
capital and general corporate purposes.

     C.  The parties deem it to be in their best interest to set forth
their mutual agreements herein.

     NOW THEREFORE, in consideration of any loan, advance, extension of credit
and/or other financial accommodation at any time made by Bank to or for the
benefit of Borrower, and of the promises set forth herein, the parties hereto
agree as follows:


1.        DEFINITIONS AND TERMS.

               1.1  Definitions.  The following words, terms and/or phrases
          shall have the meanings set forth thereafter and such meanings shall
          be applicable to the singular and plural form thereof, giving effect
          to the numerical difference.

          (a)  "Advance":  any loan of monies made by Bank to Borrower pursuant
     to the terms of Section 2.1.

          (b)  "Advance Date":  with respect to each Advance, the Business Day
     upon which the proceeds of such Advance are to made available to Borrower.

          (c)  "Affiliate":  any Person (i) in which Borrower, one or more 
     equity interest holders owning twenty-five percent (25%) or more of the 
     total equity interest of Borrower, any Subsidiary, and/or any Parent,
     individually, jointly and/or severally, now or at any time or times
     hereafter, has or have an equity or other ownership interest equal to or in
     excess of twenty-five percent (25%) of the total equity of or other
     ownership interest in such Person; and/or (ii) which directly or indirectly
     through one or more intermediaries controls or is controlled by, or is
     under common control with Borrower; and/or (iii) any officer or director of
     Borrower or any Subsidiary.  For purposes of this definition,

<PAGE>   7
    "control" shall mean the possession, directly or indirectly, of the
     power to direct or cause the direction of the management and policies of a
     Person, whether through the ownership of Stock, by contract or otherwise,
     and in any case shall include direct or indirect ownership (beneficially or
     of record) of, or direct or indirect power to vote, 25% or more of the
     outstanding shares of any class of capital stock of such Person (or in the
     case of a Person that is not a corporation, 25% or more of any class of
     equity interest).

          (d)  "Agreement":  this Loan Agreement, together with all amendments,
     modifications, extensions, supplements, restatements replacements and
     extensions hereto or hereof.

          (e)  "and/or":  one or the other or both, or any one or more or all,
     of the things or Persons in connection with which the conjunction is used.

          (f)  "Assets":  any and all real, personal and intangible property of
     a Person, including, without limitation, accounts, chattel paper, contract
     rights, letters of credit, instruments and documents, equipment, general
     intangibles, inventory, leases, options, licenses, and real property,
     whether now existing or hereafter acquired or arising.

          (g)  "Bank":  American National Bank and Trust Company of Chicago, a
     national banking association, and its successors and assigns.

          (h)  "Borrower":  SPSS, Inc., a Delaware corporation, and its 
     permitted successors and assigns.

          (i)  "Borrower's Liabilities":  all obligations and liabilities of
     Borrower to Bank under the terms of this Agreement and the other Loan
     Documents, and all extensions and renewals or refinancing thereof, whether
     such obligation or liability is direct or indirect, secured or unsecured,
     joint or several, absolute or contingent, due or to become due, whether for
     payment or performance, whether heretofore arising, now existing or
     hereafter arising, however evidenced, created, incurred, acquired or owing
     and whether now contemplated or hereafter arising. Without limitation of
     the foregoing, such liability and obligations include the principal amount
     of Loans, interest, fees, indemnities or expenses under this Agreement and
     all other Loan Documents, and all extensions, renewals and refinancing
     thereof, whether or not such Loans were made in compliance with the terms
     and conditions of this Agreement or in excess of the obligation of Bank to
     lend.  Borrower's Liabilities shall remain Borrower's Liabilities,
     notwithstanding any assignment or transfer or any subsequent assignment or
     transfer of any of the Borrower's Liabilities or any interest therein.

          (j)  "Borrower's Obligations":  all terms, conditions, warranties,
     representations, agreements, undertakings, covenants and provisions (other
     than Borrower's Liabilities) to be performed, discharged, kept, observed or
     complied with by Borrower to or for the benefit of Bank, under the terms of
     this Agreement and all other Loan Documents, and all extensions and
     renewals or refinancing thereof, whether such obligation is direct or
     indirect, secured or unsecured, joint or several, absolute or

                                       2
<PAGE>   8
     contingent, due or to become due, whether heretofore arising, now
     existing or hereafter arising, however evidenced, created, incurred,
     acquired or owing and whether now contemplated or hereafter arising.
     Borrower's Obligations shall remain Borrower's Obligations, notwithstanding
     any assignment or transfer or any subsequent assignment or transfer of any
     of the Borrower's Obligations or any interest therein.

          (k)  "Borrowing Request":  a request for an Advance setting forth the
     information required pursuant to Section 2.5(a).

          (l)  "Business Day":  (i) For all purposes other than as covered by
     clause (ii) hereof, any day, other than a Saturday, Sunday, a day that is a
     legal holiday under the laws of the State of Illinois, or any other day on
     which banking institutions located in the State of Illinois are authorized
     or required by law or other governmental action to close; and (ii) with
     respect to determinations in connection with, and payments of principal and
     interest in Eurodollar Advances, any day which is a Business Day described
     in clause (i) and which is also a day for trading by and between banks in
     U.S. dollar deposits in the London Interbank Eurodollar Market.

          (m)  "Capitalized Lease" at any time any lease which is, or is
     required under GAAP to be, capitalized on the balance sheet of the lessee
     at such time, and "Capitalized Lease Obligation" of any Person at any time
     shall mean the aggregate amount which is, or is required under GAAP to be,
     reported as a liability on the balance sheet of such Person at such time as
     lessee under a Capitalized Lease.

          (n)  "Charges":  all national, Federal, state, county, city, municipal
     and/or other governmental (or any instrumentality, division, agency, body
     or department thereof, including without limitation the Pension Benefit
     Guaranty Corporation) taxes, levies, assessments, charges, liens, claims or
     encumbrances upon and/or relating to the Borrower's Assets, Liabilities,
     Borrower's business, Borrower's ownership and/or use of any of its Assets,
     Borrower's income and/or gross receipts and/or Borrower's ownership and/or
     use of any of its material Assets.

          (o)  "Consolidated Group": Borrower and any Affiliates of Borrower
     required to file consolidated tax returns pursuant to Section 1502 of the
     Code.

          (p)  "Costs": any and all reasonable costs and expenses (including,
     without limitation, the reasonable fees and expenses of any counsel,
     accountants, appraisers or other professionals) incurred by Bank at any
     time, in connection with:  (i) the preparation, negotiation, execution and
     administration of this Agreement and all other Loan Documents; (ii) the
     preparation, negotiation and execution of any amendment or modification of
     this Agreement or the other Loan Documents; (iii) the custody,
     preservation, use or operation of, or the sale of, collection from or other
     realization upon Assets of Borrower; (iv) the exercise or enforcement of
     any of the rights of Bank hereunder; (v) any failure by Borrower to perform
     or observe any of the provisions hereunder; (vi) any litigation, contest,
     dispute, suit, proceeding or action (whether instituted by Bank, Borrower
     or any other Person) in any way relating to this Agreement,

                                       3
<PAGE>   9
     the other Loan Documents, Borrower's Liabilities, Borrower's affairs
     or any Affiliate's affairs in connection with which, if Bank is the
     plaintiff it makes a recovery or obtains any final order in favor of Bank,
     or if Bank is the defendant it is not found by a court of competent
     jurisdiction to be liable; (vii) any attempt to enforce any rights of Bank
     against Borrower or any other Person which may be obligated to Bank by
     virtue of this Agreement or the other Loan Documents in connection with
     which Bank makes a recovery or obtains a final order in Bank's favor; and
     (viii) performing any of the obligations relating to or payment of any of
     Borrower's Obligations hereunder in accordance with the terms hereof.

          (q)  "Default Rate":  interest at the rate of two percent (2%) per
     annum plus the Prime Interest Rate.

          (r)  "Designated Person":  any Person identified as a "Designated
     Person" on Borrower's Secretary's Certificate dated of even date herewith,
     as amended or superseded from time to time.

          (s)  "Dollars" and "$":  the lawful currency of the United States of
     America.

          (t)  "Environmental Laws":  any Federal, state or local law, rule,
     regulation, ordinance, order, code or statute applicable to Borrower or its
     property, in each case as amended (whether now existing or hereafter
     enacted or promulgated), controlling, governing or relating to the
     pollution or contamination of the air, water or land or concerning
     hazardous, special or toxic materials, wastes or substances, or any
     judicial or administrative interpretation of such laws, rules or
     regulations, including, without limitation, the Water Pollution Control Act
     (33 U.S.C. ss. 1251 et seq.), Resource Conservation and Recovery Act (42
     U.S.C. ss. 6901 et seq.), Safe Drinking Water Act (42 U.S.C. ss. 3000(f) et
     seq.), Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), Clean Air
     Act (42 U.S.C. ss. 7401 et seq.), and Comprehensive Environmental Response,
     Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.).

          (u)  "Equipment Leases":  all leases or similar agreements pursuant to
     which Borrower leases equipment.

          (v)  "Eurodollar Advance": any portion of the Loan  for which the
     interest rate is based on the Eurodollar Rate, whether or not Bank obtains
     Eurodollars equal to all or any portion of such Eurodollar Advance

          (w)  "Eurodollar Rate": with respect to each Eurodollar Advance made
     at a time when Borrower's Liabilities are equal to or less than Two Million
     Five Hundred Thousand Dollars ($2,500,000), the rate equal to one and fifty
     one hundredths percent (1.50%) per annum plus the LIBOR Rate and with
     respect to each Eurodollar Advance made at a time when Borrower's
     Liabilities are more than Two Million Five Hundred Thousand Dollars
     ($2,500,000), the rate equal to one and seventy-five one hundredths percent
     (1.75%) per annum plus the LIBOR Rate.

                                       4
<PAGE>   10
          (x)  "Event of Default": the definition ascribed to this term in
     Section 7.1.

          (y)  "Exchange Rate": means, on any date when an amount expressed in a
     currency other than Dollars is to be determined with respect to any Letter
     of Credit, the nominal rate of exchange of Bank in the New York foreign
     exchange market for the purchase by Bank (by cable transfer) of such
     currency in exchange for Dollars at 12:00 noon (Chicago time) one Business
     Day prior to such date (or otherwise in accordance with the normal practice
     of Bank), expressed as a number of units of such currency per one Dollar.

          (z)  "Financials": those financial statements of Borrower, heretofore,
     concurrently herewith or hereafter delivered by or on behalf of Borrower to
     Bank, including but not limited to those financial statements and reports
     delivered by Borrower to Bank pursuant to Section 6.2(c).

          (aa) "GAAP": generally accepted accounting principles applied in the
     preparation of the financial statements of a Person with such changes
     thereto as: (i) shall be consistent with the then-effective principles
     promulgated or adopted by the Financial Accounting Standards Board and its
     predecessors and successors, and (ii) shall be concurred in by the
     independent certified public accountants of recognized standing acceptable
     to Bank reviewing such financial statements of such Person.

          (bb) "Governmental Authority":  any government or political
     subdivision or any agency, authority, bureau, central bank, commission,
     department or instrumentality of either, or any court, tribunal. grand jury
     or arbitrator, in each case whether foreign or domestic.

          (cc) "Guaranty Equivalent":  any agreement, document or instrument
     pursuant to which a Person directly or indirectly guarantees, becomes
     surety for, endorses, assumes, agrees to indemnify the obligee of any other
     Person against, or otherwise agrees, becomes or remains liable
     (contingently or otherwise) for, such obligation, other than by
     endorsements of instruments in the ordinary course of business.  Without
     limitation, a Guaranty Equivalent shall be deemed to exist if a Person
     agrees, becomes or remains liable (contingently or otherwise), directly or
     indirectly: (i) to purchase or assume, or to supply funds for the payment,
     purchase or satisfaction of, an obligation; (ii) to make any loan, advance,
     capital contribution or other investment in, or a purchase or lease of any
     property or services from, a

                                       5
<PAGE>   11
     Person; (iii) to maintain the solvency of such Person; (iv) to enable
     such Person to meet any other financial condition; (v) to enable such
     Person to satisfy any obligation or to make any payment; (vi) to assure the
     holder of an obligation against loss; (vii) to purchase or lease property
     or services from such Person regardless of the non-delivery of or failure
     to furnish of such property or services; or (viii) in respect of any other
     transaction the effect of which is to assure the payment or performance (or
     payment of damages or other remedy in the event of nonpayment or
     nonperformance) of any obligation.

          (dd)  "Indebtedness":  with respect to any Person, at a particular
     time (without duplication): (i) all obligations on account of money
     borrowed by, or credit extended to or on behalf of, or for or on account of
     deposits with or advances to, such Person; (ii) all obligations of such
     Person evidenced by bonds, debentures, notes or similar instruments; (iii)
     all obligations of such Person for the deferred purchase price of property
     or services other than trade payables incurred in the ordinary course of
     business and on terms customary in the trade; (iv) all obligations secured
     by a Lien on property owned by such Person (whether or not assumed); and
     all obligations of such Person under Capitalized Leases (without regard to
     any limitation of the rights and remedies of the holder of such Lien or the
     lessor under such Capitalized Lease to repossession or sale of such
     property); (v) the face amount of all letters of credit issued for the
     account of such Person and, without duplication, the unreimbursed amount of
     all drafts drawn thereunder, and all other obligations of such Person
     associated with such letters of credit or draws thereon; (vi) all
     obligations of such Person in respect of acceptances or similar obligations
     issued for the account of such Person; (vii) all obligations of such Person
     under a product financing or similar arrangement; (viii) all obligations of
     such Person under any interest rate or currency protection agreement,
     interest rate or currency future, interest rate or currency option,
     interest rate or currency swap or cap or other interest rate or currency
     hedge agreement; and (ix) all obligations and liabilities with respect to
     unfunded vested benefits under any "employee benefit plan" or with respect
     to withdrawal liabilities incurred under ERISA by Borrower or any ERISA
     Affiliate to a "multiemployer plan", as such terms are defined under the
     Employee Retirement Income Security Act of 1974.

          (ee)  "Indebtedness Instrument":  any note, mortgage, indenture,
     chattel mortgage, deed of trust, loan agreement, hypothecation agreement,
     pledge agreement, security agreement, financing statement or other
     document, instrument or agreement evidencing or securing the payment of or
     otherwise relating to the borrowing of monies. Indebtedness Instruments
     shall include, but not be limited to  the Loan Documents.

          (ff)  "Interest Period":  with respect to any Eurodollar Advance, the
     period commencing on the date such Eurodollar Advance is made or continued
     as a Eurodollar Advance, as the case may be, or the date on which a Prime
     Rate Advance is converted into such Eurodollar Advance as applicable, and
     ending one, two, three, six or twelve months thereafter, as Borrower may
     elect in the applicable Borrowing Request (or as Borrower shall be deemed
     to have elected, as applicable); provided that any Interest Period which
     would otherwise end on a day which is not a Business Day shall be extended
     to the next succeeding Business Day unless such Business Day falls in
     another calendar

                                       6
<PAGE>   12
     month, in which case such Interest Period shall end on the next
     preceding Business Day.  No Interest Period shall terminate after the end
     of the Maturity Date.

          (gg)  "Interest Rate":  the Prime Interest Rate or the Eurodollar
     Rate, as determined in accordance with the provisions of Article 2.

          (hh)  "Letter of Credit"  or "Letters of Credit":  any standby letters
     of credit issued or to be issued by Bank for the account of Borrower
     pursuant to Section 2.1(b) and Article 4.

          (ii)  "Letter of Credit Usage":  as at any date of determination, the
     sum of (i) the maximum aggregate undrawn amount which is or at any time
     thereafter may become available for drawing under all Letters of Credit
     then outstanding plus (ii) the aggregate amount of all drawings under
     Letters of Credit honored by Bank and not theretofore reimbursed by
     Borrower (whether such reimbursement is out of the proceeds of Loans
     pursuant to Section 2.1(a) or otherwise).  For purposes of this definition,
     any amount described in clause (i) or (ii) of the preceding sentence which
     is denominated in a currency other than Dollars shall be valued based on
     the applicable Exchange Rate for such currency as of the applicable date of
     determination .

          (jj)  "LIBOR Breakage Fee":  a fee equal to all losses (excluding loss
     of anticipated profits) costs, or expense incurred by reason of the
     liquidation or reemployment of deposits or other funds acquired by Bank to
     fund or maintain the requested Eurodollar Advance, when, as a result of
     such failure on the part of Borrower or prepayment by Borrower (including,
     without limitation, any mandatory prepayment of principal and any
     prepayment resulting from the liabilities being declared due and payable in
     accordance with their terms hereof), interest on such Eurodollar Advance is
     not based on the applicable Eurodollar Rate for the requested Interest
     Period. 

          (kk)  "LIBOR Rate":  for each Interest Period, a rate of interest, per
     annum, equal to: (i) the rate of interest determined by the Bank at which
     deposits in U.S. Dollars for the relevant Interest Period are offered based
     on information presented on the Telerate Screen as of 11:00 A.M. (London
     time) on the applicable Interest Rate Determination Date; provided that if
     more than one (1) offered rate appears on the Telerate Screen in respect of
     such Interest Period, the arithmetic mean of all such rates (as determined
     by the Bank) will be the rate used; provided further that if Telerate
     ceases to provide LIBOR quotations, such rate shall be the average rate of
     interest determined by the Bank at which deposits in U.S. Dollars are
     offered for the relevant Interest Period by banks or other financial
     institutions selected by Bank to banks in London interbank markets as of
     11:00 A.M. (London time) on the applicable Interest Rate Determination
     Date, multiplied by (ii) the LIBOR Rate Reserve Percentage. The LIBOR Rate
     shall be adjusted automatically as of the effective date of each change in
     the LIBOR Rate Reserve Percentage. The LIBOR Rate shall be calculated in
     accordance with the foregoing whether or not Bank is actually required to
     hold reserves in connection with its eurocurrency funding or, if required
     to hold such reserves, is required to hold reserves at the LIBOR Rate
     Reserve Percentage.

                                       7
<PAGE>   13
          (ll)  "LIBOR Rate Reserve Percentage":  for any day shall mean the
     percentage (expressed as a decimal, rounded upward to the nearest 1/100 of
     1%), as determined in good faith by Bank (which determination shall be
     conclusive), which is in effect on such day as prescribed by the Board of
     Governors of the Federal Reserve System (or any successor) representing the
     maximum reserve requirement (including, without limitation, supplemental,
     marginal and emergency reserve requirements) with respect to eurocurrency
     funding (currently referred to as "Eurocurrency liabilities") of a member
     bank in such system.

          (mm)  "Lien":  any mortgage, deed of trust, pledge, lien,
     hypothecation, security interest, charge or other encumbrance or security
     arrangement of any nature whatsoever, including but not limited to any
     conditional sale or title retention arrangement, and any assignment,
     deposit arrangement or lease intended as, or having the effect of,
     security.

          (nn)  "Loan":  any and all loans, advances, extensions of credit
     and/or other financial accommodations of any kind or nature made by Bank at
     any time to, for the benefit or at the request of Borrower pursuant to this
     Agreement and/or any of the other Loan Documents.

          (oo)  "Loan Documents":  this Agreement and the Other Agreements.

          (pp)  "Loan Party":  Borrower and every other Person who is a party to
     any one or more of the Loan Documents.

          (qq)  "Maturity Date":  May 29, 2001, or such earlier date as all of
     Borrower's Obligations shall be due and payable by acceleration or
     otherwise.

          (rr)  "Maximum Principal Amount":  the meaning set forth in Section
     2.1(a).

          (ss)  "Note":  that certain revolving promissory note dated even date
     herewith, in the original principal amount of Ten Million Dollars
     ($10,000,000) made by Borrower payable to the order of Bank, as said note
     may hereafter be amended, restated, modified, supplemented, extended or
     replaced.

          (tt)  "Notice of Issuance of Letter of Credit":  means notice
     delivered by Borrower to Bank, in form and substance acceptable to Bank,
     together with any application for letter of credit that Bank requires in
     accordance with its customary practice for the issuance of letters of
     credit pursuant to Section 2.1(b) and Article 4 with respect to the
     proposed issuance of a Letter of Credit of the type requested

          (uu)  "Organic Documents":  with respect to any Person, its articles
     or certificate of incorporation, by-laws, shareholder's agreement,
     certificate of partnership, certificate of limited partnership, partnership
     agreement, articles of organization, operating agreement, or similar
     documents or agreements governing its management and the rights and
     privileges of its equity owners.

                                       8
<PAGE>   14
          (vv)  "Other Agreements":  the Note, together with all other
     agreements, instruments and documents evidencing or securing the Loans or
     the transactions contemplated herein, including, without limitation, bond
     agreements, loan agreements, security agreements, guaranties, mortgages,
     deeds of trust, notes, applications and agreements for letters of credit,
     letters of credit, advances of credit, bankers acceptances, pledges, powers
     of attorney, consents, assignments, collateral assignments, contracts,
     notices, leases, financing statements and all other written matter
     heretofore, now and/or from time to time hereafter executed by and/or on
     behalf of Borrower, any other Loan Party and delivered to Bank, or issued
     by Bank upon the application and/or other request of, and on behalf of,
     Borrower.

          (ww)  "Parent":  any Person, now or at any time or times hereafter,
     owning or controlling (alone or with Borrower, any Subsidiary and/or any
     other Person) at least a majority of the issued and outstanding Stock or
     other ownership interest of Borrower or any Subsidiary (hereinafter
     defined).  For purposes of this definition, "control" shall have the same
     meaning ascribed to this term in Section 1.1(c).

          (xx)  "Permitted Liens": (i) any liens created in favor of Bank; (ii)
     liens for Charges which are not yet due and payable or which are expressly
     permitted pursuant to the terms hereof, or claims and unfunded liabilities
     under ERISA not yet due and payable or which are being contested in good
     faith; (iii) liens arising in connection with worker's compensation,
     unemployment insurance, old age pensions and social security benefits which
     are not overdue or are being contested in good faith by appropriate
     proceedings diligently pursued, provided that in the case of any such
     contest any proceedings commenced for the enforcement of such lien shall
     have been duly suspended and such provision for the payment of such lien
     has been made on the books of Borrower (or the applicable Affiliate) as may
     be required by GAAP; (iv) liens incurred in the ordinary course of business
     to secure the performance of statutory obligations arising in connection
     with progress payments or advance payments due under contracts with the
     United States Government or any agency thereof entered into in the ordinary
     course of business; (v) any liens securing indebtedness of Borrower to any
     Persons in an aggregate amount less than $1,000,000; (vi) purchase money
     liens in connection with the acquisition of Assets, (vii) Liens granted
     solely upon Assets of Subsidiaries; and (viii) those liens disclosed on
     Schedule 5.1(g).

          (yy)  "Person": any individual, sole proprietorship, partnership,
     limited liability company, joint venture, trust, unincorporated
     organization, association, corporation, institution, entity, party or
     government (whether national, Federal, state, county, city, municipal or
     otherwise, including without limitation any instrumentality, division,
     agency, body or department thereof).

          (zz)  "Prime Interest Rate": the prime or base rate of interest quoted
     from time to time by the American National Bank and Trust Company of
     Chicago as its base rate on corporate loans at large U.S. money center
     commercial banks on such day; provided that in the event the American
     National Bank and Trust Company of Chicago

                                       9
<PAGE>   15
     ceases quoting a prime or base rate, then Prime Rate shall mean the
     per annum rate of interest quoted as the Bank Prime Loan Rate for the most
     recent weekday for which such rate is quoted in Statistical Release H.15
     (519) published from time to time by the Board of Governors of the Federal
     Reserve System; provided further that in the event that both of the
     aforesaid indices cease to be published or to quote rates of the aforesaid
     types, the Prime Rate shall be determined from a comparable index chosen by
     Bank in good faith. The Prime Rate shall change effective on the date of
     the publication of any change in the applicable index by which the Prime
     Rate is determined.

          (aaa)  "Prime Rate Advance":  all or any portion of the Loan which is
     not a Eurodollar Advance.

          (bbb)  "Records": all books, records, computer records, computer
     software, ledger cards, programs and other computer materials, customer and
     supplier lists, invoices, orders and other property and general intangibles
     at any time evidencing or relating to the Assets.

          (ccc)  "SEC":  the Securities and Exchange Commission.

          (ddd)  "Securities":  shall have the meaning ascribed to that term in
     the Securities Act of 1934.

          (eee)  "Securities Laws":  all applicable Federal and state securities
     laws and regulations promulgated pursuant thereto.

          (fff)  "Stock":  all shares, interests, participations or other
     equivalents (however designated) of or in a corporation, whether voting or
     non-voting, including, but not limited to, common stock, warrants,
     preferred stock, convertible debentures and all agreements, instruments and
     documents convertible, in whole or in part, into any one or more or all of
     the foregoing.

          (ggg)  "Subsidiary":  any Person at least a majority of whose issued
     and outstanding Stock or other ownership interests now or at any time
     hereafter is owned by Borrower.

          (hhh)  "Tangible Net Worth": as determined at any time, the total of
     shareholders' equity (including capital stock, additional paid-in capital
     and retained earnings after deducting treasury stock and subordinated
     indebtedness approved in writing by Bank) of a Person, less the sum of the
     total amount of any intangible assets, which, for purposes of this
     definition, shall include, without limitation, general intangibles,
     noncompetition agreements, consulting agreements, capitalized software
     costs, unamortized deferred charges and goodwill, all as determined in
     accordance with GAAP.

          (iii)  "Unmatured Default":  any event or condition which, with the
     passage of time or the giving of notice or both, would constitute an Event
     of Default hereunder.

                                       10
<PAGE>   16
               1.2  GAAP.  Except as otherwise defined in this Agreement or the
          other Loan Documents, all accounting terms used herein shall have the
          meaning ascribed to that term in accordance with GAAP.

               1.3  Borrower.  Whenever the context so requires, the use of "it"
          in reference to Borrower shall mean Borrower as defined above.

               1.4  Rules of Construction.  In this Agreement, unless a clear
          contrary intention appears:

          (a)  the singular number includes the plural number and vice versa;
     reference to any gender includes each other gender;

          (b)  the words "herein," "hereof" and "hereunder" and other words of
     similar import refer to this Agreement as a whole and not to any particular
     Article, Section or other subdivision;

          (c)  reference to any Person includes such Person's successors and
     assigns but, if applicable, only if such successors and assigns are
     permitted by this Agreement, and reference to a Person in a particular
     capacity excludes such Person in any other capacity or individually;
     provided that nothing in this clause is intended to authorize any
     assignment not otherwise permitted by this Agreement;

          (d)  reference to any agreement, document or instrument means such
     agreement, document or instrument as amended, supplemented or modified and
     in effect from time to time in accordance with the terms thereof and, if
     applicable, the terms hereof, and reference to any note includes any note
     issued pursuant to any Loan Document in extension or renewal thereof and in
     substitution or replacement therefor;

          (e)  unless the context indicates otherwise, reference to any Article,
     Section, Schedule or Exhibit means such Article or Section hereof or such
     Schedule or Exhibit hereto:

          (f)  the words "including" (and with correlative meaning "include")
     means including, without limiting the generality of any description
     preceding such term:

          (g)  with respect to the determination of any period of time, the word
     "from" means "from and including" and the word "to" means "to but
     excluding;" and

          (h)  reference to any law means such as amended, modified, codified or
     reenacted, in whole or in part, and in effect from time to time.

          (i)  The Article and Section headings herein are for convenience only
     and shall not affect the construction hereof.

                                       11
<PAGE>   17
2.        LOANS - GENERAL TERMS

               2.1  Revolving Loan/Letters of Credit.

          (a)  Revolving Loan. Subject to the terms and conditions hereof, Bank
     shall make available to Borrower revolving Loans from time to time in an
     aggregate principal amount not to exceed at any time outstanding Ten
     Million Dollars ($10,000,000) (the "Maximum Principal Amount"). The Loans
     shall be further evidenced by the Note. The Loans shall be funded and
     interest shall accrue and be paid thereon in accordance with this Article
     2. The entire unpaid principal balance plus accrued but unpaid interest on
     the Loans is due and payable on the Maturity Date.

          (b)  Letters of Credit.  In addition to the Loan made pursuant to this
     Section 2.1, Borrower may request, in accordance with the provisions of
     Article 4, from time to time and at any time prior to the Maturity Date,
     that Bank issue Letters of Credit for the account of and on behalf of
     Borrower for Borrower's working capital and general corporate purposes.
     Subject to the terms and conditions of this Agreement and in reliance upon
     the representations and warranties of Borrower herein set forth, Bank shall
     issue such Letters of Credit in accordance with the provisions of Section
     4; provided that Borrower shall not request that Bank issue (and Bank shall
     not issue):  (i) any Letter of Credit if, after giving effect to such
     issuance, the outstanding principal balance of the Loan plus the Letter of
     Credit Usage would exceed Ten Million Dollars ($10,000,000); and (ii) any
     Letter of Credit having an expiration date later than November 30, 2001,
     provided that Bank may agree that a Letter of Credit will automatically be
     extended for one or more successive periods.

               2.2  Maximum Principal Amount. In the event that the outstanding
          principal balance of the Loan plus the Letter of Credit Usage exceeds
          the Maximum Principal Amount at any time, Borrower shall pay the
          amount of such excess to Bank, without notice or demand, and any
          amount not so paid shall bear interest at the Default Rate until paid.
          Borrower's obligation to pay principal pursuant to this Section 2.2
          shall include (but not be limited to) an obligation to pay principal
          in an amount required to reduce the outstanding principal balance of
          the Loan plus the Letter of Credit Usage to an amount equal to or less
          than Ten Million Dollars ($10,000,000) at all times. This is an
          absolute obligation to pay to Bank the amount of the unpaid principal
          balance of the Loan plus the Letter of Credit Usage in excess of said
          Maximum Principal Amount, regardless of the cause of such excess.

               2.3  Maturity Date; Termination of Loans. Bank's obligation to
          make any Advance to Borrower pursuant to the provisions hereof shall
          be in effect until the Maturity Date, unless sooner terminated ( a) by
          Bank upon the occurrence of an Event of Default, an Unmatured Default,
          or pursuant to the terms hereof or (b) by Borrower at any time upon no
          less than three (3) Business days' prior written notice, accompanied
          by payment in full all Borrower's

                                       12
<PAGE>   18
          Liabilities then outstanding, including without limitation all
          principal and interest outstanding under Loans, together with all
          Costs.

               2.4  Authorized Disbursement of Proceeds. Borrower
          hereby authorizes and directs Bank to disburse, for and on behalf of
          Borrower and for Borrower's account, the proceeds of any Loan to such
          Person as Borrower or any Designated Person shall direct. In addition
          to Advances of Loan proceeds made pursuant to a Borrowing Request made
          by Borrower from time to time, Borrower hereby irrevocably authorizes
          Bank to disburse proceeds of the Loan to pay: (a) interest which is
          accrued but unpaid and which is due and payable pursuant to the terms
          hereof and of the Note until the Loan is paid in full; and (b) for any
          and all Costs. The execution of this Agreement by Borrower shall, and
          hereby does, constitute an irrevocable direction and authorization to
          Bank so to disburse such funds described in this Section and to treat
          such Advances as money loaned pursuant to this Agreement and as
          indebtedness evidenced by the Note. No further direction or
          authorization from Borrower shall be necessary for Bank to make such
          Advances, and all such Advances shall satisfy, to the extent so
          disbursed, the obligations of Borrower hereunder and shall be
          evidenced by the Note. Notwithstanding anything to the contrary
          contained herein, Bank is under no duty or obligation to make such
          Advances and failure to make such Advances shall not be deemed to be a
          default by Bank or impair any of Bank's rights or remedies hereunder.

               2.5  Borrowing Procedure.

                    (a)  In order to request an Advance, Borrower shall hand
          deliver or telecopy to Bank a duly completed Borrowing Request not
          later than 11:00 a.m. Chicago time: (i) at least two (2) Business Days
          before a proposed Eurodollar Advance and (ii) on the day of a proposed
          Prime Rate Advance. Each Borrowing Request shall be irrevocable and
          shall specify: (w) the number and location of the account to which
          funds are to be disbursed; (x) the date such Advance is to be made
          (which shall be a Business Day); (y) the amount of such Advance; and
          (z) if applicable, the information required to elect that such Advance
          be a Eurodollar Advance, in compliance with the provisions of Sections
          2.10 and 2.11.

                    (b)  If Borrower in respect of an outstanding
          Eurodollar Advance shall not have delivered a Borrowing Request in
          accordance with Section 2.5(a) at least three (3) Business Days prior
          to the end of the Interest Period then in effect for such Eurodollar
          Advance and requesting that such Eurodollar Advance be refinanced,
          then Borrower shall (unless Borrower has notified the Bank not fewer
          than three (3) Business Days prior to the end of such Interest Period,
          that such Eurodollar Advance is to be repaid at the end of such
          Interest Period) be deemed to have delivered a Borrowing Request
          requesting that such Advance be refinanced with a new Advance of
          equivalent amount, and such new Advance shall bear interest at the
          Prime Interest Rate.

               2.6  Interest Rate. The principal on the Note
          shall bear interest at the Prime Interest Rate or, to the extent
          Borrower has fully and timely complied with


                                       13


<PAGE>   19
          the provisions of Sections 2.10 and 2.11, at the Eurodollar Rate.
          Unless Borrower has designated any Advance as a Eurodollar Advance in
          strict accordance with the terms hereof, Borrower's Liabilities shall
          bear interest at the Prime Interest Rate. Interest on all Prime Rate
          Advances and on all Eurodollar Advances shall be computed on a 360 day
          year for the actual number of days elapsed. After the occurrence of an
          Event of Default and during the continuation thereof, all Loans shall
          bear interest at the Default Rate. The unpaid principal balance of
          each Advance shall bear interest at the Interest Rate applicable
          thereto, determined by Bank in accordance with the provisions hereof,
          which determination shall be binding upon Borrower, absent manifest
          error.

               2.7  Change of Laws. If Bank shall determine at any time after
          the date hereof that the adoption of any law, rule or regulation
          regarding capital adequacy, or any change therein or in the
          interpretation or administration thereof by any governmental
          authority, central bank or comparable agency charged with the
          interpretation or administration thereof or compliance by Bank with
          any request or directive regarding capital adequacy (whether or not
          having the force of law) from any such authority, central bank or
          comparable agency, has or would have the effect of reducing the rate
          of return on Bank's capital as a consequence of its obligations
          hereunder to a level below that which Bank could have achieved but for
          such adoption, change or compliance (taking into consideration Bank's
          policies with respect to capital adequacy) by an amount deemed by Bank
          to be material, then Borrower shall pay to Bank upon demand such
          amount or amounts, in addition to the amounts payable under any other
          provision of this Agreement or the Other Agreements, as will
          compensate Bank for such reduction. Determinations by Bank for
          purposes of this Section of the additional amount or amounts required
          to compensate Bank with respect to the foregoing shall be conclusive
          in the absence of manifest error. In determining such amount or
          amounts, Bank may use any reasonable averaging or attribution methods.
          Notwithstanding the foregoing, no amounts shall be payable by Borrower
          to Bank under the terms of this Section 2.7 if Liabilities are paid in
          full on or before ten (10) days after the date on which Bank shall
          have notified Borrower that amounts will be due under this Section
          2.7. In the event of a prepayment pursuant to this Section 2.7, any
          LIBOR Breakage Fee otherwise payable pursuant to the terms of this
          Article 2 shall be waived by Bank and shall not be due or payable.

               2.8  Regulatory Changes. Notwithstanding any other provision
          herein contained to the contrary, in the event that any regulatory
          change shall, in the reasonable determination of Bank, make it
          unlawful for Bank to make or to maintain any Eurodollar Advance or
          impose additional restrictions on Eurodollar Advances by Bank, then,
          the obligation of Bank to make or maintain any such Eurodollar Advance
          shall be terminated and all outstanding Eurodollar Advances shall
          automatically be converted to Prime Rate Advances. Bank shall, as
          promptly as practicable following any such determination, give
          Borrower a notice thereof that sets forth the basis for any such
          determination. After such

                                       14


<PAGE>   20
          determination and while such determination is in effect,
          Bank shall not be required to make further Eurodollar Advances.

               2.9  Advances Prior to LIBOR Rate Determination. Anything herein
          to the contrary notwithstanding, after notice but prior to making any
          requested Eurodollar Advance if, for any reason whatsoever, LIBOR
          Rates are not then being quoted for the requested Interest Period and
          in an amount approximating the amount of such Eurodollar Advance, Bank
          shall give Borrower prompt notice thereof and such Eurodollar Advance
          (if not yet made) shall be a Prime Rate Advance and no conversions
          into Eurodollar Advances shall be permitted and no new Eurodollar
          Advances shall be made so long as such condition exists.

               2.10  Eurodollar Advances and Conversion. Provided no Event of
          Default or Unmatured Default has occurred and is continuing, Borrower
          shall have the option, subject to the other provisions of this
          Agreement, to: (i) request that any Advance or any portion of an
          Advance in a minimum amount of $500,000 and in multiples of $100,000,
          shall be deemed to be a Eurodollar Advance by giving telephonic notice
          to Bank at least two (2) Business Days prior to the day any Eurodollar
          Advance is to be made hereunder specifying the applicable Interest
          Period; provided that Borrower gives Bank written confirmation by
          facsimile of its telephonic notice on the same Business Day as such
          telephone notice is given with respect to such Eurodollar Advance, and
          (ii) convert on any Business Day, all or any portion of the
          outstanding principal amount of any Advance or any portion of an
          Advance, in a minimum amount of $500,000 and in multiples of $100,000,
          from one type of interest rate advance to another type of interest
          rate advance by giving at least two (2) Business Days prior telephonic
          notice to Bank thereof; provided that Borrower gives Bank written
          confirmation of its telephonic notice by facsimile on the same
          Business Day that such telephonic notice is given with respect to such
          conversion hereunder. Notwithstanding the foregoing: (y) no Eurodollar
          Advance may be converted into a Prime Rate Advance pursuant to this
          Section 2.10, except effective on the last day of the Interest Period
          applicable thereto, and (z) Borrower shall have no more than five (5)
          Eurodollar Advances with different interest periods at any one time.

               2.11  Interest Period Election. Borrower may, by prior telephonic
          notice to Bank, elect the Interest Period(s) to be applicable to all
          or any portion of any Eurodollar Advance upon the expiration of the
          Interest Period then applicable to such Eurodollar Advance; provided
          that such notice is given to Bank at least two (2) Business Days prior
          to the expiration of the then Interest Period and that Borrower gives
          written confirmation by facsimile of its telephonic notice on the same
          Business Day that such telephonic notice is given. In the event
          Borrower does not make such an election with respect to all or any
          portion of a Eurodollar Advance for which the Interest Period is
          expiring, then, upon the expiration of such Interest Period, the
          portion of such Eurodollar Advance for which no such election has been
          made shall automatically convert to a Prime Rate Advance.

                                       15


<PAGE>   21
               2.12  Libor Brokerage Fee. In the event of any prepayment of an
          Advance prior to the end of the then applicable Interest Period (by
          acceleration or otherwise) or in the event any Advance is not made
          after delivery of a Borrowing Request in accordance with the terms
          hereof, for any reason whatsoever, Borrower shall pay to Bank an
          amount equal to the LIBOR Breakage Fee. Any fee payable under this
          Sections 2.12 not paid when due shall bear interest at the Default
          Rate.

               2.13  Usury. The provisions of this Section shall govern and
          control over any irreconcilably inconsistent provision contained in
          this Agreement or in any other document evidencing or securing the
          Loan. Bank shall never be entitled to receive, collect, or apply as
          interest hereon (for purposes of this Section, the word "interest"
          shall be deemed to include any sums treated as interest under
          applicable law governing matters of usury and unlawful interest), any
          amount in excess of the Highest Lawful Rate (hereinafter defined) and,
          in the event Bank ever receives, collects, or applies as interest any
          such excess, such amount which would be excessive interest shall be
          deemed a partial prepayment of principal and shall be treated
          hereunder as such; and, if the principal of this Agreement is paid in
          full, any remaining excess shall forthwith be paid to Borrower. In
          determining whether or not the interest paid or payable, under any
          specific contingency, exceeds the Highest Lawful Rate, Borrower and
          Bank shall, to the maximum extent permitted under applicable law, (i)
          characterize any non-principal payment as an expense, fee or premium
          rather than as interest, (ii) exclude voluntary prepayments and the
          effects thereof, and (iii) spread the total amount of interest
          throughout the entire contemplated term of this Agreement, provided,
          that if this Agreement is paid and performed in full prior to the end
          of the full contemplated term hereof, and if the interest received for
          the actual period of existence hereof exceeds the Highest Lawful Rate,
          Bank shall refund to Borrower the amount of such excess and, in such
          event, Bank shall not be subject to any penalties provided by any laws
          for contracting for, charging or receiving interest in excess of the
          Highest Lawful Rate. "Highest Lawful Rate" shall mean the maximum rate
          of interest which Bank is allowed to contract for, charge, take,
          reserve or receive under applicable law after taking into account, to
          the extent required by applicable law, any and all relevant payments
          or charges hereunder.

3.        PAYMENT TERMS

               3.1   Loan Account; Method of Making Payments. Bank shall
          maintain a Loan Account on its books in which shall be recorded: (i)
          all Loans made by Bank to Borrower pursuant to this Agreement; (ii)
          all payments made by Borrower on all Loans; and (iii) all other
          appropriate debits and credits as provided in this Agreement,
          including, without limitation, all fees, charges, expenses and
          interest. All entries in the Loan Account shall be made in accordance
          with Bank's customary accounting practices, in effect from time to
          time. The failure of Bank to record any of the foregoing shall not in
          any way limit Borrower's obligations under this Agreement.

                                       16
<PAGE>   22
               3.2  Interest Payments.

          (a)  Accrued interest on all Prime Rate Advances shall be payable
     monthly, in arrears, on the last Business Day of each month during the term
     hereof, without notice or demand.

          (b)  Accrued interest on any Eurodollar Advance shall not be due and
     payable monthly, but, instead, shall be payable in arrears on the last day,
     of the Interest Period applicable thereto.

               3.3  Principal Payments. The unpaid principal balance, plus all
          accrued but unpaid interest shall be due and payable in full on the
          Maturity Date, without notice or demand.

               3.4  Place of Payment. All payments to Bank hereunder and under
          the Other Agreements shall be payable in immediately available funds
          on or before 3:00 p.m. Chicago time at the principal place business of
          Bank, or such place or places as Bank may designate in writing to
          Borrower. All of such payments to Persons other than Bank shall be
          payable at such place or places as Bank may designate in writing to
          Borrower. Borrower's Liabilities will be payable as set forth in the
          Note, this Agreement, and the Other Agreements.

               3.5  Payment on Maturity and Prepayment. On the Maturity Date,
          whether by acceleration or otherwise, Borrower shall pay to Bank, in
          full, in cash or other immediately available funds, the outstanding
          amount of the Loan. Each Prime Rate Advance may be repaid at any time,
          without premium or penalty by Borrower giving telephonic notice to
          Bank of such prepayment no later than 3:00 p.m. Chicago time on the
          date of such prepayment, confirmed in writing by facsimile of its
          telephonic notice on the same day. Each Eurodollar Advance may be
          prepaid on the last day of the Interest Period applicable thereto, but
          only by Borrower giving telephonic notice to Bank of such prepayment
          at least two (2) Business Days prior to the day of such prepayment,
          such notice confirmed in writing by facsimile on the day of the
          telephonic notice. Prepayment of any Eurodollar Advance during an
          Interest Period is expressly prohibited. In the event of an attempted
          prepayment of any Eurodollar Advance during any Interest Period, Bank,
          at Borrower's option, shall either: (i) hold such funds in a
          non-interest bearing cash collateral account to secure Borrower's
          Liabilities and to apply such funds to Borrower's Liabilities on the
          last day of the Interest Period, or (ii) apply such funds to
          Borrower's Liabilities, in which event Borrower shall pay to Bank a
          LIBOR Breakage Fee immediately upon demand therefor, and any amount
          not so paid shall bear interest at the Default Rate.

               3.6  Advances to Constitute One Loan.  All Advances, loans and
          any other financial accommodations provided pursuant to the terms
          hereof by Bank to Borrower shall constitute one loan and all
          indebtedness and obligations of

                                       17


<PAGE>   23
          Borrower to Bank under this Agreement, the Other Agreements or
          otherwise shall constitute one general obligation.

               3.7  Application of Payments and Collections.

          (a)  Application of Payments.  Bank shall have the right unilaterally
     (and without notice to or the consent of any Person) to allocate any and
     all payments which may be received by or tendered to Bank made by Borrower
     or any other Person at any time or from time to time and which relate in
     any way to the Loan or any other of Borrower's Liabilities then due and
     payable in any order of priority as Bank in its reasonable discretion shall
     elect, as follows: (i) to the payment of any Costs; (ii) to accrued but
     unpaid interest, penalties and late payment fees; and (iii) to principal;
     provided that Bank shall not allocate payments in a manner which would
     create a LIBOR Breakage Fee or other fee or penalty payable by Borrower
     which would not otherwise be imposed.  Borrower (y) irrevocably waives the
     right to direct the application of payments and collections received by
     Bank from or on behalf of Borrower, and (z) agrees that Bank shall have the
     continuing exclusive right to apply and reapply any and all such payments
     and collections against the Loan or any other Borrower's Liabilities or
     Liabilities then due and payable in such manner as Bank may deem
     appropriate, notwithstanding any entry by Bank upon any of its books and
     records.

          (b)  Reapplication of Payments. To the extent that Bank receives any
     payment on account of Borrower's Liabilities, and any such payment(s)
     and/or proceeds or any part thereof are subsequently invalidated, declared
     to be fraudulent or preferential, set aside, subordinated and/or required
     to be repaid to a trustee, receiver or any other Person under any
     bankruptcy act, state or federal law, common law or equitable cause, then,
     to the extent of such payment(s) or proceeds received, Borrower's
     Liabilities or part thereof intended to be satisfied shall be revived and
     continue in full force and effect, as if such payment(s) and/or proceeds
     had not been received by Bank and applied on account of the Borrower's
     Liabilities.

               3.8  Monthly Statements. All Advances to Borrower and all other
          debits and credits provided for in this Agreement shall be evidenced
          by entries made by Bank in its internal data control systems showing
          the date, amount and reason for each such debit or credit. Until such
          time as Bank shall have rendered to Borrower written statements of
          account as provided herein, the balance in the Loan Account, as set
          forth on Bank's most recent statement, shall be rebuttably presumptive
          evidence of the amounts due and owing to Bank by Borrower. At Bank's
          option, Bank may render a monthly statement to Borrower setting forth
          the balance of the Loan Account, including principal, interest, costs,
          penalties, charges and other fees. Each such statement shall be
          subject to subsequent adjustment by Bank and Bank's right to reapply
          payments in accordance with Section 3.7(b), but shall, as to
          statements of principal and interest then due or having been paid,
          absent manifest errors or omissions, be presumed correct and binding
          upon Borrower and shall constitute an account stated unless, within
          thirty (30) days after receipt of any statement from Bank, Borrower
          shall deliver

                                       18


<PAGE>   24
          to Bank written objection thereto, specifying the error or errors, if
          any, contained in such statement.

                                       19


<PAGE>   25


4.        LETTERS OF CREDIT

               4.1  Mechanics of Issuance.

          (a)  Notice of Issuance. Whenever Borrower desires the issuance of a
     Letter of Credit, it shall deliver to Bank a Notice of Issuance of Letter
     of Credit no later than 10:00 A.M. (Chicago time) at least three (3)
     Business Days in advance of the proposed date of issuance. The Notice of
     Issuance of Letter of Credit shall specify (i) the proposed date of
     issuance (which shall be a Business Day), (ii) the face amount of the
     Letter of Credit, in Dollars (which amount, in the case of a drawing under
     a Letter of Credit which is denominated in a currency other than Dollars,
     shall be calculated by reference to the applicable Exchange Rate) as quoted
     by Bank to Borrower in connection with such Letter of Credit, (iii) the
     expiration date of the Letter of Credit, (iv) the name and address of the
     beneficiary, and (v) the verbatim text of the proposed Letter of Credit or
     the proposed terms and conditions thereof, including a precise description
     of any documents and the verbatim text of any certificates to be presented
     by the beneficiary which, if presented by the beneficiary prior to the
     expiration date of the Letter of Credit, would require Bank to make payment
     under the Letter of Credit; provided that, anything to the contrary in this
     Agreement notwithstanding, Borrower may, with Bank's consent, deliver a
     Notice of Issuance of Letter of Credit electronically to Bank, in which
     such event Borrower shall be deemed for all purposes hereunder and the
     other Loan Documents to have delivered a written Notice of Issuance of
     Letter of Credit hereunder. Borrower shall notify Bank prior to the
     issuance of any Letter of Credit in the event that any of the matters to
     which Borrower is required to certify in the applicable Notice of Issuance
     of Letter of Credit is no longer true and correct as of the proposed date
     of issuance of such Letter of Credit, and upon the issuance of any Letter
     of Credit, Borrower shall be deemed to have re-certified, as of the date of
     such issuance, as to the matters to which Borrower is required to certify
     in the applicable Notice of Issuance of Letter of Credit.

          (b)  Issuance of Letter of Credit. Upon satisfaction or waiver of the
     conditions set forth herein, Bank shall issue the requested Letter of
     Credit in accordance with Bank's standard operating procedures; provided
     that the Bank, in its sole and absolute discretion, may require changes in
     the text of the proposed Letter of Credit or any such documents or
     certificates, and that no Letter of Credit shall require payment against a
     conforming draft to be made thereunder on the same Business Day that such
     draft is presented if such presentation is made after 10:00 A.M. (Chicago
     time) on such Business Day; provided further that Bank shall not be
     obligated to issue any Letter of Credit denominated in a foreign currency
     which in the judgment of Bank is not readily and freely available.

               4.2  Letter of Credit Fees. Borrower agrees to pay the following
          amounts to Bank with respect to Letters of Credit issued by Bank (a)
          an issuance fee equal to 1.5% of the aggregate maximum amount
          available to be drawn under such Letter of Credit for each 12 month
          period or portion thereof during which such Letter of Credit is
          outstanding and (b) all issuing costs of Bank.

                                       20

<PAGE>   26
               4.3  Drawings and Reimbursement of Amounts Drawn Under Letters of
          Credit.

          (a)  Responsibility of Bank With Respect to Requests For Drawings. In
     determining whether to honor any request for drawing under any Letter of
     Credit by the beneficiary thereof, Bank shall be responsible only to
     determine that the documents and certificates required to be delivered
     under such Letter of Credit have been delivered and that they comply on
     their face with the requirements of such Letter of Credit.

          (b)  Reimbursement by Borrower of Amounts Drawn Under Letters of
     Credit. In the event Bank has determined to honor a request for drawing
     under a Letter of Credit issued by it, Bank shall immediately notify
     Borrower, and Borrower shall reimburse Bank on or before the Business Day
     immediately following the date on which such drawing is honored (the
     "Reimbursement Date") in an amount in Dollars (which amount, in the case of
     a drawing under a Letter of Credit which is denominated in a currency other
     than Dollars, shall be calculated by reference to the applicable Exchange
     Rate on the date of such drawing) in same day funds equal to the amount of
     such drawing; provided that, anything contained in this Agreement to the
     contrary notwithstanding, (i) unless Borrower shall have notified Bank
     prior to 10:00 A.M. (Chicago time) on the date of such drawing that
     Borrower intends to reimburse Bank for the amount of such drawing with
     funds other than the proceeds of Loans made pursuant to Section 2.1(a),
     Borrower shall be deemed to have authorized Bank to make a Loan on the
     Reimbursement Date in an amount equal to the amount of such drawing, and
     (ii) subject to satisfaction or waiver of all conditions to the making of
     Loans, Bank shall, on the Reimbursement Date, make a Loan in the amount of
     such drawing, the proceeds of which shall be applied directly by Bank to
     reimburse Bank for the amount of such drawing.  If for any reason proceeds
     of a Loan are not available to Borrower in accordance with Section 2.1(a)
     in amount of such drawing, Borrower shall reimburse Bank, on demand, an
     amount in same day funds equal to the excess of the amount of such drawing
     over the aggregate amount of such Loans, if any, which are so received.

               4.4  Interest on Amounts Drawn Under Letters of Credit. Borrower
          agrees to pay to Bank, with respect to drawings made under any Letters
          of Credit issued by it, interest on the amount paid by Bank in respect
          of each such drawing from the date of such drawing to but excluding
          the date such amount is reimbursed by Borrower (including any such
          reimbursement out of the proceeds of Loans pursuant to Sections 2.1(a)
          and 4.3 at the Prime Interest Rate.

               4.5  Obligations Absolute. The obligation of Borrower to
          reimburse Bank for drawings made under the Letters of Credit issued by
          it and to repay any Loans made by Bank or other obligations of
          Borrower pursuant to Sections 4.3 and 4.4 above shall be unconditional
          and irrevocable and shall be paid strictly in accordance with the
          terms of this Agreement under all circumstances including, without
          limitation, the following circumstances:

                                       21
<PAGE>   27
          (a)  any lack of validity or enforceability of any Letter of Credit;

          (b)  the existence of any claim, set-off, defense or other right which
     any Person may have at any time against a beneficiary or any transferee of
     any Letter of Credit (or any Persons for whom any such transferee may be
     acting), or whether in connection with this Agreement, the transactions
     contemplated herein or any unrelated transaction (including any underlying
     transaction between any Person and the beneficiary for which any Letter of
     Credit was procured);

          (c)  any draft, demand, certificate or other document presented under
     any Letter of Credit proving to be forged, fraudulent, invalid or
     insufficient in any respect or any statement therein being untrue or
     accurate in any respect;

          (d)  payment by Bank under any Letter of Credit against presentation
     of a demand, draft or certificate or other document which does not comply
     with the terms of such Letter of Credit;

          (e)  any adverse change in the business, operations, properties,
     assets, condition (financial or otherwise) or prospects of any Person;

          (f)  any breach of this Agreement or any other Loan Document by any
     party thereto;

          (g)  any other circumstance or happening whatsoever, whether or not
     similar to any of the foregoing; or

          (h)  the fact that an Event of Default or an Unmatured Default shall
     have occurred and be continuing;

          provided, in each case, that payment by Bank under the applicable
          Letter of Credit shall not have constituted willful misconduct of Bank
          or its officers, employees or agents under the circumstances in
          question (as determined by a final judgment of a court of competent
          jurisdiction).

               4.6  Indemnification; Nature of Bank's Duties.

                                       22

<PAGE>   28
          (a)  Indemnification. In addition to amounts payable as provided in
     any other provision of this Section 4, Borrower hereby agrees to protect,
     indemnify, pay and save harmless Bank and its officers, employees or agents
     from and against any and all claims, demands, liabilities, damages, losses,
     and reasonable costs, charges and expenses (including reasonable fees,
     expenses and disbursements of counsel) which Bank may incur or be subject
     to as a consequence, direct or indirect, of (i) the issuance of any Letter
     of Credit by Bank, other than as a result of the willful misconduct of Bank
     or its officers, employees or agents as determined by a final judgment of a
     court of competent jurisdiction or, subject to the following clause (ii),
     the wrongful dishonor by Bank of a proper demand for payment made under any
     Letter of Credit issued by it, or (iii) the failure of Bank to honor a
     drawing under any such Letter of Credit as a result of any act or omission,
     whether rightful or wrongful, of any present or future de jure or de facto
     government or governmental authority (all such acts or omissions herein
     called "Governmental Acts").

          (b)  Nature of Bank's Duties. As between Borrower and Bank, Borrower
     assumes all risks of the acts and omissions of, or misuse of the Letters of
     Credit issued by Bank by, the respective beneficiaries of such Letters of
     Credit. In furtherance and not in limitation of the foregoing, Bank shall
     not be responsible for: (i) the form, validity, sufficiency, accuracy,
     genuineness or legal effect of any document submitted by any party in
     connection with the application for and issuance of any such Letter of
     Credit, even if it should in fact prove to be in any or all respects
     invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity
     or sufficiency of any instrument transferring or assigning or purporting to
     transfer or assign any such Letter of Credit or the rights or benefits
     thereunder or proceeds thereof, in whole or in part, which may prove to be
     invalid or ineffective for any reason; (iii) failure of the beneficiary of
     any such Letter of Credit to comply fully with any conditions required in
     order to draw upon such Letter of Credit; (iv) errors, omissions,
     interruptions or delays in transmission or delivery of any messages, by
     mail, cable, telegraph, telex or otherwise, whether or not they be in
     cipher; (v) errors in interpretation of technical terms; (vi) any loss or
     delay in the transmission or otherwise of any document required in order to
     make a drawing under any such Letter of Credit or of the proceeds thereof;
     (vii) the misapplication by the beneficiary of any such Letter of Credit of
     the proceeds of any drawing under such Letter of Credit; or (viii) any
     consequences arising from causes beyond the control of Bank, including
     without limitation any Governmental Acts, and none of the above shall
     affect or impair, or prevent the vesting of, any of Bank's rights or powers
     hereunder.

          (c)  Limitation of Bank's Liability. In furtherance and extension and
     not in limitation of the specific provisions set forth in the first
     paragraph of this Section 4.6, any action taken or omitted by Bank under or
     in connection with the Letters of Credit issued by it or any documents and
     certificates delivered thereunder, if taken or omitted in good faith, shall
     not put Bank under any resulting liability to Borrower.

               4.7  Increased Costs and Taxes Relating to Letters of Credit.
          Without limiting the other provision of Article 4, in the event that
          Bank shall determine

                                       23

<PAGE>   29
          (which determination shall, absent manifest error, be final and
          conclusive and binding upon all parties hereto) that any change after
          the date hereof in any law, treaty or governmental rule, regulation or
          order, or any change therein or in the interpretation, administration
          or application thereof (including the introduction of any new law,
          treaty or governmental rule, regulation or order), or any
          determination of a court or governmental authority, in each case that
          becomes effective after the date hereof, or compliance by Bank with
          any guideline, request or directive issued or made after the date
          hereof by any central bank or other governmental or
          quasi-govern-mental authority (whether or not having the force of
          law):

          (a)  subjects Bank (or its applicable lending or letter of credit
     office) to any additional tax (other than any tax on the overall net income
     of Bank) with respect to the issuing or maintaining of any Letters of
     Credit or the purchasing or maintaining of any participations therein or
     any other obligations under this Section 4, whether directly or by such
     being imposed on or suffered by Bank;

          (b)  imposes, modifies or holds applicable any reserve (including
     without limitation any marginal, emergency, supplemental, special or other
     reserve), special deposit, compulsory loan, FDIC insurance or similar
     requirement in respect of any Letters of Credit issued by Bank; or

          (c)  imposes any other condition on or affecting Bank (or its
     applicable lending or letter of credit office) regarding this Article 4 or
     any Letter of Credit or any participation therein;

and the result of any of the foregoing is to increase the cost to Bank of
agreeing to issue, issuing or maintaining any Letter of Credit or agreeing to
purchase, purchasing or maintaining any participation therein or to reduce any
mount received or receivable by Bank (or its applicable lending or letter of
credit office) with respect thereto; then, in any case, Borrower shall promptly
pay to Bank, upon receipt if the statement referred to in the next sentence,
such additional amount or amounts as may be necessary to compensate Bank for any
such increased cost or reduction in amounts received or receivable hereunder.
Bank shall deliver to Borrower a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to Bank under this
Section 4.7, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.

               4.8  Standard Letter of Credit Application.
          Notwithstanding Section 9.8 below, if any provision contained in this
          Agreement is in conflict, or inconsistent with any provision of a
          Letter of Credit Application executed by Borrower and delivered to and
          accepted by Bank in connection with this Agreement, then the
          provision(s) of such Letter of Credit Application shall control.

5.        GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS


                                       24

<PAGE>   30
               5.1  General Representations, Warranties and Covenants. Except as
          disclosed in writing to Bank concurrently herewith, Borrower warrants
          and represents to and covenants with Bank that:

          (a)  Organization. Borrower is and at all times hereafter shall be
     a corporation, duly organized and existing and in good standing under the
     laws of the State of Delaware and qualified or licensed to do business and
     in good standing in all states in which the laws thereof require Borrower
     to be so qualified and/or licensed and in which the failure to so qualify
     could have a material adverse effect on the business, Assets or condition
     (financial or otherwise) of Borrower or its ability to perform its
     obligations under the Loan Documents, including without limitation the
     States of Illinois and Delaware.

          (b)  Entity Power. Borrower has corporate power and authority to own
     its property and to transact the business in which it is engaged or
     presently proposes to engage. Borrower has the corporate right, power and
     capacity and is duly authorized and empowered to enter into, execute,
     deliver and perform this Agreement and the other Loan Documents to which it
     is a party, and all such action has been duly and validly authorized by all
     necessary corporate proceedings on its part. Without limitation of the
     foregoing, Borrower has the corporate power and authority to borrow
     pursuant to the Loan Documents to the fullest extent permitted hereby and
     thereby from time to time, and has taken all necessary corporate action to
     authorize such borrowings.

          (c)  Violation of Organic Documents and Agreements. Neither the
     execution and delivery of this Agreement or any other Loan Document, nor
     consummation of the transactions herein or therein contemplated, nor
     performance of or compliance with the terms and conditions hereof or
     thereof, does or will (i) violate or conflict with any Law, or (ii)
     violate, conflict with or result in a breach of any term or condition of,
     or constitute a default under, or result in (or give rise to any right,
     contingent or otherwise, of any Person to cause) any termination,
     cancellation, prepayment or acceleration of performance of, or result in
     the creation or imposition of (or give rise to any obligation, contingent
     or otherwise, to create or impose) any lien upon any of property of
     Borrower pursuant to, or otherwise result in (or give rise to any right,
     contingent or otherwise, of any Person to cause) any change in any right,
     power, privilege, duty or obligation of Borrower under or in connection
     with (a) the Organic Documents of Borrower, (b) any agreement or instrument
     creating, evidencing or securing any Indebtedness or Guaranty Equivalent to
     which Borrower is a party or by which its or any of its properties (now
     owned or hereafter acquired) may be subject or bound, or (c) any other
     agreement or instrument or arrangement to which Borrower is a party or by
     which it or any of its properties (now owned or hereafter acquired) may be
     subject or bound.

          (d)  Execution and Binding Effect. This Agreement and each other Loan
     Document to which Borrower is a party and which is executed and delivered
     or required to be executed and delivered on or before the date of which
     this representation and warranty is made, or deemed made, has been duly and
     validly executed and delivered by Borrower. This Agreement and each such
     other Loan Document constitutes, and each other Loan Document when executed
     and delivered by Borrower will constitute, the legal,

                                       25

<PAGE>   31
     valid and binding obligations of Borrower, enforceable against Borrower in
     accordance with its terms.

          (e)  Ownership

               (i)    Schedule 5.1(e) sets forth all classes of stock of
                      Borrower, the shareholders thereof (other than members of
                      the general public), addresses of each such shareholder,
                      number of shares owned and how the shares are held.

               (ii)   Schedule 5.1(e) (as may be amended from time to time) sets
                      forth all options, warrants and other rights to acquire
                      Stock or other equity interests of Borrower, the nature of
                      such option, warrant or right and the conditions for the
                      exercise thereof. Bank hereby expressly consents to the
                      transfer, issuance or conveyance of Stock and/or other
                      Equity Interests of any Person in accordance with such
                      options, warrants and rights.

               (iii)  Borrower is not, and will not be, subject to any
                      obligation (contingent or otherwise) to repurchase or
                      otherwise acquire or retire any shares of its capital
                      stock. All of the outstanding shares of Borrower's capital
                      stock are and at all times will be validly issued, fully
                      paid and nonassessable. There are no statutory or
                      contractual stockholders' preemptive rights with respect
                      to Borrower's shares. Borrower has not violated and will
                      not violate any applicable federal or state securities
                      laws in connection with the offer, sale and issuance of
                      any of its capital stock. There are no agreements between
                      Borrower's stockholders with respect to the voting or
                      transfer of Borrower's capital stock.

          (f)  Fictitious Names. Each of the fictitious names, if any, used by
     Borrower during the five (5) year period preceding the date of this
     Agreement is set forth on Schedule 5.1(f) attached hereto (as amended from
     time to time) and none of such fictitious names are registered trademarks
     or tradenames with the U.S. Patent and Trademark Office, except as set
     forth in Schedule 5.1(f).

          (g)  Liens/Title. Schedule 5.1(g) is a true, accurate and complete
     list of all Liens, relating to the Assets of Borrower on the date hereof.
     At all times following acquisition thereof, Borrower shall have good,
     indefeasible and merchantable title to and ownership of all of its Assets,
     free and clear of all liens, claims, security interests and encumbrances,
     except the Permitted Liens.

          (h)  Financial Warranty. Borrower: (i) is now, and at all times
     hereafter shall be generally paying its debts as they mature, (ii) now
     owns, and shall at all times hereafter own, property which, at a fair
     valuation, is greater than the sum of its debt, and (iii) now

                                       26

<PAGE>   32
     has, and shall have at all times hereafter, capital sufficient to
     carry on its business and transactions and all businesses and transactions
     in which it is about to engage.

          (i)  Proceedings. There are no actions or proceedings which are
     pending or threatened against Borrower which might result in any material
     and adverse change in its business, operations, Assets, condition
     (financial or otherwise) or its ability to fully perform its obligations
     and liabilities under the Loan Documents to which it is a party.

          (j)  Intentionally Deleted.

          (k)  Adequate Licenses. Borrower possesses adequate Assets, licenses,
     patents, copyrights, trademarks and tradenames to continue to conduct its
     business as previously conducted by it and as contemplated in the
     foreseeable future except such licenses, patents, copyrights, trademarks
     and trade names the failure of which to obtain could not have a material
     adverse effect on Borrower's business, operations, Assets, condition
     (financial or otherwise) or ability to perform its obligations under those
     Loan Documents to which it is a party.

          (l)  Government Permits; Consents.

               (i)  Borrower has and is in good standing with respect to all
                    governmental permits, certificates, consents and franchises
                    necessary to continue to conduct its business as previously
                    conducted prior to the date hereof and to own or lease and
                    operate its properties as now owned or leased by it. None of
                    said permits, certificates, consents or franchises contain
                    any term, provision, condition or limitation more burdensome
                    than such as are generally applicable to Persons engaged in
                    the same or similar business as the Borrower.

               (ii) Except for the actions of Borrower's Board of Directors
                    authorizing this Agreement and the related transactions and
                    documents, Borrower does not require the approval, consent
                    or waiver by any other Person (including but not limited to
                    shareholders, partners, members, equity owners, holders of
                    Indebtedness Instruments, or any owner of any lien upon the
                    Assets of any one or more of them or their Affiliates) for
                    the consummation of the transactions contemplated herein,
                    including but not limited to the borrowing of the Loan, and
                    the payment and performance of all Borrower's Liabilities
                    and Borrower's Obligations.

          (m)  Charge; Restrictions. To the best of Borrower's knowledge,
     Borrower is not a party to (nor are any of its Assets otherwise subject to)
     any contract or agreement or subject to any Charge restriction, judgment,
     decree or order materially and adversely affecting its business, property,
     assets, operations or condition, financial or otherwise.

                                       27
<PAGE>   33
          (n)  Compliance with Laws. To the best of Borrower's knowledge,
     Borrower, is not and will not be during the term hereof, in violation of
     any applicable statute, regulation, order or ordinance of the United States
     of America, of any state, city, town, municipality, county or of any other
     jurisdiction, or of any agency thereof, including the Federal Reserve
     Board, in any respect materially and adversely affecting its business,
     operations, Assets, or condition (financial or otherwise) or its ability to
     perform its obligations under those Loan Documents to which it is a party.
    
          (o)  Compliance with Indebtedness Instruments. Borrower is not and at
     no time during the term hereof shall be in default under any Indebtedness
     Instrument.

          (p)  Financials. The Financials heretofore delivered by Borrower, or
     any other Loan Party to Bank, fairly and accurately present the assets,
     liabilities and financial conditions and results of operations of Borrower,
     and such other Persons described therein as of and for the periods ending
     on such dates and have been prepared in accordance with generally accepted
     accounting principles and such principles have been applied on a basis
     consistently followed in all material respects throughout the periods
     involved.

          (q)  Taxes. All tax and information returns required to be filed by or
     on behalf of Borrower have been properly prepared, executed and filed. All
     taxes, assessments, fees and other Charges upon Borrower, or upon any of
     its properties, incomes, sales or franchises which are due and payable have
     been paid other than those not yet delinquent and payable without premium
     or penalty, and except for those being diligently contested in good faith
     by appropriate proceedings, and in each case adequate reserves and
     provisions for taxes have been made on the books of Borrower. The reserves
     and provisions for taxes on the books of Borrower are adequate for all open
     years and for its current fiscal period. Borrower does not know of any
     proposed additional assessment or basis for any material assessment for
     additional taxes (whether or not reserved against). The federal, state and
     local income tax liabilities of Borrower have been finally determined by
     the Internal Revenue Service and other relevant taxing authorities, or the
     time for audit has expired, for all fiscal periods ending on or prior to
     December 31,1994 and all such liabilities (including all deficiencies
     assessed following audit) have been satisfied.

          (r)  No Adverse Change. There has been no material and adverse change
     in the Assets, liabilities or financial condition of Borrower since the
     date of the Financials.

          (s)  No Indebtedness. Except as disclosed in the most recent 
     Financials heretofore delivered by Borrower to Bank or otherwise disclosed 
     in writing to Bank, none of Borrower nor any Affiliate has any Indebtedness
     (except for Indebtedness arising in the ordinary course of its business
     since the dates reflected in the Financials that is not Indebtedness for
     borrowed money), has guaranteed or entered into any Guaranty Equivalent
     (other than as a result of the endorsement of any instrument of items of
     payment for deposit or collection in the ordinary course of business or as
     otherwise expressly permitted pursuant to the terms hereof) the obligations
     of any Person, and there are no actions or proceedings which are pending
     or, to the best of Borrower's knowledge,


                                       28

<PAGE>   34
     threatened against Borrower or any Affiliate which, in any of the foregoing
     cases, are reasonably likely to result in any material adverse change in
     its financial condition or materially adversely affect its assets or its
     ability to fully perform and satisfy its obligations under the Loan
     Documents.

          (t)  Intentionally Deleted.

          (u)  No Liability on Bank. The execution, delivery and performance by
     Borrower and each other Loan Party of this Agreement and/or the Other
     Agreements will not, except to the extent caused by independent actions of
     Bank, impose on or subject Bank to any liability, whether fixed or
     contingent, in respect of any Environmental Law relating to the operation
     of Borrower's business. Bank's exercise of any of the rights or remedies
     described in this Agreement or in any of the Other Agreements shall not
     constitute a breach of any provision contained in any agreement, instrument
     or document concerning the assignment or license of, or the payment of
     royalties for, any patents, patent rights, tradenames, trademarks, trade
     secrets, know-how, copyrights or any other form of intellectual property
     now or at any time or times hereafter protected as such by any applicable
     law. 

          (v)  Affiliates. Schedule 5.1(v) attached hereto is a true, accurate
     and complete schedule of Borrower's Affiliates, together with a description
     of Borrower's relationship to each such Affiliate. Borrower is not a
     partner (general or limited) of any partnership, a party to any joint
     venture or owns (beneficially or of record) any equity or similar interest
     in any Person (including but not limited to any interest pursuant to which
     Borrower has or may in any circumstance have an obligation to make capital
     contributions to, or be generally liable for or on account of the
     liabilities, acts or omissions of such other Person). 

          (w)  Real Property; Environmental Issues. Borrower does not now own
     and at no time in the last five (5) years has owned, any real property.
     Borrower has not received a summons, citation, notice, or directive from
     the Environmental Protection Agency or any other federal or state
     governmental agency concerning any action or omission resulting in the
     releasing, or otherwise disposing of hazardous waste or hazardous
     substances into the environment with respect to any real property. 

          (x)  Investment Company Act and Public Utility Holding Company Act..
     Borrower is not (a) an "investment company" or a company "controlled" by an
     investment company within the meaning of the Investment Company Act of
     1940, as amended, (b) a "holding company" or a "subsidiary company" of a
     "holding company" or an "affiliate" of either a "holding company" or a
     "subsidiary company" within the meaning of the Public Utility Holding
     Company Act of 1935, as amended, or (c) subject to any other law which
     purports to restrict or regulate the ability to borrow money or obtain
     credit. 

          (y)  Intellectual Property. Attached hereto as Schedule 5.1(y) is a
     true, accurate and complete list of all United States and foreign patents,
     trademarks, tradenames, service marks, copyrights and applications therefor
     owned and or used by Borrower (the "Intellectual Property Rights"). Except
     as set forth on Schedule 5.1(y),

                                       29

<PAGE>   35
     the Intellectual Property Rights are owned by Borrower or Borrower will own
     or possess the royalty-free licenses or other rights to use all
     Intellectual Property Rights. To the best of Borrower's knowledge, none of
     the products or processes used in Borrower's business conflicts with or
     infringes or has infringed upon any patents, trademarks, trade names,
     service marks or copyrights of any other person or entity; and to the best
     of Borrower's knowledge, Borrower has the full right to conduct its
     business as heretofore conducted by Borrower, without incurring license
     fees or royalty or other payment obligations to any person or entity in
     respect of the Intellectual Property Rights.

          (z)  WARN. Borrower is now, and at all times during the term or any
     renewal term hereof Borrower shall be, in compliance with the Worker's
     Adjustment and Retraining Notification Act.

          (aa)  REG U et al. Borrower warrants and represents to Bank that
     Borrower shall use the proceeds of all Loans solely to and for general
     corporate purposes and consistently with all applicable laws and statutes.
     Borrower's use of the proceeds of any Loan made by Bank are legal and
     proper uses (duly authorized by all requisite action of the board of
     directors of Borrower), in accordance with applicable laws, rules and
     regulations, as in effect from time to time. Borrower's execution and
     delivery of this Agreement or any of the other Loan Documents and
     Borrower's conduct of its business and use of proceeds of the Loan does not
     and will not directly or indirectly violate or result in a violation of the
     Securities Exchange Act of 1934, as amended, or Regulations U, G, T and X
     of the Board of Governors of the Federal Reserve System (12 CFR 221, 207,
     220 and 224, respectively). Borrower further warrants and represents to
     Bank and covenants with Bank that Borrower is not in the business of
     extending credit for the purpose of purchasing or carrying margin stock
     (within the meaning of Regulation U issued by the Board of Governors of the
     Federal Reserve System), and no proceeds of any Loans will be used to
     purchase or carry any margin stock or to extend credit to others for the
     purpose of purchasing or carrying any margin stock.

          (bb)  Fiscal Year End. Currently and at all times when Borrower's
     Liabilities are outstanding, Borrower's fiscal year will end December 31.

          (cc)  Disclosure. To the best knowledge of Borrower, neither this
     Agreement nor any Loan Document nor any statement, list, certificate or
     other document or information, nor any schedules to this Agreement or any
     other Loan Document, delivered or to be delivered to Bank, contains or will
     contain any untrue statement of a material fact or omits or will omit to
     state a material fact necessary to make statements contained herein or
     therein, in light of the circumstances in which they are made, not
     misleading.

               5.2  Reaffirmation of Warranties, Representations and Covenants.
          Each request for an Advance made by Borrower pursuant to this
          Agreement or the Other Agreements shall constitute (i) an automatic
          warranty and representation by Borrower to Bank that there does not
          then exist an Event of Default or an Unmatured Default, and (ii) a
          reaffirmation as of the date of said Borrowing Request that each and
          every warranty and representation and covenant of

                                       30
<PAGE>   36
          Borrower contained in this Article 5 and other sections of this
          Agreement and in the Other Agreements, is true and correct in all
          material respects, except where such representation or warranty
          specifically relates to an earlier date.

               5.3  Survival of Warranties and Representations. Borrower
          covenants, warrants and represents to Bank that all representations
          and warranties of Borrower contained in this Agreement and the Other
          Agreements shall be true on the date hereof, and shall survive the
          execution, delivery and acceptance hereof and thereof by the parties
          thereto and the closing of the transactions described herein and
          therein or related hereto or thereto. Unless expressly limited by the
          terms of this Article 5, each representation and warranty shall be
          deemed to be remade concurrently with each Advance hereunder.


6.        COVENANTS AND CONTINUING AGREEMENTS.

               6.1  Financial Covenants. Borrower shall, at all times during the
          term hereof, measured quarterly:

          (a)  maintain a ratio of total liabilities (less deferred revenue) to
     Tangible Net Worth of less than 1.35 to 1;

          (b)  maintain a ratio of current assets to current liabilities of
     greater than 1.5 to 1; and 

          (c)  maintain Tangible Net Worth greater than the applicable amount
     below from and after each of the dates identified below:

          May 29, 1998                       $19,000,000 
          January 1, 1999                    $20,000,000 
          January 1, 2000                    $21,000,000 
          January 1, 2001                    $22,000,000


All covenants set forth herein shall be measured quarterly, upon receipt of the
statements delivered to Bank pursuant to Section 6.2(c)(iii) or the annual
consolidated financial statements delivered in accordance with Section
6.2(c)(i), if available.

               6.2  Affirmative Covenants.  Borrower warrants and represents to
          and covenants with Bank that Borrower shall, unless Bank otherwise
          consents thereto in writing, do all of the following during the term
          hereof:

          (a)  Representation and Warranties. To the extent any representation
     or warranty contained herein refers to an event or state of facts which
     exists on the date hereof and shall exist during the term hereof or at the
     time of each Advance hereunder, said representation or warranty shall be
     deemed to be an affirmative covenant of Borrower to take all actions, omit
     to take such actions or cause such actions to be taken which shall

                                       31


<PAGE>   37
     be necessary or desirable to cause such representation or warranty to be
     true and accurate at all times during the term hereof. To the extent any
     representation, warranty or covenant herein (including the negative
     covenants set forth in Section 6.3) relates to any other Person, it shall
     be deemed to be a covenant of Borrower to cause such Person to comply with
     or otherwise perform such representation, warranty or covenant, whether or
     not Borrower has the legal, corporate or other ability to cause such
     compliance or performance.

          (b)  Corporate Existence. Borrower shall preserve and maintain its
     corporate existence, rights, privileges and franchises in the jurisdiction
     of its incorporation or organization, and qualify and remain qualified to
     do business in each other jurisdiction in which such qualification is
     necessary in view of its business or operations, except such jurisdictions
     where failure to qualify would not have a material adverse effect on
     Borrower's, business, Assets, operations, condition (financial or
     otherwise) or ability to perform its obligations under the Loan Documents.

          (c)  Records; Reports. Borrower covenants with Bank that Borrower
     shall keep Records and prepare financial statements and shall cause to be
     furnished to Bank the following (all of the foregoing and following which
     comprise financial statements are to be kept and prepared in accordance
     with GAAP applied on a basis consistent with the Financials unless
     Borrower's certified public accountants concur in any changes therein and
     such changes are consistent with then applicable GAAP).

                    (i)    As soon as available but not later than ninety (90)
                           days after the close of each fiscal year of Borrower,
                           a balance sheet of Borrower as at the end of such
                           year, the related statement of operations (including
                           income statement) for such year and a reconciliation
                           of capital for such year, all certified on an
                           unqualified basis by a firm of independent certified
                           public accountants selected by Borrower and
                           acceptable to Bank, in Bank's sole and absolute
                           discretion.

                    (ii)   As soon as available but not later than forty-five
                           (45) days after the end of each calendar quarter
                           hereafter, a balance sheet of Borrower as at the end
                           of, and the related statement of operations for, both
                           such calendar quarter and the portion of such
                           Borrower's fiscal year then elapsed, all reviewed by
                           a firm of independent certified public accountants
                           selected by Borrower and acceptable to Bank, in
                           Bank's sole and absolute discretion.

                    (iii)  Concurrently with delivery to its shareholders,
                           copies of all financial and other information
                           delivered by Borrower to such Persons, including
                           without limitation, its proxy statements and annual
                           reports to stockholders. Concurrently with delivery
                           to the SEC by Borrower, copies of all reports filed
                           by Borrower with the SEC, including without
                           limitation, all reports on Forms 10K, 10Q or 8K

                                       32

<PAGE>   38
                    promulgated under the Securities Exchange Act of 1934, as
                    amended.

               (iv) Concurrently with delivery of the Financials required
                    pursuant to Sections 6.2(c)(i) and (ii) hereof, a
                    certificate executed by the President, Treasurer or Chief
                    Financial Officer of Borrower that such Financials present
                    fairly the financial position and results of operations of
                    Borrower for the applicable period,  and that no Event of
                    Default or Unmatured Default has occurred and is continuing
                    (including but not limited to compliance with the covenants
                    set forth in Section 6.1) or if an Event of Default or
                    Unmatured Default has occurred, setting forth the details of
                    such event and the action which Borrower proposes to take
                    with respect thereto.

               (v)  In satisfaction of Borrower's obligation to deliver to Bank
                    the items identified at (i), (ii) and (iii) above,
                    Borrower's executive officer's certificate to be delivered
                    to Bank pursuant to (iv) above may itemize those Financials,
                    shareholder information and SEC filings which at the
                    relevant dates are available in full text on the world wide
                    web; provided that such executive officer's certificate
                    shall identify the world wide web location of all documents
                    that are not SEC filings available in full text in a timely
                    fashion in the EDGAR database located at www.sec.gov. All of
                    the foregoing information that Bank expressly requests,
                    together with all other information required to be delivered
                    to Bank pursuant to (I), (ii) and (iii) above, shall be
                    delivered to Bank by Borrower in paper form.

               (vi) Such other data and information (financial and otherwise) as
                    Bank, from time to time, reasonably may request bearing upon
                    or related to Borrower's financial condition and/or results
                    of operations.

          (d)  Insurance. Borrower, at its sole cost and expense, shall keep and
     maintain: (i) policies of insurance against all hazards and risks
     ordinarily insured against by others in similar business or as reasonably
     requested in writing by Bank; and (ii) public liability insurance relating
     to Borrower's ownership and use of its Assets. All such policies of
     insurance shall be in form, with insurers and in such amounts as may be
     satisfactory to Bank. Promptly upon Bank's request, Borrower shall deliver
     to Bank the original (or certified) copy of each policy of insurance, and
     evidence of payment of all premiums for each such policy. Such policies of
     insurance (except those of public liability) shall contain an endorsement,
     in form and substance acceptable to Bank, showing losses payable to Bank.
     Such endorsement or an independent instrument furnished to Bank, shall
     provide that all insurance companies will give Bank at least thirty (30)
     days prior written notice before any such policy or policies of insurance
     shall be altered or canceled and that no act or default of Borrower or any
     other Person shall affect the right of Bank to recover under

                                       33


<PAGE>   39
     such policy or policies of insurance in case of loss or damage. Borrower
     hereby directs all insurers under such policies of insurance (except those
     of public liability) following an Event of Default to pay all proceeds
     payable thereunder directly to Bank. Following an Event of Default,
     Borrower, irrevocably, appoints Bank (and all officers, employees or agents
     designated by Bank) as Borrower's true and lawful agent and
     attorney-in-fact for the purpose of making, settling and adjusting claims
     under such policies of insurance, endorsing the name of Borrower on any
     check, draft, instrument or other item of payment for the proceeds of such
     policies of insurance and for making all determinations and decisions with
     respect to such policies of insurance. In the event Borrower at any time or
     times hereafter shall fail to obtain or maintain any of the policies of
     insurance required above or to pay any premium in whole or in part relating
     thereto, then Bank, without waiving or releasing any of Borrower's
     Obligations or Borrower's Liabilities or any Event of Default or Unmatured
     Default hereunder, may at any time or times thereafter (but shall be under
     no obligation to do so) obtain and maintain such policies of insurance and
     pay such premium and take any other action with respect thereto which Bank
     deems advisable. All sums so disbursed by Bank, including reasonable
     attorneys' fees, court costs, expenses and other charges relating thereto,
     shall be part of Borrower's Liabilities, payable by Borrower to Bank on
     demand. The Bank shall also have been named as an additional insured with
     respect to Borrower's liability insurance.

          (e)  Payment of Charges.  Borrower shall pay promptly, when due, all
     Charges and Borrower, shall not permit the Charges to arise or to remain
     unpaid, and will promptly discharge the same.  In the event Borrower, at
     any time or times hereafter, shall fail to pay the Charges or to obtain
     such discharges as required herein, Borrower promptly shall so advise Bank
     thereof in writing.  Bank may, without waiving or releasing any of
     Borrower's Obligations or Borrower's Liabilities or any Event of Default or
     Unmatured Default hereunder, in its sole and absolute discretion, at any
     time or times thereafter, make such payment, or any part thereof, or obtain
     such discharge and take any other action with respect thereto which Bank
     deems advisable.  All sums so paid by Bank and any expenses, including
     reasonable attorneys' fees, court costs, expenses and other charges
     relating thereto, shall be part of Borrower's Liabilities, payable by
     Borrower to Bank on demand.  Notwithstanding the foregoing, Borrower, may
     permit or suffer the Charges to attach to its Assets and may dispute,
     without prior payment thereof, the Charges, on the conditions that:  (i)
     Borrower in good faith, shall be contesting the same in an appropriate
     proceeding diligently pursued; (ii) enforcement thereof against any Assets
     of Borrower shall be stayed; and (iii) appropriate reserves therefor shall
     have been established on the Records of Borrower in accordance with GAAP.

          (f)  Pay Debts. Borrower shall pay or discharge or otherwise satisfy
     all Indebtedness at or before maturity or before the same becomes
     delinquent; provided that Borrower shall not be required to pay any
     Indebtedness while the same is being contested by it in good faith and by
     appropriate proceedings so long as Borrower shall have set aside on its
     books reserves in accordance with GAAP with respect thereto and title to
     any property of Borrower is not jeopardized.  

                                       34
<PAGE>   40
          (g)  Compliance with Laws. Borrower shall comply with all laws,
     rules, regulations and governmental orders (federal, state and local),
     including all Environmental Laws, having applicability to it or to the
     business or businesses at any time conducted by it, where the failure to so
     comply would have a material adverse effect, either individually or in the
     aggregate, on the business, Assets, operations, condition (financial or
     otherwise) or its ability to perform its obligations under the Loan
     Documents.

          (h)  Perform Obligations. Borrower shall duly and punctually pay and
     perform each of its obligations under this Agreement and the Other
     Agreements in accordance with the terms thereof.

          (i)  Operating and Disbursement Accounts. Borrower shall maintain all
     of its general operating accounts and primary disbursement accounts at
     Bank. Schedule 6.2(i) sets out all depository, investment and other
     accounts maintained by Borrower with financial institutions and/or brokers
     other than Bank. Borrower promptly shall deliver an amended Schedule 6.2(i)
     to Bank reflecting each addition to and deletion of such accounts.

               6.3  Negative Covenants. Borrower warrants and represents to and
          covenants with Bank that Borrower shall not, without Bank's prior
          written consent, which Bank may or may not give in its sole and
          absolute discretion, concurrently or hereafter do any of the
          following:

          (a)  Sell or Encumber Assets. Borrower, shall not assign, sell or
     transfer any of its Assets to any Person, other than in the ordinary course
     of business, nor permit, grant, or suffer a security interest, lien, claim
     or encumbrance upon any of its Assets, except the Permitted Liens.

          (b)  Attachment. Borrower, shall not permit or suffer any levy,
     attachment or restraint to be made affecting any of its Assets;

          (c)  Receiver. Borrower, shall not permit or suffer any receiver,
     trustee or assignee for the benefit of creditors, or any other custodian to
     be appointed to take possession of all or any of its Assets.

          (d)  Amend Organizational Documents; Business Objectives. Borrower,
     shall not make any change: (i) in its Organic Documents or capital
     structure; or (ii) in any of its business objectives, purposes and
     operations, including by undertaking additional business activities.
     Borrower shall not engage in any business not of the same general type as
     those conducted by it on the date hereof.

          (e)  Mergers and Acquisitions. Neither Borrower nor any Subsidiary
     shall liquidate, dissolve, enter into any merger, consolidation,
     partnership, joint venture or other combination, except that any Person
     which is in the general line of business of Borrower may merge into or with
     or be acquired by Borrower or any Subsidiary, provided that Borrower or
     such Subsidiary, as applicable, shall be the continuing or surviving
     entity.

                                       35
<PAGE>   41
          (f)  Adverse Transactions. Borrower, shall not enter into any
     transaction which materially and adversely affects its ability to perform
     its obligations under the Loan Documents or to pay any other Indebtedness. 

          (g)  Investments. Borrower shall not make any investment in the Stock,
     other equity interests in, or obligations of any Person; provided that in
     connection with Borrower's management of its cash on a short-term basis in
     the ordinary course of business Borrower may invest in obligations of other
     Persons that are cash or cash equivalents and provided that Borrower may
     create new Subsidiaries of which Borrower is the 100% owner of all equity
     interests. 

          (h)  Loan; Guaranty Debt. Borrower shall not make any loan to any
     Person. Borrower has not entered into and shall not enter into any Guaranty
     Equivalents. 

          (i)  Borrow Indebtedness; Pay Indebtedness. Other than amounts loaned
     by Bank to Borrower hereunder, Borrower shall not incur any Indebtedness
     for borrowed money in excess on $1,000,000 of unsecured borrowings in the
     aggregate outstanding at any one time. Except in the ordinary course of
     business, Borrower, shall not defease, prepay, repay, purchase, redeem or
     otherwise acquire any of its Indebtedness for borrowed money. 

          (j)  Issue Power of Attorney. Except pursuant to this Agreement and
     the Other Agreements, Borrower, shall not issue any power of attorney or
     other contract or agreement giving any Person power or control over the
     day-to-day operations of Borrower's, business, other than in connection
     with Permitted Liens or Indebtedness expressly permitted pursuant to the
     terms of this Agreement. 

          (k)  Amendment of Credit Agreements. Except in the ordinary course of
     business, Borrower shall not amend, modify or extend any note, credit
     agreement, security agreement or other document, instrument of agreement
     evidencing or securing Indebtedness of Borrower, without in each case
     Bank's prior written consent.

               6.4  Required Notices

          (a)  In addition to those notices required elsewhere in this
     Agreement, Borrower shall notify Bank promptly after obtaining knowledge
     of:

          (i)  except as otherwise previously disclosed in writing to Bank, any
               event or occurrence which Borrower has determined has caused a
               material loss or decline in value of Borrower's, Assets due to
               casualty or any other adverse occurrence and the estimated (or
               actual, if available) amount of such loss or decline;

          (ii) the institution of any suit or administrative proceeding which,
               if determined adversely to Borrower, is reasonably likely to
               materially adversely affect the operations, financial condition
               or business of Borrower;

                                       36
<PAGE>   42
                    (iii)  Borrower, becoming subject to any Charge,
                           restriction, judgment, decree or order which could
                           materially and adversely affect Borrower's business,
                           operations, Assets, condition (financial or
                           otherwise) or ability to perform its respective
                           obligations under the Loan Documents.

                    (iv)   the commencement of any lockout, strike or walkout
                           relating to any labor contract to which Borrower is a
                           party;

                    (v)    except as otherwise previously disclosed, any event
                           or occurrence which Borrower has determined will have
                           a material adverse affect on the ability of any
                           obligor of a Pledged Note to repay the Note;

                    (vi)   the occurrence of a default by Borrower, under any
                           agreement, document or instrument to which it is a
                           party which could materially and adversely affect its
                           business, operations, Assets, condition (financial or
                           otherwise) or ability to perform its respective
                           obligations under the Loan Documents;

                    (vii)  the filing of a petition under any section or chapter
                           of the United States Bankruptcy Code or any similar
                           law or regulation shall be filed by or against
                           Borrower or Borrower shall make an assignment for the
                           benefit of its creditors or if any case or proceeding
                           is filed by or against Borrower for its dissolution
                           or liquidation;

                    (viii) the making of an application for the appointment of
                           a receiver, trustee or custodian for any of the
                           assets of Borrower;

                    (ix)   as soon as possible and in any event within five (5)
                           days after Borrower shall have obtained knowledge of
                           the occurrence of an Event of Default or Unmatured
                           Default, the written statement of the chief financial
                           officer of Borrower setting forth the details of such
                           event and the action which Borrower proposes to take
                           with respect thereto; and

                    (x)    the exercise of any holder of any option, warrant or
                           right to purchase any equity interest in Borrower,
                           other than the exercise of rights disclosed in
                           Section 5.1(e).

               6.5  Payment of Claims. Bank, in its sole and absolute
          discretion, without waiving or releasing any of Borrower's Liabilities
          or Borrower's Obligations or any Event of Default or Unmatured Event
          of Default, may at any time or times hereafter, but shall be under no
          obligation to, pay, acquire and/or accept an assignment of any
          security interest, lien, encumbrance or claim asserted by any Person
          against the Assets of Borrower. All sums paid by Bank in respect
          thereof and all reasonable Costs relating thereto incurred by Bank or
          for which

                                       37


<PAGE>   43
          Bank becomes obligated on account thereof shall be part of
          Borrower's Liabilities payable by Borrower to Bank on demand and any
          amount not paid on demand shall bear interest at the Default Rate.

               6.6  Year 2000 Compliance.

          (a)  Borrower is currently reviewing its computer and management
     information systems to determine whether they are adequate for the conduct
     of Borrower's business as presently conducted and as proposed to be
     conducted and Borrower is actively addressing all known material
     requirements for systems integration, upgrade and replacement, and Borrower
     covenants and agrees promptly to notify Bank in writing of any facilities
     or software inadequacies that could reasonably be expected to have a
     material adverse effect on the business of the Borrower.

          (b)  The Borrower, will be Year 2000 Compliant on or before March 31,
     1999 and at all times thereafter. As used in the preceding sentence, "Year
     2000 Compliant" means the ability of the software and other information
     processing capabilities of Borrower to correctly interpret and process all
     data in whatever form so as to avoid errors that may otherwise occur
     because of the inability of software or other information processing
     capabilities to recognize accurately the year 2000 or subsequent dates. 

          (c) Any reprogramming required to permit the proper functioning of the
     computer and management information systems of the Borrower during and
     following the year 2000 will be completed by March 31, 1999 and the cost of
     such reprogramming is not expected to have a material adverse effect on the
     business of the Borrower.

7.        DEFAULT

               7.1  Events of Default. The occurrence of any one
          of the following events shall constitute a default ("Event of
          Default") under this Agreement:

          (a)  If Borrower fails or neglects to perform, keep or observe any
     of Borrower's Obligations and the same is not cured within thirty (30) days
     after such default or, if such default is not susceptable to cure within
     thirty (30) days, then within ninety (90) days so long as Borrower is
     actively taking all commercially reasonable measures to cure the same;
     provided that all failures, if any, to timely pay Borrower's Liabilities
     are governed by (c) below and that a breach of any of the provisions,
     terms, conditions or covenants contained in Sections 6.2(d), 6.3 and 6.4
     shall automatically be an Event of Default without any notice or cure
     period;

          (b)  If any representation, warranty or material statement, report or
     certificate made or delivered by Borrower, or any of its directors,
     officers, authorized employees or agents, to Bank is not true and correct;
     
          (c)  If Borrower fails to pay any of Borrower's Liabilities, when due
     and payable or declared due and payable and the same is not cured within
     five (5) days,


                                       38


<PAGE>   44
     provided however, that Interest shall accrue at the Default Rate
     commencing immediately after non-payment;

          (d)  If Borrower shall be in default under the terms of any
     Indebtedness Instrument, other than the Loan Documents;

          (e)  If Borrower fails or neglects to perform, keep or observe any of
     Borrower's Obligations contained in Section 6.2(e) and the same is not
     cured within ten (10) days after Bank gives Borrower notice of such
     default;

          (f)  If any of Borrower's Assets or any portion thereof are attached,
     seized, subjected to a writ of distress warrant, or are levied upon, or
     come within the possession of any receiver, trustee, custodian or assignee
     for the benefit of creditors and the same is not terminated or dismissed
     within forty-five (45) days thereafter;

          (g)  If a petition under any section or chapter of the United States
     Bankruptcy Code or any similar law or regulation shall be filed by
     Borrower, or if Borrower shall make an assignment for the benefit of its
     creditors or if any case or proceeding is filed by Borrower for its
     dissolution or liquidation;

          (h)  If Borrower is enjoined, restrained or in any way prevented by
     court order from conducting all or any material part of its business
     affairs or if a petition under any section or chapter of the United States
     Bankruptcy Code or any similar law or regulation is filed against Borrower
     or if any case or proceeding is filed against Borrower for its dissolution
     or liquidation and such injunction, restraint or petition is not dismissed
     or stayed within forty-five (45) days after the entry or filing thereof;
    
          (i)  If an application is made by Borrower for the appointment of a
     receiver, trustee or custodian for any of its assets;
 
          (j)  If an application is made by any Person other than Borrower for
     the appointment of a receiver, trustee, or custodian for any of the Assets
     of Borrower and the same is not dismissed within forty-five (45) days after
     the application therefor;

          (k)  Except as expressly permitted pursuant to Section 6.2(e), (i) if
     a notice of any Charge is filed of record with respect to all or any of
     Borrower's Assets, or (ii) if any Charge becomes a lien or encumbrance upon
     any of its assets and the same is not released within forty-five (45) days
     after the same becomes a lien or encumbrance;

          (l)  The occurrence of an Event of Default under any of the Other
     Agreements, which is not cured within the time, if any, specified therefor
     in such Other Agreement; 

          (m)  If any final non-appealable judgment for the payment of money in
     excess of $1,000,000 (after giving effect to any amount covered by
     insurance as to which the insurer shall not have defied or questioned its
     obligation to pay) shall be rendered against Borrower and the same shall
     remain undischarged for a period of thirty (30) days during


                                       39

<PAGE>   45
     which execution shall not be effectively stayed or diligently
     contested in good faith by appropriate proceedings;

          (n)  If Borrower or any ERISA Affiliate (i) shall effect
     a complete or partial withdrawal (as defined in ERISA Sections 4203 or
     4205) from a Multiemployer Plan, if such withdrawal could subject either
     Borrower or any ERISA Affiliate to liability; (ii) shall fail to pay when
     due an amount that is payable by it to the PBGC or to an Employee Benefit
     Plan; (iii) has instituted against it by a fiduciary of any Multiemployer
     Plan an action to enforce ERISA Section 515 and such proceedings shall not
     have been dismissed within thirty (30) days thereafter; (iv) has imposed
     against it any tax under Code Section 4980B(a); (v) has assessed against it
     by the Secretary of Labor a civil penalty with respect to any Employee
     Benefit Plan under ERISA Section 502(c) or 502(l); (vi) shall apply for a
     waiver of the minimum funding standards of the Code; or (vii) shall permit
     any other event or condition to occur or exist with respect to an Employee
     Benefit Plan that could subject either Borrower or any ERISA Affiliate to
     liability;

          (o)  Except as set forth in Section 7.1(d) or (e), a default by
     Borrower shall occur under any agreement, document or instrument (other
     than this Agreement or any of the other Loan Documents) now or hereafter
     existing, to which Borrower is a party and the effect of such default is
     reasonably likely to have a material adverse effect on the financial
     conditions or business operations of such Loan Party; and

          (p)  If Borrower dissolves, liquidates or fails to maintain its
     corporate existence, without the prior written consent of Bank.

               7.2  Remedies Cumulative. All of Bank's rights and remedies under
          this Agreement and the Other Agreements are cumulative and
          non-exclusive.

               7.3  Acceleration. Upon the occurrence an Event of Default and
          the continuation thereof, without notice by Bank to or demand by Bank
          to Borrower, Bank shall have no further obligation to and may then
          forthwith cease advancing monies, extending credit or issuing letters
          of credit to or for the benefit of Borrower under this Agreement and
          the Other Agreements. Upon an Event of Default, without notice by Bank
          to or demand by Bank to Borrower, all Borrower's Liabilities shall be
          due and payable, forthwith.

               7.4  Remedies. Upon the occurrence of an Event of Default and the
          continuation thereof, Bank, in its sole and absolute discretion, may
          exercise any and all rights and remedies that it may have under the
          other Loan Documents, at law or in equity.

               7.5  Injunctive Relief. Borrower recognizes that upon the
          occurrence of an Event of Default, no remedy of law will provide
          adequate relief to Bank, and agrees that Bank shall be entitled to
          temporary and permanent injunctive relief in any such case without the
          necessity of proving actual damages.

                                       40
<PAGE>   46
               7.6  Advances During Unmatured Default. Upon the occurrence of
          any Unmatured Default or Event of Default, Bank shall not be obligated
          to make any Advances; provided that, nothing contained herein shall
          prohibit Bank from making any Advances.

8.        CONDITIONS PRECEDENT TO DISBURSEMENT

               8.1  Checklist Items. The obligation of Bank to make the Loan to
          Borrower is subject to the condition precedent that, in addition to
          satisfaction of the conditions set forth in Sections 8.2 and 8.3, Bank
          shall have received, prior to the first disbursement of the proceeds
          of any of the Loan hereunder all documents, instruments, agreements,
          notes, evidences of Borrower's authority, and all other instruments as
          Bank may reasonably request, including but not limited to all items on
          the documentation checklist, delivered by Bank to Borrower prior to
          the date hereof.

               8.2  Necessary Actions. The obligation of Bank to make the Loan
          to Borrower is subject to the further condition precedent that all
          proceedings taken in connection with the transactions contemplated by
          this Agreement, and all instruments, authorizations and other
          documents applicable thereto, shall be reasonably satisfactory in form
          and substance to Bank and its counsel.

               8.3  Conditions Precedent. In addition to the foregoing, prior to
          Bank making any and all Loans hereunder, all of the following shall
          have been satisfied in a manner satisfactory to Bank:

          (a)  no change in the condition or operations, financial or otherwise,
     of Borrower shall have occurred which change, in the sole credit judgment
     of Bank, may have a material adverse effect on Borrower;

          (b)  no litigation shall be outstanding or have been instituted or
     threatened which Bank determines to be material against Borrower;

          (c)  all of the representations and warranties of Borrower set forth
     in this Agreement and each of the Other Agreements to which Borrower is a
     party shall be true and correct on the date of the contemplated Loan to the
     same extent as originally made on such date; and

          (d)  no Event of Default or Unmatured Default shall exist
     or be continuing.

9.        GENERAL

               9.1  ERISA Matters.

          (a)  Representations and Warranties. Borrower hereby represents and
     warrants and covenants and agrees that:

                                       41
<PAGE>   47
                    (i)    There are no Employee Benefit Plans maintained or
                           sponsored by or participated in or contributed to by
                           Borrower or any of its Subsidiaries or other
                           Affiliates or to which Borrower or any of its
                           Subsidiaries or other Affiliates have any
                           obligations; and

                    (ii)   Borrower shall not, and shall not permit any of its
                           Subsidiaries or other Affiliates to establish,
                           maintain, contribute to or otherwise be or become
                           obligated with respect to one or more Employee
                           Benefit Plans without first receiving the prior
                           written consent of Bank, which Bank may grant or
                           withhold in its sole and absolute discretion.

          (b)  Definitions. For purposes of this Section 9.1, the following
     definitions shall apply:

                    (i)    "Code" shall mean the Internal Revenue Code of 1986,
                           as amended.

                    (ii)   "Employee Benefit Plan" shall mean an employee
                           benefit plan within the meaning of Section 3(3) of
                           ERISA that is maintained, sponsored, participated in
                           or contributed to by Borrower or any ERISA Affiliate.

                    (iii)  "ERISA" shall mean the Employee Retirement Income
                           Security Act of 1974, as amended from time to time,
                           or any successor thereto.

                    (iv)   "ERISA Affiliate" shall mean any corporation, trade
                           or Business that is, along with Borrower, a member of
                           a controlled group of trades or businesses, or a
                           member of any group of organizations, within the
                           meaning of Sections 414(b), (c), (m) or (o) of the
                           Code, and any regulations thereunder.

               9.2  Costs/Service Charges. Borrower hereby agrees that it shall
          reimburse Bank on demand, as part of Borrower's Obligations, for any
          and all Costs and any amount not paid on demand shall bear interest at
          the Default Rate. Borrower acknowledges that Bank will charge Borrower
          monthly service charges for various services performed by Bank in
          connection with the Loan and/or any other aspect of the relationship
          between Borrower and Bank, which charges shall be such as are
          generally imposed on customers of Bank for similar services. Borrower
          hereby agrees that Bank may charge such service charges against
          Borrower's operating account at Bank, or in the absence of sufficient
          collected balances in such operating account to satisfy such service
          charges, the amount thereof shall become a Loan hereunder bearing
          interest at the Prime Interest Rate.

                                       42


<PAGE>   48
               9.3  Statement. Each statement of account by Bank delivered to
          Borrower relating to Borrower's Liabilities shall be presumed correct
          and accurate and shall constitute an account stated between Borrower
          and Bank unless Bank subsequently corrects such statement of its own
          volition or, within thirty (30) days after Borrower's receipt of said
          statement, Borrower delivers to Bank, by registered or certified mail
          addressed to Bank at the address specified in Section 9.4, written
          objection thereto specifying the error or errors, if any, which
          Borrower asserts are contained in any such statement.

               9.4  Notices. Any and all notices given in connection with this
          Agreement shall be deemed adequately given only if in writing (which
          term "writing", for all purposes of this Agreement and the other Loan
          Documents, shall include original signatures and other writings
          transmitted by telecopy) and addressed to the party for whom such
          notices are intended at the address set forth below. All notices shall
          be sent by personal delivery, Federal Express or other over-night
          messenger service, first class registered or certified mail, postage
          prepaid, return receipt requested or by other means at least as fast
          and reliable as first class mail. A written notice shall be deemed to
          have been given to the recipient party on the earlier of (a) the date
          it shall be delivered to the address required by this Agreement; (b)
          the date delivery shall have been refused at the address required by
          this Agreement; or (c) with respect to notices sent by mail, the date
          as of which the postal service shall have indicated such notice to be
          undeliverable at the address required by this Agreement. Any and all
          notices referred to in this Agreement, or which either party desires
          to give to the other, shall be addressed as follows:


                                       43


<PAGE>   49
<TABLE>
          <S>                        <C>                                                           
          IF TO BORROWER:            SPSS, Inc.
                                     233 South Wacker Drive
                                     11th Floor
                                     Chicago, IL 60606
                                     Attn:  William R. Nelson
                                     Telecopy:  312-329-3560

          IF TO BANK:                American National Bank and Trust Company of
                                     Chicago
                                     120 South LaSalle Street
                                     Second Floor
                                     Chicago, IL 60603
                                     Attn:  Erik J. Langeland
                                     Telecopy:  312-661-3566                

          WITH A COPY TO:            Sachnoff & Weaver, Ltd.
                                     Suite 2900
                                     30 South Wacker Drive
                                     Chicago, Illinois 60606
                                     Attn:  Frank D. Ballantine, Esq.
                                     Telecopy:  312-207-6400
</TABLE>

The above addresses may be changed by notice of such change, mailed as provided
herein, to the last address designated.

               9.5  Amendments and Waivers. This Agreement and the other Loan
          Documents may not be modified, altered or amended except by an
          agreement in writing signed by Borrower and Bank. Borrower expressly
          agrees that for purposes of this Agreement and each and every other
          Loan Document: (i) this Agreement and each and every other Loan
          Document shall be a "credit agreement" under the Illinois Credit
          Agreements Act, 815 ILCS 160/1 et. seq. (the "Act"); (ii) the Act
          applies to this transaction including, but not limited to, the
          execution of this Agreement and each and every other Loan Document;
          and (iii) any action on or in any way related to this Agreement and
          each and every other Loan Document shall be governed by the Act.
          Borrower may not sell, assign or transfer this Agreement or the Other
          Agreements or any portion thereof, including, without limitation,
          Borrower's rights, titles, interests, remedies, powers and/or duties
          hereunder or thereunder. Borrower hereby consents to Bank's sale,
          assignment, transfer or other disposition, at any time and from time
          to time hereafter, of this Agreement or the Other Agreements, or of
          any portion thereof or participation therein, including, without
          limitation, Bank's rights, titles, interests, remedies, powers and/or
          duties.

                                       44


<PAGE>   50
               9.6  No Implied Waiver; Remedies Cumulative. Bank's failure at
          any time or times hereafter to require strict performance by Borrower
          of any provision of this Agreement or any other Loan Document shall
          not waive, affect or diminish any right of Bank thereafter to demand
          strict compliance and performance therewith. Any suspension or waiver
          by Bank of an Event of Default or an Unmatured Default by Borrower or
          any other Loan Party under this Agreement or the Other Agreements
          shall not suspend, waive or affect any other Event of Default or
          Unmatured Default by Borrower or any other Loan Party under this
          Agreement or the Other Agreements, whether the same is prior or
          subsequent thereto and whether of the same or of a different type.
          None of the undertakings, agreements, warranties, covenants and
          representations of Borrower contained in this Agreement or the Other
          Agreements and no Event of Default or Unmatured Default by Borrower or
          any other Loan Party under this Agreement or the Other Agreements
          shall be deemed to have been suspended or waived by Bank unless such
          suspension or waiver is by an instrument in writing signed by an
          officer of Bank and directed to Borrower or such applicable other Loan
          Party specifying such suspension or waiver.

               9.7  Severability. If any provision (in whole or in part) of this
          Agreement or the other Loan Documents or the application thereof to
          any person or circumstance is held invalid or unenforceable, then such
          provision shall be deemed modified, restricted, or reformulated to the
          extent and in the manner necessary to render the same valid and
          enforceable, or shall be deemed excised from this Agreement or the
          other Loan Document, as the case may require, and this Agreement and
          such other Loan Document shall be construed and enforced to the
          maximum extent permitted by law, as if such provision had been
          originally incorporated herein as so modified, restricted, or
          reformulated or as if such provision had not been originally
          incorporated herein or therein, as the case may be. The parties
          further agree to seek a lawful substitute for any provision found to
          be unlawful. If such modification, restriction or reformulation is not
          reasonably possible, the remainder of this Agreement and the other
          Loan Documents and the application of such provision to other persons
          or circumstances will not be affected thereby and the provisions of
          this Agreement and the other Loan Documents shall be severable in any
          such instance.

               9.8  Incorporation of Other Loan Documents. The provisions of the
          Other Agreements are incorporated in this Agreement by this reference
          thereto. Except as otherwise provided in this Agreement and except as
          otherwise provided in the Other Agreements by specific reference to
          the applicable provision of this Agreement, if any provision contained
          in this Agreement is in conflict with, or inconsistent with, any
          provision in the Other Agreements or the other Loan Documents, Bank
          shall have the right to elect, in its sole and absolute discretion,
          which provision shall govern and control. Except to the extent
          provided to the contrary in this Agreement and in the other Loan
          Documents, no termination or cancellation (regardless of cause or
          procedure) of this Agreement or the Other Agreements shall in any way
          affect or impair the powers,

                                       45


<PAGE>   51
          obligations, duties, rights and liabilities of Borrower or Bank
          in any way or respect relating to (a) any transaction or event
          occurring prior to such termination or cancellation, and/or (b) any of
          the undertakings, agreements, covenants, warranties and
          representations of Borrower contained in this Agreement or the Other
          Agreements. All such undertakings, agreements, covenants, warranties
          and representations shall survive such termination or cancellation.

               9.9  Acceptance. This Agreement and the other Loan Documents are
          submitted by Borrower to Bank (for Bank's acceptance or rejection
          thereof) at Bank's principal place of business as an offer by Borrower
          to borrow monies from Bank now and from time to time hereafter and
          shall not be binding upon Bank or become effective until and unless
          accepted by Bank, in writing, at said place of business. If so
          accepted by Bank, this Agreement and the other Loan Documents and the
          other Loan Documents shall be deemed to have been made at said place
          of business.

               9.10  Knowledge. As used herein the phrase "to the best of
          Borrower's knowledge" or words of such import shall mean all
          knowledge, including, actual knowledge and knowledge of matters which
          any reasonable person in such position knew or should have known, of
          the respective officers, directors and managers of Borrower.

               9.11  Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN
          THIS AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT,
          DEMAND AND PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT,
          NON-PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR
          RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
          DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD
          BY BANK ON WHICH BORROWER MAY IN ANY WAY BE LIABLE; (B) ALL RIGHTS TO
          NOTICE AND A HEARING PRIOR TO BANK'S TAKING POSSESSION OR CONTROL OF,
          OR TO BANK REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL OR ANY BOND
          OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
          BANK TO EXERCISE ANY OF BANK'S REMEDIES; AND (C) THE BENEFIT OF ALL
          VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION LAWS.

                                       46


<PAGE>   52


               9.12  Governing Law. THIS AGREEMENT AND THE OTHER
          LOAN DOCUMENTS HAVE BEEN DELIVERED FOR ACCEPTANCE BY BANK IN CHICAGO,
          ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
          INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE
          STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
          CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS INCLUDING, BUT NOT
          LIMITED TO, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES. TO
          THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY (A)
          IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
          LOCATED IN CHICAGO, ILLINOIS OVER ANY ACTION OR PROCEEDING TO ENFORCE
          OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (B)
          IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO THE
          MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (C)
          AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY
          SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
          JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
          BY LAW; AND (D) AGREES NOT TO INSTITUTE OR MAINTAIN ANY LEGAL ACTION
          OR PROCEEDING AGAINST BANK OR ANY OF THEIR RESPECTIVE DIRECTORS,
          OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING
          OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE
          LOCATED IN COOK COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL AFFECT
          OR IMPAIR BANK'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED
          BY LAW OR BANK'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
          BORROWER OR BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER
          JURISDICTION.

               9.13  Waiver of Marshaling. All rights of marshaling
          of assets of Borrower, including any such right with respect to the
          Pledged Property, are hereby waived by Borrower.

               9.14  Limitation by Law. All rights, remedies and
          powers provided in this Agreement may be exercised only to the extent
          that the exercise thereof does not violate any applicable provision of
          law, and all the provisions of this Agreement are intended to be
          subject to all applicable mandatory provisions of law which may be
          controlling and to be limited to the extent necessary so that they
          will not render this Agreement invalid, unenforceable, in whole or in
          part, or not entitled to be recorded, registered or filed under the
          provisions of any applicable law.


                                       47


<PAGE>   53
               9.15  Survival of Representations and Warranties. All
          representations and warranties contained in this Agreement or made in
          writing by Borrower in connection herewith shall survive the execution
          and delivery of this Agreement and repayment of Borrower's
          Liabilities. Any investigation by Bank shall not diminish in any
          respect whatsoever its rights to rely on such representations and
          warranties.

               9.16  Service of Process. Borrower hereby irrevocably appoints
          and designates CT Corporation System, Inc., 208 S. LaSalle Street,
          Chicago, IL 60604 as its true and lawful attorney-in-fact and duly
          authorized agent for service of legal process and agrees that service
          of such process upon such agent and attorney-in- fact shall constitute
          personal service of such process upon Borrower.

               9.17  Representation by Counsel. Borrower hereby represents that
          it has been represented by competent counsel of its choice in the
          negotiation and execution of this Agreement and the other Loan
          Documents; that it has read and fully understood the terms hereof;
          Borrower and its counsel have been afforded an opportunity to review,
          negotiate and modify the terms of this Agreement, and that it intends
          to be bound hereby. In accordance with the foregoing, the general rule
          of construction to the effect that any ambiguities in a contract are
          to be resolved against the party drafting the contract shall not be
          employed in the construction and interpretation of this Agreement.

               9.18  Release of Bank. Borrower releases Bank from any and all
          causes of action or claims which Borrower may now or hereafter have
          for any asserted loss or damage to Borrower claimed to be caused by or
          arising from any act or omission to act on the part of Bank, its
          officers, agents or employees, except for willful misconduct or gross
          negligence.

               9.19  Invalidated Payments. To the extent that either Bank
          receives any payment on account of Borrower's Liabilities, and any
          such payment(s) and/or proceeds or any part thereof are subsequently
          invalidated, declared to be fraudulent or preferential, set aside,
          subordinated and/or required to be repaid to a trustee, receiver or
          any other Person under any bankruptcy act, state or federal law,
          common law or equitable cause, then, to the extent of such payment(s)
          or proceeds received, Borrower's Liabilities or part thereof intended
          to be satisfied shall be revived and continue in full force and
          effect, as if such payment(s) and/or proceeds had not been received by
          Bank and applied on account of Borrower's Liabilities.

               9.20  Designated Person. Until Bank is notified by Borrower to
          the contrary in accordance with Section 9.4, the signature upon this
          Agreement or upon any of the Other Agreements of any partner, manager,
          employee or agent of Borrower, or of any other Person designated in
          writing to Bank by any of the foregoing, or of a "Designated Person"
          (as that term is defined in Borrower's

                                       48


<PAGE>   54
          Secretary's Certificate of even date herewith, constituting one
          of the Other Agreements) shall bind Borrower and be deemed to be the
          duly authorized act of Borrower.

               9.21  Headings. The descriptive headings of the
          various provisions of this Agreement and the other Loan Documents are
          inserted for convenience of reference only and shall not be deemed to
          affect the meaning or construction of any of the provisions hereof.

               9.22  Counterparts. This Agreement and the other
          Loan Documents may be executed in any number of counterparts, and by
          the different parties hereto and thereto on the same or separate
          counterparts, each of which when so executed and delivered shall be
          deemed to be an original; all the counterparts for each such Loan
          Document shall together constitute one and the same agreement.

               9.23  Fax Execution. For purposes of negotiating
          and concluding this Agreement and the Loan Documents (including any
          subsequent amendments thereto), any signed document transmitted by
          facsimile machine ("FAX") shall be treated in all manner and respects
          as an original document, except that delivery by FAX shall not
          constitute delivery for the purposes of notices delivered pursuant to
          Section 9.4 above. The original signature of any party that is
          transmitted by FAX shall be considered for these purposes as an
          original signature. Any document delivered by FAX shall be considered
          to have the same binding legal effect as an original document,
          provided that an original of the faxed document was mailed by
          certified or registered first class US Mail or personally delivered to
          the recipient. At the request of either party, any FAX document
          subject to this Agreement shall be re-executed by both parties in an
          original form. The undersigned parties hereby agree that neither shall
          raise the use of the FAX or the fact that any signature or document
          was transmitted or communicated through the use of a FAX as a defense
          to the formation of this Agreement or any other Loan Document.

               9.24  No Third Party Beneficiaries. This Agreement
          is solely for the benefit of the Bank, Borrower and their respective
          successors and assigns (except as otherwise expressly provided herein)
          and nothing contained herein shall be deemed to confer upon any Person
          other than Borrower and its successors and assigns any right to insist
          on or to enforce the performance or observance of any of the
          obligations contained herein. All conditions to the obligations of the
          Bank to make the Loans hereunder are imposed solely and exclusively
          for the benefit of the Bank and its respective successors and assigns
          and no other Person shall have standing to require satisfaction of
          such conditions in accordance with their terms and no other Persons
          shall under any circumstances be deemed to be a beneficiary of such
          conditions.


                                       49


<PAGE>   55
               9.25  Domicile of Loans. Bank may make, maintain or transfer any
          of its Loans hereunder to, or for the account of, any branch office,
          subsidiary or affiliate of Bank.

               9.26  Entire Agreement. This Agreement and the other Loan
          Documents constitute the entire agreement of Borrower and Bank with
          respect to the subject matter hereof and supersede all prior and
          contemporaneous negotiations, agreements, understandings and
          communications. No representation, understanding, promise or condition
          concerning the subject matter hereof shall be binding upon Bank unless
          expressed herein or therein. No course of dealing, course or
          performance, trade usage or parole evidence of any nature, whether
          based on actions, omissions or circumstances occurring or existing
          heretofore or hereafter, may be used in any way to alter or supplement
          the terms hereof.

               9.27  Construction. In this Agreement, unless the context
          otherwise clearly requires, references to the plural include the
          singular, the singular the plural, and the part the whole; the neuter
          case includes the masculine and feminine cases; and "or" is not
          exclusive. In this Agreement, any references to property (and similar
          terms) include an interest in such property (or other item referred
          to); "include," "includes," "including" and similar terms are not
          limiting; and "hereof," "herein," "hereunder" and similar terms refer
          to this Agreement as a whole and not to any particular provision; and
          "expenses," "costs," "out-of-pocket expenses" and similar terms
          include the charges of in-house counsel, auditors and other
          professionals of the relevant Person to the extent that such amounts
          are routinely identified and charged under such Person's cost
          accounting system. Section and other references in this Agreement are
          to this Agreement unless otherwise specified.

               9.28  Successors and Assigns. This Agreement shall be binding
          upon Borrower and its successors and assigns, and shall inure to the
          benefit of and be enforceable by Bank and its successors and assigns.
          Without limitation of the foregoing, Bank (and any successive assignee
          or transferee) from time to time may assign or otherwise transfer all
          or any portion of its rights or obligations under the Loan Documents
          (including all or any portion of any commitment to extend credit), or
          any Borrower's Liabilities, to any other Person, and such (including
          any Borrower's Liabilities resulting from extension of credit by such
          other Person under or in connection with the Loan Documents) shall be
          and remain Borrowers entitled to the benefit of this Agreement, and to
          the extent of its interest in such Borrowers such other Person shall
          be vested with all the benefits in respect thereof granted to Bank in
          this Agreement or otherwise.

               9.29  Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY LAW,
          BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
          WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
          HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS


<PAGE>   56
          AGREEMENT OR THE OTHER AGREEMENTS OR ANY COURSE OF CONDUCT,
          COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
          OF EITHER PARTY IN CONNECTION HEREWITH. BORROWER HEREBY EXPRESSLY
          ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR BANK TO
          MAKE THE LOAN.


                                       51


<PAGE>   57
          IN WITNESS WHEREOF, this Loan Agreement has been duly executed as of
     the day and year specified at the beginning hereof.

                                        BORROWER:
                                             
                                        SPSS, INC.
                                        a Delaware corporation


                                        By: /s/ William R. Nelson
                                            ------------------------------------
                                        Title: Treasurer
                                  
                                        BANK:
                                             
                                        AMERICAN NATIONAL BANK AND TRUST
                                        COMPANY OF CHICAGO


                                        By: /s/ Erik Langeland
                                            ------------------------------------
                                        Title: Commercial Banking Officer



<PAGE>   58

                             Schedule of Schedules



Schedule 5.1(e)         Schedule of Shareholders, Stock and Options

Schedule 5.1(f)         Schedule of Fictitious Names

Schedule 5.1(g)         Schedule of Permitted Liens

Schedule 5.1(v)         Schedule of Affiliates

Schedule 5.1(y)         Schedule of Intellectual Property Rights

Schedule 6.2(i)         Schedule of Depository Accounts




<PAGE>   59
                                Schedule 5.1(e)
                                        
                  Schedule of Shareholders, Stock and Options

                                       3
                                        

<PAGE>   60
                                Schedule 5.1(f)
                                        
                          Schedule of Fictitious Names


                                       4
                                        
                                        
<PAGE>   61
                                Schedule 5.1(g)
                                        
                          Schedule of Permitted Liens


                                       5
                                        

<PAGE>   62
                                Schedule 5.1(v)
                                        
                             Schedule of Affiliates

                                       6
                                        
                                        
<PAGE>   63
                                Schedule 5.1(y)
                                        
                    Schedule of Intellectual Property Rights


                                       7
                                        
                                        
<PAGE>   64
                                Schedule 6.2(I)
                                        
                        Schedule of Depository Accounts


                                       8
                                        
                                        

<PAGE>   1
                                                                    Exhibit 10.1


                                   AGREEMENT

     Agreement made this 1st day of April 1998 by and between SPSS Inc. ("SPSS")
with offices at 444 North Michigan Avenue, Chicago, IL 60611 and PRENTICE-HALL,
INC. ("PH") with offices at One Lake Street, Upper Saddle River, NJ 07458.

     WHEREAS, SPSS has developed certain computer software which it desires to
modify and license to PH for purposes of distribution and marketing, and certain
books it would like PH to market and distribute; and

     WHEREAS, PH desires to distribute and market such computer software and
books;

     NOW THEREFORE, in consideration of the mutual premises and agreements
contained herein, it is hereby agreed as follows:


1.        Definitions

               1.1  "Agreement" shall mean this agreement, together with all
          exhibits hereto, as each may be amended from time to time in
          accordance with the terms hereof.

               1.2  "Commercial SPSS Software" shall mean any version of any
          software developed by or on behalf of SPSS during the term hereof
          which is intended primarily for research and/or analysis in business,
          government and academia.

               1.3  "Contract Software" shall refer to the following software in
          all formats, by all media, on all platforms and for all computer and
          operating systems, now known or hereafter developed: (i) the software
          developed by SPSS and listed on Exhibit A, (ii) all new SPSS
          Educational Versions as defined below; and (iii) all Updates of the
          foregoing.

               1.4  "Designation" shall be defined as set forth in paragraph
          4.3.

               1.5  "Deliverables" shall mean the work product of the
          development work to be performed by SPSS in connection with any new
          SPSS Educational Version or Update which is to be delivered to PH
          under the terms of this Agreement.

               1.6  "Delivery Date" shall mean the dates that shall be mutually
          agreed upon by the parties, by which each of the Contract Software is
          to be delivered.

               1.7  "Documentation" shall mean the manuals, works and
          documentation which explains the operation of and provides support for
          the use of the Contract Software and Other SPSS Software, in all
          formats and media, now known or hereafter developed, and all revisions
          and new editions thereof, as set forth in Exhibit C.

               1.8  "Errors" shall be defined as set forth in paragraph
          13.1(i).

                                       9

<PAGE>   2
               1.9 "Net Cash Received" shall mean sales of copies of the
          Products invoiced to the customer, exclusive of taxes and shipping
          charges, less actual returns and bad debt.

               1.10 "Net Price" shall mean the price that PH charges to its
          customer.

               1.11 "New Products" shall mean new SPSS Educational Versions of
          the Other SPSS Software, new Documentation and new Titles,
          collectively.

               1.12 "Other SPSS Integrated Version" shall mean any new SPSS
          Educational Version combined with documentation, CD-ROM electronic
          books referenced in exhibit G, and text-specific data relating to a
          textbook(s) published by a publisher other than PH, and packaged with
          that textbook, and without separate print documentation, Products or
          Titles.

               1.13 "Other SPSS Software" shall mean any existing SPSS
          Commercial Software other than the Contract Software, and all new
          Commercial SPSS software.

               1.14 "Per Unit Cost" shall have the meaning set forth in
          paragraph 9.2.

               1.15 "PH/SPSS Integrated Version" shall mean any SPSS Educational
          Version combined with text-specific data relating to PH textbook(s)
          and documentation, and packaged with the PH textbook(s), and without
          separate print documentation, Products or Titles.

               1.16 "Products" shall refer to the Contract Software, the
          Documentation and the Titles, collectively.

               1.17 "Relationship Managers" shall mean the respective persons
          appointed by each of the parties pursuant to paragraph 5.1 to serve as
          representative of such party for the purpose of this Agreement.

               1.18 "Secondary Schools" shall mean schools for students in the
          7th through 12th grades the United States, and their equivalents in
          other parts of the Territory.

               1.19 "SPSS Educational Version" shall mean any version of any
          English-language software developed by or on behalf of SPSS during the
          term hereof which (i) constitutes an adaptation of English-language
          Commercial SPSS Software; (ii) is intended primarily for use in an
          undergraduate academic or instructional setting; and (iii) is for sale
          to students, secondary schools or 2 or 4 year colleges for academic or
          instructional use.

               1.20 "SPSS Titles" shall mean all print materials listed on
          Exhibit B and all other print materials prepared by SPSS during the
          term of this Agreement, in all formats and media, now known or
          hereafter developed, and all revisions and new editions thereof, other
          than Documentation and SPSS promotional materials.

               1.21 "Territory" shall mean the United States, Canada, Australia,
          Austria, Germany, Holland, Hong Kong, Indonesia, Japan, Korea,
          Malaysia, Singapore, Sweden, Taiwan, Thailand, and Vietnam.

               1.22 "Updates" shall mean any revised version or new release of
          the Contract Software which alters, modifies, enhances, improves,
          corrects errors of or replaces or substitutes for such Contract
          Software.

                                       10
<PAGE>   3
2.        Grant of Rights

               2.1  SPSS grants to PH, during the term hereof, (i) the right and
          license (exclusive except as stated in paragraph 2.2) to distribute
          and fulfill orders for the Products, alone or in conjunction with
          other products, through all channels of distribution now or hereafter
          existing, for use in Secondary Schools and 2 and 4 year undergraduate
          institutions, throughout the Territory; (ii) the non-exclusive right
          and license, shared with SPSS, its subsidiaries and its appointed
          software distributors, provided such subsidiaries and software
          distributors are not substantially in the business of educational
          publishing, to market and promote the Products for sale by PH
          throughout the Territory; and (iii) subject to terms to be negotiated,
          the exclusive option to distribute and fulfill orders for the PH/SPSS
          Integrated Versions from Secondary Schools and 2 and 4 year
          undergraduate institutions, throughout the Territory.

               2.2  Notwithstanding paragraph 2.1(i), SPSS shall retain (i) the
          non-exclusive right itself to distribute the Documentation and Titles
          directly in any market; (ii) the non-exclusive right to distribute the
          Documentation and Titles through local distributors in any portion of
          the Territory outside the United States and Canada; (iii) the
          non-exclusive right itself or through local distributors to distribute
          the Contract Software in the Secondary Schools market worldwide; (iv)
          the right to enter into agreements with any other party to produce,
          market, sell, and/or distribute Other SPSS Integrated Versions
          worldwide; and (v) the right to distribute the Products for internal
          (SPSS) use and in connection with SPSS customer support. In addition,
          in consideration of paragraph 18.1, Allyn & Bacon shall not have any
          distribution rights under this Agreement.

               2.3  PH shall have the non-exclusive right, but not the
          obligation, to prepare, publish and distribute works about SPSS
          software other than and in addition to the Titles ("Additional
          Titles"), and SPSS agrees that PH shall have the non-exclusive right
          to display SPSS Marks, alone or in conjunction with PH's Marks, on
          such Additional Titles and in related advertising and promotional
          materials, subject to paragraph 4.

3.        New Product Development and Rights.

               3.1  The parties agree that, during the term hereof, the
          development of New Product shall be made in accordance with the
          following procedures:

                    (a)  SPSS shall notify PH in writing about any new
                         English-language Commercial SPSS Software, at or about
                         the time that such software is first shipped.

                    (b)  At any time during the term hereof, PH or SPSS may
                         request in writing that the other party consider the
                         development of any New Product. If the other party
                         agrees, the parties will then negotiate in good faith
                         the terms under which SPSS will develop such New
                         Product, including, delineation of the deliverables,
                         any required testing, delivery dates and advances, if
                         any, to be paid as set forth in paragraph 11.2(a).

                    (c)  Such New Product shall be subject to the terms and
                         conditions of this Agreement and shall thereafter be
                         included in the definition of "Products."

                                       11

<PAGE>   4
               3.2 During the term of this Agreement, in no event shall SPSS
          have the right to distribute or fulfill orders for New Products or to
          license such rights to others, except as specifically set forth in
          paragraph 2.2 or solely to the extent that PH declines to distribute a
          new SPSS Educational Software product in accordance with paragraph
          11.3(b).

               3.3 In the event that SPSS is acquired by or is merged or
          consolidated into another corporation and SPSS is not a surviving
          corporate entity, this Agreement shall continue in effect in
          accordance with its terms following such acquisition, merger or
          consolidation only with respect to (i) the Products as defined herein
          as of the date immediately prior to the acquisition, merger or
          consolidation, (ii) any Updates, and (iii) any New Products which are
          based upon such Products.

               3.4 SPSS shall not be in breach of this Agreement if SPSS become
          a party to an agreement allowing a third party to sell new SPSS
          Educational Versions as a result of an existing agreement acquired by
          SPSS as a consequence of a merger, consolidation or acquisition of all
          or substantially all of the stock or assets of another corporation,
          provided that SPSS shall have no right to renew any such agreement
          beyond its then current term.

 4.       Advertising of Product and Use of Trademarks

               4.1 SPSS grants to PH, during the term hereof, all rights
          necessary for the advertisement, promotion and distribution of the
          Products, including, but not limited to, the right to use excerpts
          from the Products and the right to use the trade names, trademarks,
          trade dress, service marks and such other distinctive marks ("Marks")
          of SPSS. SPSS shall have final approval of any use of SPSS Marks, and
          any advertisements and promotional materials reflecting SPSS Marks.
          SPSS approval shall not be unreasonably withheld or delayed.

               4.2 SPSS shall have the right, during the term hereof, to
          advertise, publicize and promote the fact that PH is the exclusive
          distributor of the Products in the Territory. PH shall have final
          approval of any use of any PH Marks and any advertisements and
          promotional materials reflecting PH Marks. PH approval shall not be
          unreasonably withheld or delayed.

               4.3 The parties may agree to jointly develop a distinctive
          designation combining the SPSS Marks and the PH Marks (the
          "Designation") for display on the Products and in connection with the
          advertising and promotion of the Products. Each party shall have the
          right to approve the final design of the Designation and the use of
          the Designation. Neither party shall make use of the Designation
          except in connection with the Products. Each party's right to use the
          Designation shall cease upon expiration of the Agreement, subject to
          each party's right, as set forth herein, to distribute any inventory
          in its possession.

               4.4 The parties agree that approval may be assumed for any
          advertisement, promotional piece or use of a Mark that is
          substantially similar to one previously approved. Should a party
          disapprove of an advertisement, promotional piece or use of a Mark,
          such party shall promptly specify for the other party what changes are
          to be made to secure approval, consistent with the intent of both
          parties in entering this Agreement.

               4.5 Nothing in this Agreement creates in PH or SPSS any rights to
          the Marks of the other party, except as specifically set forth herein.

                                       12



<PAGE>   5
5.        Cooperation of Parties

               5.1  Upon execution of this Agreement, PH and SPSS shall each
          appoint one Relationship Manager and shall promptly notify the other
          party in writing of the identity and location of such person and of
          any changes if they occur.

               5.2  PH and SPSS Relationship Managers shall be responsible for
          the following activities:

                    (a)  Representing PH and SPSS, respectively, in matters
                         relating to the performance of this Agreement,
                         including the periodic review of marketing plans for
                         the Products;

                    (b)  Submitting and receiving the Deliverables and other
                         materials and documents to be delivered under this
                         Agreement;

                    (c)  Proposing and developing any modifications to the
                         payment schedule;

                    (d)  Proposing and developing any modifications to the
                         Products;

                    (e)  Proposing  and  agreeing  on  specifications and
                         scheduling  for  creation  of any New Products;

                    (f)  Arranging any meeting to be held between the parties;
                         and

                    (g)  Preparing and implementing market research studies if
                         such studies are deemed by PH and SPSS to be necessary,
                         provided however that each party may implement at its
                         own expense market research that is not agreed to by
                         the other party and the other party shall cooperate
                         with such research.

               5.3  PH shall be entitled, but not obligated, to conduct periodic
          on-site reviews, with reasonable notice and during normal business
          hours, of SPSS's development of Educational or Integrated Versions of
          any software produced by SPSS and the manufacturing of the Products.
          PH agrees that it will coordinate the time for such on-site reviews
          with SPSS.

6.        Preparation of Software Deliverables

               6.1  SPSS shall use all customary and commercially reasonable
          efforts to develop functional specifications for any new software
          Deliverables.

               6.2  SPSS shall use all customary and commercially reasonable
          efforts to create and deliver these Deliverables to PH's Relationship
          Manager (or his or her designee) in accordance with the requirements
          of this Agreement. SPSS's responsibilities shall include, without
          limitation, designing packaging for the Products and, upon request by
          PH, reviewing for accuracy any and all advertising, catalogs or other
          promotional materials pertaining to the Products. Notwithstanding
          anything set forth herein to the contrary, SPSS shall deliver the
          final versions of all new SPSS Educational Versions and Updates by the
          final Delivery Dates as agreed upon by the parties pursuant to
          paragraphs 3.1(b) or 8.1, as applicable. In the event that SPSS fails
          to do so, PH may exercise its rights under paragraphs 19.1 or 19.2, as
          applicable.

               6.3  PH and SPSS agree that each will act reasonably and in good
          faith in connection with the preparation and acceptance of the
          Deliverables as outlined in this paragraph 6.


                                       13

<PAGE>   6
          7.   Production of Documentation and Titles

               7.1. SPSS shall produce each SPSS Title as set forth in Exhibit B
          and all Documentation as set forth on Exhibit C in accordance with the
          print specifications set forth in Exhibit D. In the event any of the
          Titles or Documentation has to be changed due to circumstances beyond
          the control of SPSS, SPSS shall advise PH in writing and, in such
          event, submit alternative Documentation and Title of equivalent
          quality for approval by PH. In the event PH does not approve any
          Documentation and Title, PH may exercise its rights pursuant to
          paragraph 19.2 and produce the Documentation and Titles itself.

          8.   Preparation of Revisions of Product

               8.1 In the event the parties determine that an Update or a
          revision or enhancement of Documentation or a Title ("Revision") is
          necessary to keep the Product competitive in the marketplace, the
          parties will negotiate in good faith the terms for the specifications,
          Deliverables, any testing, Product Advances, if any, as set forth in
          paragraph 11.2, and the Delivery Dates. PH and SPSS will act
          reasonably and in good faith in connection with the preparation and
          approval of these Updates and Revisions. Such Updates and/or Revisions
          shall thereafter be subject to the terms and conditions of this
          Agreement and shall be included in the definition of "Contract
          Software," "Documentation", and/or "Title", as applicable.

          9.   Ordering, Shipment and Distribution

               9.1 PH agrees to submit written orders to SPSS for specified
          quantities of the Products from time to time during the term of this
          Agreement. Notwithstanding anything set forth herein to the contrary,
          PH shall not be obligated to order or purchase any copies of the
          Products.

               9.2 SPSS shall provide PH with its forecast of the per unit price
          to be paid by PH for the Products (the "Per Unit Cost") within seven
          (7) working days of receipt of a PH order. Such Per Unit Cost shall be
          no more than the per unit paper, printing and binding costs for the
          Documentation and the Titles and the per unit cost for duplication of
          the Contract Software. Within seven (7) working days of its receipt of
          such forecast, PH will notify SPSS that SPSS should commence
          fulfillment of the order as set forth herein or that PH is able to
          secure the manufacture of the applicable Product at a Per Unit Cost
          which is less than SPSS's forecast.

               9.3 If PH is able to secure the manufacture of the applicable
          Product on the same schedule as SPSS at a lower Per Unit Cost, SPSS
          will have 14 working days to notify PH that SPSS will fulfill PH's
          order at such lower Per Unit Cost. In such event, the quality of the
          Products shall not vary from the Contract Software of the initial
          order or the print specifications set forth in Exhibit D, as
          applicable. If SPSS does not fulfill PH's order at the lower Per Unit
          Cost, PH may exercise its rights pursuant to paragraph 19 and
          manufacture the applicable Product itself.

               9.4 If SPSS is to fulfill PH's order, SPSS shall do so within 45
          working days of receipt of PH's order and shall furnish PH with the
          following three sets of shipping documents in advance of shipping: the
          original negotiable bill of lading, packing list and commercial
          invoice per PH's shipping instructions. PH will pay SPSS the per unit
          price within 45 working days after acceptance by PH of the delivered
          Products.

               9.5 Shipments by SPSS shall be F.O.B. destination and SPSS
          assumes all risk of loss or damage to the Products until delivered to
          PH. SPSS agrees to ship the Products in accordance with PH's
          instructions and to be responsible for arranging freight and insurance
          and shipping and handling. PH agrees to reimburse SPSS for the
          freight, insurance and shipping and handling charges, provided that PH
          first approves such charges. Products

                                       14
<PAGE>   7
          shall be shipped in saleable condition and copies received which
          are not in saleable condition or which are returned to PH by the
          end-user as defective shall at the option of SPSS, be returned to SPSS
          at SPSS's expense or destroyed by PH at SPSS's expense.

               9.6  SPSS agrees to place on all copies of the Products delivered
          to PH an ISBN and bar code as directed by PH and to supply such other
          product identification codes as PH shall reasonably request.

               9.7  SPSS agrees to promptly turn over to PH all orders for the
          Products, except as set forth in paragraph 2.2, for fulfillment by PH
          and to inform all customers of PH's exclusive distributorship.

               9.8  Except as set forth in paragraph 4.4, all matters pertaining
          to pricing, discounts, marketing and selling of the Products shall be
          determined by PH.


          10.  PH Distribution and Promotion

               10.1 PH agrees:

                    (a)  to use customary and reasonable efforts to promote
          sales of the Products, including preparing and producing all
          advertising copy, catalogs and other promotional materials deemed
          necessary by PH,

                    (b)  to fulfill orders received for the Products.

                    (c)  to encourage authors of works on statistics or other
          subjects directly related to SPSS products who have entered into
          agreements with PH to refer to or describe SPSS products, including
          the Contract Software, within such works when appropriate.

                    (d)  that SPSS may purchase copies of the Documentation,
          Titles and/or other PH titles in accordance with PH's standard
          discount policies for distribution to fulfill orders that may be
          received by SPSS during the performance of customer service.

                    (e)  to maintain sufficient inventory of the Products to
          fulfill the demand for the Products.

                    (f)  to provide SPSS with monthly statements describing the
          sales of the Products, by the fifteenth working day of the following
          month.

                    (g)  to allow SPSS to attend and participate in PH meetings,
          such as sales meetings, as may be reasonably requested by SPSS.

                    (h)  to encourage PH editors to contract with SPSS to do
          "PH/SPSS Integrated Versions."

          11.  Compensation

               11.1 As full consideration for all rights and licenses granted or
          relinquished hereunder and the initial and ongoing services to be
          provided by SPSS, PH agrees to pay to SPSS:

                    (a)  A royalty of 25% on sales of each of the Contract
          Software based on the net cash received by PH from sales of the
          Contract Software in the United States and Canada.

                                       15

<PAGE>   8
                (b) A royalty of 30% on sales of each of the Titles based on the
     net cash received by PH from the sales of each Title in the United States
     and Canada..

                (c) A royalty of 35% on sales of the Documentation based on the
     net cash received by PH from the sales of Documentation in the United
     States and Canada.

                (d) A royalty of 17.5% for sales of the Contract Software,
     Titles and Documentation outside the United States and Canada.

     If PH packages or sells Products together with other products ( a "Package"
     or "Value Pack"), the net price of such Product for the purpose of
     calculating royalty payment will be an amount equal to the Product's net
     price divided by the sum of the net prices of each individual product in
     the Package, multiplied by the net price of the Package.

     No royalty shall be paid on copies of the Product (i) destroyed or returned
     to SPSS pursuant to paragraph 12 or (ii) on copies given away gratis to
     instructors for review or promotional purposes.

          11.2  (a) PH agrees to pay to SPSS an advance against royalties for
     each new SPSS Educational Version or Update ("Advance") equal to 50% of the
     expected first year royalty which shall have been mutually agreed upon by
     the parties for the new SPSS Educational Version or Update at issue,
     payable as follows:

                (i)  one-half,  upon SPSS's  commencement of the development of
                the new SPSS  Educational  Version or Update; and

                (ii) one-half, within 30 days after the initial date of PH's
                distribution of such new SPSS Educational Version or Update.

                (b) Notwithstanding anything set forth in paragraph 11.2 (a) to
     the contrary, if SPSS does not deliver by the final Delivery Dates agreed
     upon by the parties pursuant to paragraphs 3.1(b) or 8.1, as applicable,
     (i) final operational new SPSS Educational Versions or Updates which
     substantially conform to the specifications to be agreed to by the parties
     and/or (ii) related Documentation which is materially accurate, PH shall
     have the right to reduce the Advance by 50%. Furthermore, in the event that
     SPSS fails to deliver final versions of such new SPSS Educational Versions
     or Updates within one year from the final agreed Delivery Date and the
     first portion of the Advance has been paid as set forth in paragraph
     11.2(a)(i), PH may notify SPSS in writing that it will no longer accept
     delivery of such new SPSS Educational Version or Update, and PH shall have
     the right to recover any Advance made to SPSS in connection with such new
     SPSS Educational Version or Update from any amounts otherwise due to SPSS
     hereunder. PH agrees that, if sales of a new SPSS Educational Version or
     Update or any other Product do not enable PH to recover the Advance for
     such new SPSS Educational Version or Update, SPSS will have no obligation
     to repay PH the uncovered portion of such Advance. Nothing set forth in
     this paragraph 11.2(b) shall be deemed to be or construed as a waiver of
     any other rights or remedies that PH may have under this Agreement or at
     law or in equity.

          11.3  (a) In the event that PH requests that SPSS develop an Update,
     PH shall notify SPSS, and provide an estimate of the Advance. If in the
     good faith judgment of SPSS, the development costs for such Update would be
     more than double the amount of the Advance, SPSS shall have the absolute
     right to decline to do the Update upon notice to PH in writing. If for any
     other reason, SPSS does not believe that such development is commercially
     reasonable, SPSS shall notify PH thereof, in writing, specifying the
     reasons for such determination. In the latter case, if, PH still desires
     SPSS to commence development of such Update, PH will notify SPSS thereof,
     in writing, in which event, the parties shall comply with the procedures
     set forth in paragraphs 3 or 8 and

                                       16

<PAGE>   9
     11.2, as applicable, except that the Advance will be multiplied by two
     and SPSS shall receive royalties as set forth in paragraph 11.1. PH agrees
     that, if its sales of such Update do not enable PH to recover the Advance
     for such Update, SPSS will have no obligation to repay PH the unrecovered
     portion of such Advance.

          (b)  In the event that SPSS wishes to develop a new SPSS Educational
     Version or Update and PH does not believe that the development and/or
     distribution of such new SPSS Educational Version or Update is commercially
     reasonable, PH shall notify SPSS in writing, specifying the reasons for
     such determination. If, notwithstanding PH's opinion, SPSS desires to
     commence development of such new SPSS Educational Version or Update, SPSS
     will notify PH in writing. At such time, PH will notify SPSS, in writing,
     either that it wishes to comply with the procedures set forth in paragraphs
     3 or 8 and 11.2, as applicable, or that it will not pay an Advance for such
     new SPSS Educational Version or Update. If PH notifies SPSS that it will
     not pay an Advance, SPSS may offer a third party the right to develop and
     distribute such new SPSS Educational Version or Update, provided that PH
     shall have the right of last refusal to match any terms offered by the
     third party. If SPSS and the third party enter into an agreement, such new
     SPSS Educational Version or Update shall not be included in the definition
     of "Contract Software" and SPSS shall not use the Designation (as defined
     in paragraph 4.3) in connection with such new SPSS Educational Version or
     Update.

               11.4  PH will report on the sale of the Products by March 31 and
          September 30 of each year ("Reporting Dates") for the six month period
          ending the prior December 31 and June 30, respectively. With each
          report of sales, PH will make settlement for any balance shown to be
          due less a reasonable reserve for returns.

               11.5  Except as limited in paragraph 11.3(a), all Advances paid
          to SPSS hereunder shall be recoupable from royalties otherwise payable
          pursuant to paragraph 11.1 and 11.3. In the event that, as of any
          Reporting Date, the total royalties earned on the sale of the Products
          ("Earned Royalties") do not exceed the aggregate amount of the advance
          payments made to SPSS hereunder (other than any Advance pursuant to
          paragraph 11.3(a)) ("Aggregate Advance"), PH shall be entitled to
          reduce any future advance payments by the amount that the Aggregate
          Advance exceeds the Earned Royalties.

               11.6  The parties agree that, during the term hereof, at the
          expiration of each Fiscal Year (January 1 through December 31), PH
          will provide SPSS with a report setting forth (i) PH's total Per Unit
          Costs (as defined in paragraph 9.2) for the Products sold by PH during
          such Fiscal Year ("Fiscal Unit Costs") and (ii) PH's total Net Cash
          Received for the Products sold, during such fiscal year ("Fiscal Net
          Sales"). If the Fiscal Unit Costs total less than 19% of the Fiscal
          Net Sales ("Budget Costs"), PH will pay SPSS one-half of the
          difference between the Budget Costs and Fiscal Unit Costs. If the
          Fiscal Unit Costs total more than the Budget Costs, SPSS will pay PH
          one-half of the difference between the Budget Costs and Fiscal Unit
          Costs. Any payments due under this paragraph 11.6 will be made within
          60 days of the end of each Fiscal Year and will be considered separate
          from any royalty payments made under this Agreement.

               11.7  PH will maintain relevant records with respect to any
          royalty report or statement provided to SPSS under the Agreement for a
          two year period from the date of the statement. SPSS may, at SPSS's
          expense, during normal business hours and upon reasonable notice not
          more frequently than once each year, on its own or using a competent
          professional representative, examine the relevant records pertaining
          to the statement for the purpose of verifying its accuracy. SPSS
          agrees to keep confidential all information relating to the business
          affairs of PH and to impose such obligation on his/her
          representatives. Royalty statements will be final and binding upon
          SPSS after two years. In the event any underpayment or overpayment is
          discovered, PH shall promptly pay any underpayment and SPSS shall
          repay any overpayment or allow PH to take a credit for such
          overpayment.


                                       17

<PAGE>   10

12.       Discontinue Distribution

          If PH decides that the public demand for any Product no longer
warrants its continued marketing and distribution, PH will notify SPSS thereof,
whereupon, SPSS may request that PH return any remaining inventory of such
Product to SPSS for distribution by SPSS, and PH will do so, provided that SPSS
(i) pays for all freight and insurance expenses and shipping and handling
charges in connection therewith, (ii) gives PH a full refund at the per unit
price for such inventory. If SPSS does not purchase such inventory from PH
within 15 days of PH's notification, PH may either destroy or sell it, as PH
deems appropriate, provided however that any buyer shall be bound by the terms
set forth in this Agreement, and that if PH sells the inventory, royalties will
be paid to SPSS pursuant to paragraph 11.

13.       Representations and Warranties

               13.1     SPSS represents and warrants that:

          (a)  It has full power and authority to grant the rights granted
     hereunder;

          (b)  It is financially sound and technically competent to perform its
     obligations hereunder, and agrees that any change in such status shall be
     immediately communicated in writing to PH;

          (c)  It shall develop the Contract Software in accordance with
     customary professional standards applicable to the development of software.

          (d)  The development, preparation and manufacture of the Products
     shall be in accordance with and shall not violate applicable federal, state
     and local laws, rules and regulations and that SPSS shall obtain all
     permits or permissions required to be in compliance therewith;

          (e)  No licenses, grant of rights or permissions other than as set
     forth herein is required for PH to exercise all rights granted hereunder;

          (f)  Except to the extent developed by PH or its employees, the
     Deliverables and all portions thereof shall be developed by SPSS employees
     or by consultants who have executed enforceable non-disclosure and "work
     made for hire" agreements with SPSS. SPSS shall at all times remain
     responsible for the Deliverables and the final Products and for all
     obligations, warranties and indemnities of SPSS pursuant to this Agreement.

          (g)  Neither the Deliverables nor the Products nor their content,
     promotion, advertisement, sale, distribution, disposition or use by
     end-users will infringe or violate any copyright, patent, trade secret,
     trademark, right of publicity or privacy or other personal or proprietary
     right of any third party or contain any defamatory, libelous or obscene
     materials or any matter injurious to man or machine. SPSS represents that,
     during the term of this Agreement, it will do all things necessary to
     maintain its copyright protection in the Products;

          (h)  The performance of the terms of this Agreement and of SPSS's
     obligations hereunder shall not breach any separate agreement by which SPSS
     is bound; and

          (i)  During the term hereof, the Contract Software will be
     substantially free of errors that interfere with its use under normal use
     and conditions, and the Documentation and Titles will not contain
     substantially inaccurate information that interferes with its use
     (collectively, and respectively, "Errors"). (a) If PH determines that the
     Contract Software or Documentation or Titles contain any such Error, it
     shall promptly send a written notice to SPSS describing the Error (and, in
     the case of the Contract Software) the

                                       18

<PAGE>   11
          conditions under which the Error arose. SPSS shall promptly test
          the Contract Software and review the Documentation or Title. (b) If
          the Error is in the Contract Software, SPSS will promptly inform PH of
          its classification of the severity of the error, using the same
          process and scale as it does for its Commercial SPSS software and what
          action SPSS considers to be commercially reasonable to address the
          Error based on that classification. SPSS may elect to correct the
          Error immediately, provide a workaround for the Error, correct the
          Error in a future version, or whatever else it deems commercially
          reasonable, including not addressing the Error. If PH finds SPSS'
          actions to be insufficient, PH, at its option and expense, may
          exercise its rights under paragraph 19 and take such corrective steps
          as it deems necessary. (c) If the Error is in the Documentation or
          Title, SPSS will promptly inform PH of what SPSS considers to be
          commercially reasonable to address the Error. SPSS may elect to
          correct the Error immediately, correct the Error in a future edition,
          or whatever else it deems commercially reasonable. If PH finds SPSS'
          actions to be insufficient, PH, at its option and expense, may
          exercise its rights under paragraph 19 and take such corrective steps
          as it deems necessary. EXCEPT AS OTHERWISE SET FORTH HEREIN, THE
          WARRANTIES SET FORTH IN THIS SUB-PARAGRAPH 13(i) ARE EXCLUSIVE AND IN
          LIEU OF ALL OTHER WARRANTIES WITH RESPECT TO THE PERFORMANCE OF THE
          CONTRACT SOFTWARE. SPSS MAKES NO OTHER WARRANTIES WITH RESPECT TO THE
          PERFORMANCE OF THE CONTRACT SOFTWARE, INCLUDING BUT NOT LIMITED TO,
          IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
          PURPOSE, WHICH ARE SPECIFICALLY EXCLUDED.

               13.2  SPSS shall provide PH with complete, packaged Contract
          Software with documentation containing licenses, all warranties,
          disclosures and representations concerning the Contract Software and
          its use, and such licenses, warranties, disclosures and
          representations of SPSS will be extended to the end user. PH has no
          authority, express or implied, to make any representations,
          warranties, or disclosures to customers or users concerning the
          Contract Software or their use beyond that information and
          documentation which is provided by SPSS.

               13.3  PH represents and warrants that:

                    (a)  It possesses  full power and  authority to enter into
this Agreement and to fulfill its obligations hereunder;

                    (b)  It is financially sound and competent to perform its
obligations hereunder, and agrees that any change in such status shall be
immediately communicated in writing to SPSS;

                    (c)  The performance of the terms of this Agreement and of
PH's obligations hereunder shall not breach any separate agreement by which PH
is bound;

                    (d)  Its marketing and distribution of the Products shall be
in accordance with and shall not violate applicable federal, state and local
laws, rules and regulations;

                    (e)  All contributions of PH to the Deliverables which do
not originate with SPSS, shall not infringe intellectual property rights of
third parties.

14.       Maintenance and Support and Training

               14.1  SPSS shall provide technical support to the instructors
          adopting the Contract Software, via telephone, during SPSS's normal
          business hours, Monday through Friday, except official holidays. SPSS
          shall provide PH with an example of a document informing the
          instructors that such support is available and PH will


                                       19
<PAGE>   12
     distribute copies of such document to such instructors. PH shall not be
     required or obligated to provide support or maintenance to end-users of the
     Software but may do so if the technical support provided by SPSS is not
     satisfactory.

          14.2  At PH's request, SPSS will provide, free of charge, to PH such
     reasonable number of hours of support and technical training relating to
     the use and operation of the Contract Software as PH deems reasonably
     necessary to effectuate the purpose of this Agreement.

     15.  Term/Termination

          15.1  This Agreement shall become effective as of the date hereof and
     extend for a period of five (5) years unless terminated sooner as set forth
     in paragraph 15.5 or extended as set forth in paragraphs 15.2 or 15.4.

          15.2  PH shall have the option to renew this Agreement for an
     additional five (5) year term ("Renewal Term") upon written notice to SPSS
     in the event that royalties earned in connection with the sale of the
     Products total at least $2,750,000 (inclusive) at the date of expiration of
     the Term or PH agrees to tender the difference.

          15.3  If aggregate royalties paid to SPSS for sales of the Products
     have reached $1,100,000 by the conclusion of the second year of this
     Agreement, all rights set forth in paragraph 2 shall remain in effect for
     the full term of the Agreement. If PH fails to pay such royalties by the
     conclusion of the second year of the Agreement, PH's right to distribute
     and fulfill orders for the Titles and Documentation shall continue as set
     forth in paragraph 2, but PH's right to distribute and fulfill orders for
     the SPSS Educational Versions shall become non-exclusive for the balance of
     the Term, provided that SPSS:

                a) notifies PH in writing, at least 30 days in advance, of its
                   intention to exercise its rights under this provision;
                b) repays to PH all outstanding unearned Advances; 
                c) agrees to allow PH to return inventory of SPSS Educational
                   Versions in excess of a 1 year supply (as determined by PH's
                   prior year's sales); and 
                d) agrees to offer PH equivalent or substantially similar terms
                   (royalty percentage and Advances) to those SPSS offers any
                   other party distributing or fulfilling orders for SPSS
                   Educational Versions. 
 
          15.4  In the event that PH fails to recover all Advance payments made
     to SPSS hereunder (other than Advances made pursuant to paragraph 11.3(a)
     from royalties otherwise payable to SPSS hereunder as of the date of
     expiration of the Agreement, the Initial Term shall be automatically
     extended for an additional nine (9) month period, except that PH's right to
     distribute and fulfill orders for the Products will be non-exclusive. PH
     shall have no obligation to pay additional advances in connection with such
     extension.

          15.5  This Agreement may be terminated immediately by a party upon
     written notice to the other under any of the following conditions:

               (a)  if the other party shall be declared insolvent or bankrupt;

               (b)  if a petition is filed in any court and not dismissed in
                    ninety (90) days to declare the other party bankrupt or for
                    a reorganization under the Bankruptcy Law or any similar
                    statute;

                                       20

<PAGE>   13
               (c)  if a Trustee in  Bankruptcy  or a Receiver or similar
                    entity is appointed for the other party; or

               (d)  if the other party is in breach of a material term or
                    condition of this Agreement and fails to cure such breach
                    within 30 days of receipt of notice of such breach.

          15.6  Upon expiration or termination of this Agreement in accordance
     with the terms hereof, PH shall have the non-exclusive right to market and
     distribute its inventory of the Products, subject to any royalty
     obligations as set forth herein. Notwithstanding the foregoing, SPSS shall
     have the right to request that PH return such inventory to SPSS, provided
     that SPSS (i) pays for all freight and insurance expenses and shipping and
     handling charges in connection therewith, and (ii) gives PH a full refund
     at the Per Unit Cost for such inventory. In the event of return to SPSS, no
     royalties shall be due SPSS, and PH shall have no further rights to market
     and distribute the Products. The parties agree to continue their
     cooperation in order to effect an orderly termination of their
     relationship.

16.       Indemnification

          16.1  SPSS shall indemnify, defend and hold harmless PH against all
     claims, demands, suits, liabilities, losses, damages, judgments,
     settlements, costs and expenses, including attorneys' fees and court costs,
     that PH may sustain or incur by reason of any breach or alleged breach of
     any representation, warranty or covenant contained in this Agreement or as
     a result of, in connection with or arising out of the end-users' use of the
     Products, including, without limitation, as a result of, in connection with
     or arising out of any error, failure, defect or other fault of the
     Products, except to the extent that SPSS did not create, through its
     actions or omissions, such error, failure, defect or fault. In the event
     that SPSS does not repay PH the damages, costs or expenses incurred by PH
     hereunder in a timely manner, PH shall have the right to withhold sums
     otherwise due to SPSS under this Agreement.

          16.2  If, in response to a notice of claim or a threat of suit for
     infringement or violation of any copyright, patent or other intellectual
     property right, SPSS prepares a non-infringing version of the Commercial
     SPSS Software or procures the right to continue to reproduce, use or
     distribute the intellectual property at issue in connection with the
     Commercial SPSS Software, SPSS agrees to take the same corrective measures
     in connection with the corresponding SPSS Educational Version.

          16.3  PH shall indemnify, defend and hold harmless SPSS against all
     claims, demands, suits, liabilities, losses, damages, judgments,
     settlements, costs and expenses, including attorneys' fees and court costs,
     that SPSS may sustain or incur by reason of any breach or alleged breach of
     any representation, warranty or covenant made by PH hereunder.

          16.4  If a claim, suit, proceeding, action or demand (hereinafter
     referred to as "Claim") is made against a party indemnified pursuant to
     this paragraph 16 ("Indemnitee"), the Indemnitee will promptly notify the
     other party ("Indemnitor") of such Claim. Indemnitor may elect to undertake
     the defense of such Claim, with legal counsel approved by Indemnitee (which
     approval shall not be unreasonably withheld), provided, however, that
     Indemnitor shall not be entitled to assume the defense on Indemnitee's
     behalf for any Claim which seeks an order, injunction, or other equitable
     relief against Indemnitee. Should such a Claim be brought, Indemnitee shall
     have the right to assume and control the defense of such Claim, at
     Indemnitor's expense. Should Indemnitor elect to assume the defense of a
     Claim pursuant to the provisions of this paragraph and legal defenses are
     available to Indemnitee which are different from or in addition to those
     available to Indemnitor, or a conflict exists which precludes
     representation of Indemnitee and Indemnitor by the same counsel, Indemnitee
     may retain counsel to act as co-counsel on behalf of Indemnitee, at the
     expense of Indemnitor. In the event that Indemnitor desires to settle

                                       21

<PAGE>   14
          any Claim that it is defending, Indemnitee shall have the right to
          approve any settlement providing for any relief other than the payment
          of money; which approval shall not be unreasonably withheld.

               16.5  The parties agree that the party controlling the defense of
          a Claim shall have the reasonable cooperation and assistance of the
          other party in the defense of such Claim.

17.       Confidentiality

               17.1  Each party hereto (the "Disclosing Party") may disclose to
          the other ("Recipient") Confidential Information to further the
          performance of this Agreement. Confidential Information includes, but
          is not limited to, technical and business information relating to
          Disclosing Party's products, research and development, production,
          costs, engineering processes, profit or margin information, finances,
          customers, marketing and future business plans. Confidential
          Information also may include proprietary or confidential information
          of another party that Disclosing Party is under an obligation to keep
          confidential. All Confidential Information shall remain the sole
          property of Disclosing Party and Recipient shall have no rights to the
          Confidential Information, except as set forth herein. Recipient agrees
          that it shall hold the Confidential Information in strict confidence.
          Recipient further agrees that it shall not make any disclosure of the
          Confidential Information (including methods or concepts utilized in
          the Confidential Information) to anyone without the express written
          consent of Disclosing Party, except to employees, consultants or
          agents to whom disclosure is necessary to the performance of this
          Agreement. Recipient shall take all reasonable steps to ensure the
          confidentiality of all Confidential Information.

               17.2  After expiration or termination of this Agreement, upon
          request, Recipient shall promptly return all originals and copies
          thereof of any requested Confidential Information disclosed by
          Disclosing Party which has been fixed in any tangible means of
          expression. Notwithstanding the foregoing, PH shall have no obligation
          to turn over any information or items that it needs to exercise its
          rights hereunder, including, without limitation, paragraphs 15.6 and
          19.

               17.3  Notwithstanding the provisions of this Agreement, nothing
          received by Recipient shall be considered to be Confidential
          Information if: (i) it has been published or is otherwise readily
          available to the public other than by breach of this Agreement; (ii)
          it has been rightfully received by Recipient from a third party
          without Confidentiality limitations; (iii) it was known to or
          rightfully in the possession of Recipient at the time of disclosure;
          (iv) it has been intentionally disclosed by Disclosing Party to a
          third party without restriction on disclosure; or (v) it is required
          to be disclosed by law or court order, provided that prior written
          notice of such required disclosure and a reasonable opportunity to
          oppose or limit disclosure is given to Disclosing Party.

18.       Exclusive Product

          PH agrees that, as of the date hereof and for the Term hereof:

               18.1  The Simon & Schuster Higher Education Division (which shall
          include all the college divisions of Prentice-Hall, Inc., but
          excluding Allyn & Bacon and its operating divisions ) will refrain
          from entering into agreements with SPSS competitors listed in Exhibit
          F ("SPSS Competitors") for the distribution of educational versions of
          software that compete with the Contract Software, such software being
          also listed in Exhibit F. Exhibit F may be amended by mutual consent
          of the parties in response to changes in industry conditions, which
          consent shall not be unreasonably withheld.

               18.2  Notwithstanding the foregoing, the Simon & Schuster Higher
          Education Division may enter into agreements with SPSS Competitors or
          any other party to produce Integrated Versions of SPSS Competitors'
          products. As used in this Agreement, "Integrated Versions of SPSS
          Competitors' Products" shall mean

                                       22
<PAGE>   15
          any new educational version of an SPSS Competitor's product combined
          with documentation, CD-ROM electronic books of such products, and
          text-specific data relating to a textbook(s) published by PH, and
          packaged with that textbook, and without separate print documentation,
          Competitors' products or titles.

               18.3  PH shall not be in breach of paragraph 18.1 if the Simon &
          Schuster Higher Education Division or its divisions become a party to
          and fulfills the terms of such an agreement as a consequence of the
          acquisition of the Simon & Schuster Higher Education Division, or a
          merger, consolidation or acquisition of all or substantially all of
          the stock or assets of another corporation ("Acquisition").

               18.4  If PH acquires all or substantially all of the stock or
          assets of, or merges with, an SPSS Competitor during the Initial Term,
          it will notify SPSS thereof. In such event, SPSS has the option to
          terminate PH's right to renew this Agreement as set forth in paragraph
          15.2 upon written notification to PH at least 90 days prior to the
          expiration of the Initial Term.

19.       Escrow/SPSS Breach

          In the event that (i) SPSS is in material breach of any term,
provision or condition of this Agreement; (ii) SPSS ceases to exist, to function
as a going concern, or to conduct its operations in the normal course of
business; (iii) SPSS is declared insolvent or bankrupt or makes an assignment
for the benefit of its creditors; (iv) a petition is filed in any court and not
dismissed in ninety days to declare SPSS bankrupt for a reorganization under
Bankruptcy Law or any similar statute; (v) a Trustee in bankruptcy or a receiver
or similar entity is appointed for SPSS; or (vi) in the circumstances set forth
in paragraphs 6.2, 7.1, 9.3, 13.1(i) or 17.2:

               19.1  PH shall be given access to copies of the full proprietary
          source language statements of the most recent versions of the Contract
          Software and related documentation (hereinafter "Source Code Package")
          in accordance with the terms set forth in an agreement substantially
          similar to the Escrow Agreement annexed hereto as Exhibit E which
          shall be executed by SPSS, PH and the escrow agent simultaneous with
          or immediately following the execution of this Agreement. PH shall
          have the right to use such Source Code Package to reproduce, duplicate
          and manufacture copies of the Contract Software, at its expense, and
          to exercise all rights granted hereunder with respect to the Contract
          Software in accordance with the terms set forth herein. In cases where
          PH has access to the Source Code Package as a result of a material
          breach by SPSS, PH agrees to use such Source Code Package only to the
          extent necessary to perform the obligation that SPSS has breached.

          (a)  Upon execution of this Agreement, such Source Code Package shall
     be deposited with the escrow agent pursuant to the Escrow Agreement and
     maintained, during the term hereof, in a form sufficient to permit a data
     processing professional familiar with such software to create an executable
     copy of such Contract Software. Such Source Code Package shall include
     precise identification of all compilers, library packages, utilities and
     linkers necessary to generate executable code.

          (b)  When and if, during the term of this Agreement, SPSS provides PH
     with new SPSS Educational Versions of Other SPSS Software, or Updates, as
     the case may be, then within 10 days of acceptance of such software by PH,
     SPSS shall deposit a Source Code Package for such software and give notice
     of such delivery.

          (c)  All fees and expenses charged by the escrow agent shall be borne
     as set forth in Exhibit E.

               19.2  PH shall have the right to print copies of the
          Documentation and the Titles, at its expense, and to exercise all
          rights granted hereunder with respect to the Documentation and the
          Titles in accordance with the terms set forth herein. Upon PH's
          request and at its expense, SPSS shall deliver the film of the
          Documentation

                                       23

<PAGE>   16
          and the Titles to PH. If SPSS fails to do so, PH shall have the
          right to have such film produced at PH's expense. Notwithstanding
          anything contained herein to the contrary, SPSS shall retain copyright
          ownership rights to the Documentation and Titles, subject to PH's
          rights under this Agreement.

               19.3  PH may exercise all rights under this paragraph 19 without
          any liability to SPSS except for any royalty payments that may be due
          as set forth herein.

               19.4  Nothing set forth in this paragraph 19 shall be deemed to
          be or construed as a waiver of any other rights or remedies that PH
          may have under this Agreement or at law or in equity.

20.       General

               20.1  Except as set forth in paragraph 16, each party waives any
          right it may have to special, consequential or incidental damages,
          including lost profits, even if such party provides advance notice of
          the possibility of such damages.

               20.2  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
          ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
          CONTRACTS MADE AND FULLY PERFORMED THEREIN. Exclusive jurisdiction for
          all suits, proceedings, disputes, controversy or claim arising out of,
          in connection with, or in relation to this Agreement, or the breach
          thereof, shall be only in the appropriate state court located in New
          York County or the federal court sitting in the Southern District of
          New York.

                                       24

<PAGE>   17
               20.3  This Agreement, the Exhibits annexed hereto, and the Source
          Code Escrow Agreement, constitute the entire agreement between the
          parties with respect to the subject matter hereof and supersedes all
          previous proposals, negotiations, representations, commitments,
          writings and all other communications between the parties, both oral
          and written. This Agreement may not be released, discharged, changed
          or modified except by an instrument in writing signed by a duly
          authorized officer of each of the parties. The terms of this Agreement
          shall prevail in the event that there shall be any variance with the
          terms and conditions of any invoice or other such document submitted
          by SPSS or any purchase order or any other such document submitted by
          PH. This Agreement shall not be valid until signed and accepted by
          both parties and no change, termination or attempted waiver of any of
          the provisions hereof shall be binding unless in writing and signed by
          the party against whom the same is sought to be enforced.

               20.4  It is expressly agreed that under no circumstances shall
          this Agreement create any actual or apparent authority, partnership or
          relationship of employer and employee between the parties. This
          Agreement shall not be construed as authority for either party to act
          for the other party or to make commitments of any kind for the
          accounts of, or on behalf of, the other party, except to the extent,
          and for the purposes, expressly provided for and set forth herein.

               20.5  All notices contemplated or required hereunder shall be
          given in writing and shall become effective on the date actually
          delivered by hand and received by recipient, five days after being
          mailed by certified or registered mail, postage prepaid, return
          receipt requested, or one day after being sent by overnight courier
          services, freight prepaid:


          To PH:           Prentice-Hall, Inc.
                           One Lake Street
                           Upper Saddle River, NJ 07458
                           Attention: President, PH College,
                           Engineering Science & Math

          With a copy to:  Simon & Schuster

                           Legal Department
                           One Lake Street
                           Upper Saddle River, NJ 07458
                           Attention: Vice President and Deputy General Counsel

          To SPSS:         SPSS Inc.
                           444 North Michigan Avenue
                           Chicago, IL 60611
                           Attention: Edward Hamburg 
                                      Chief Financial Officer
                                      and Executive Vice President

               20.6  This Agreement shall be binding upon, and inure to the
          benefit of, the parties hereto and their respective successors and
          assigns.

               20.7  If any provision of this Agreement is determined by a court
          of competent jurisdiction to be invalid or unenforceable, such
          determination shall not affect the validity or enforceability of any
          other part or provision of this Agreement.

                                       25

<PAGE>   18
               20.8  No waiver by any party of any breach of any provision
          hereof shall constitute a waiver of any other breach of that or any
          other provision hereof.

               20.9  Nothing contained herein can be deemed or construed to
          limit PH's discretion in the operation of any part or aspect of its
          business, except as set forth herein.

               20.10 All remedies, rights and obligations contained in this
          Agreement shall be cumulative and none of them shall limit or preclude
          any remedy or right available under this Agreement or at law or in
          equity.

               20.11 Following the expiration or termination of this Agreement,
          whether by its terms, operation of law or otherwise, the terms,
          provisions and conditions set forth in paragraphs 13, 14, 15.6, 16,
          17, and 20 as well as any term, provision or condition required for
          the interpretation of this Agreement or necessary for the full
          observation and performance by each party hereto of all rights and
          obligations arising prior to the date of expiration or termination
          shall survive such expiration or termination.

               IN WITNESS WHEREOF, the parties hereto have executed this
          Agreement by a duly authorized officer as of the date set forth above.


                                        SPSS INC.

                                        By:  /s/  Mark Battaglia
                                            --------------------

                                        Title:  Executive Vice President
                                               -------------------------


                                        PRENTICE-HALL, INC.

                                        By:  /s/  Jerome Grant
                                            ------------------

                                        Title:  Editor-in-Chief
                                               ----------------

                                       26

<PAGE>   19
                                   EXHIBIT A

                            Contract Software S/034

<TABLE>
<S>                                                  <C>
SPSS/PC+ Studentware Plus                            0-13-178021-2
SPSS 6.1 for Windows Student Version                 0-13-486077-2
SPSS 6.1 for Windows for the Business Student        0-13-486085-3
SPSS 6.1 for the Macintosh Student Version           0-13-350091-8
SPSS 7.5 for Windows Student Version, CD ROM         0-13-631680-8
SPSS 7.5 for Windows Student Version, 3.5" disks     0-13-656919-6
SPSS 8.0 for Windows Student Version                 0-13-687377-4
SYSTAT 6.0 for Windows Student Version               0-13-659970-2
SYSTAT 8.0 for Windows Student Version               
                                                     -------------
</TABLE>

                                       27


<PAGE>   20
                                   EXHIBIT B

                                  TITLES S/028

<TABLE>
<S>                                                  <C>
SPSS Guide to Data Analysis of SPSS/PC+, 2/e         0-13-178443-9
SPSS Guide to Data Analysis Version 4.0              0-13-178096-4
SPSS 6.1 Guide to Data Analysis                      0-13-437054-6
SPSS 6.1 for Windows Brief Guide                     0-13-455677-1
SPSS 7.5 Guide to Data Analysis                      0-13-656877-7
SPSS 7.5 for Windows Brief Guide                     0-13-656885-8
SPSS 8.0 Guide to Data Analysis                      0-13-687484-3
SPSS 8.0 for Windows Brief Guide                     0-13-687914-4
SYSTAT 6.0 for Windows Brief Guide,                  0-13-618885-0
Introductory Statistics with SYSTAT                  0-13-903329-7
</TABLE>

                                       28

<PAGE>   21
                                   EXHIBIT C
                              DOCUMENTATION S/070
<TABLE>
<S>                                                             <C>      
SPSS Reference Guide Version 4.0                                0-13-177858-7
SPSS Base System User's Guide 4.0                               0-13-177866-8

SPSS Advanced Statistics User's Guide                           0-13-177940-0

SPSS/PC+ Base System User's Guide Version 5.0                   0-13-177692-4
SPSS/PC+ Professional Statistics Version 5.0                    0-13-177700-9
SPSS/PC+ Advanced Statistics Version 5.0                        0-13-177718-1

SPSS for Windows Base System User's Guide Release 6.0           0-13-178856-6

SPSS 6.1 Base System User's Guide, Part 1, UNIX Version         0-13-459651-0
SPSS 6.1 Base System User's Guide, Open VMS Version             0-13-462441-6
SPSS 6.1 Base System User's Guide, Part 1, Mac Version          0-13-438862-3
SPSS 6.1 Base System User's Guide, Part 2                       0-13-438870-4

SPSS Professional Statistics 6.1                                0-13-190125-7

SPSS Advanced Statistics 6.1                                    0-13-200065-2

SPSS 6.1 Base System Syntax Reference Guide                     0-13-438250-1
SPSS 6.1 for Windows Update  0-13-182338-8

SPSS Base 7.0 for Windows User's Guide                          0-13-476300-9
SPSS Base 7.0 Applications Guide                                0-13-476318-1
SPSS Base 7.0 Syntax Reference Guide                            0-13-476326-2
SPSS Advanced Statistics 7.0 Update                             0-13-476334-3
SPSS Base 7.5 Applications Guide                                0-13-656992-7
SPSS Professional Statistics 7.5                                0-13-656935-8
SPSS Advanced Statistics 7.5                                    0-13-656927-7
SPSS Base 7.5 User's Guide                                      0-13-657214-6
SPSS Base 7.5 Syntax Reference Guide                            0-13-656943-9
</TABLE>

                                       29



<PAGE>   22

                              EXHIBIT C Continued
<TABLE>
<S>                                                         <C>
SPSS Base 8.0 Graphics                                     0-13-095891-3
SPSS Base 8.0 User's Guide                                 0-13-688590-X
SPSS Base 8.0 Syntax Reference Guide                       0-13-688533-0
SPSS Advanced Statistics 8.0                               0-13-688400-8
SPSS Base 8.0 Applications Guide                           0-13-687949-7

SYSTAT for Windows Version 5, Getting Started              0-13-437237-9
SYSTAT for Windows Version 5, Data                         0-13-437245-X
SYSTAT for Windows Version 5, Statistics                   0-13-437252-2
SYSTAT for Windows Version 5, Graphics                     0-13-437062-7

SYSTAT 6.0 for Windows:  Command Reference                 0-13-654310-3
SYSTAT 6.0 for Windows:  Data                              0-13-654485-1
SYSTAT 6.0 for Windows:  Graphics                          0-13-654393-6
SYSTAT 6.0 for Windows:  Statistics                        0-13-654352-9

SYSTAT 7.0:  Command Reference                             0-13-644618-3
SYSTAT 7.0:  New Statistics                                0-13-644627-2
SYSTAT 7.0:  Graphics                                      0-13-676909-8
SYSTAT 7.0:  Data                                          0-13-676917-9
SYSTAT 7.0:  Statistics                                    0-13-679739-3
</TABLE>

                                       30



<PAGE>   23
                                   EXHIBIT D
               Print Specifications for Documentation and Titles
<TABLE>
<S>                          <C>
Page sizes:                  7" x 9"
                             7-3/8" x 9'
                             8-1/2' x 12"

Binding:                     Perfect or layflat
                             Saddle stitch (not greater than 104 pages)

Text stock:                  45# New Era Matte or equivalent
                             brightness 78+, opacity 89+

Text prints:                 Black only
                             Black and second color

Cover stock:                 80# LOE Dull
                             10 pt. Carolina
                             Cover is film laminated or UV coated on one side

Cover prints:                Two colors: 2-0-0-2

Packaging:                   Bulk in cartons

Pallet size:                 40" x 48" or as required

Over/under Margins:          10%
</TABLE>

                                       31


<PAGE>   24
                                   EXHIBIT E
                                    ESCROW #

                          SOURCE CODE ESCROW AGREEMENT

     between

PRODUCER, FORT KNOX and SINGLE LICENSEE

     This Escrow Agreement ("Agreement") is made as of this       day of
                                                            -----
                 , 1998, by and between SPSS Inc. ("Producer"), Fort Knox Escrow
- -----------------
Services, Inc. ("Fort Knox") and Prentice-Hall, Inc. ("Licensee").

Preliminary Statement. Producer intends to deliver to Fort Knox a sealed package
containing magnetic tapes, disks, disk packs, or other forms of media, in
machine readable form, and the written documentation prepared in connection
therewith, and any subsequent updates or changes thereto (the "Deposit
Materials") for the computer software products (the "System(s)"), all as
identified from time to time on Exhibit 2 hereto. Producer desires Fort Knox to
hold the Deposit Materials, and, upon certain events, deliver the Deposit
Materials (or a copy thereof) to Licensee, in accordance with the terms hereof.

     Now, therefore, in consideration of the foregoing, of the mutual promises
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     1.  Delivery by Producer. Within fifteen (15) days after execution of this
Agreement, Producer shall deliver to Fort Knox the Deposit Materials. Fort Knox
shall hold the Deposit Materials in accordance with the terms hereof. Fort Knox
shall have no obligation to verify the completeness or accuracy of the Deposit
Materials.

     2.  Duplication; Updates.

     (a)  Fort Knox may duplicate the Deposit Materials by any means in order to
comply with the terms and provisions of this Agreement, provided that Licensee
shall bear the expense of duplication. Alternatively, Fort Knox, by notice to
Producer, may require Producer to reasonably promptly duplicate the Deposit
Materials.

     (b)  Producer shall deposit with Fort Knox any modifications, updates, new
releases or documentation related to the Deposit Materials by delivering to Fort
Knox an updated version of the Deposit Materials ("Additional Deposit") as soon
as practicable after the modifications, updates, new releases and documentation
have been developed by Producer. Fort Knox shall have no obligation to verify
the accuracy or completeness of any Additional Deposit or to verify that any
Additional Deposit is in fact a copy of the Deposit Materials or any
modification, updates, or new release thereof. If the Additional Deposit is an
upgrade to the Deposit Materials, Fort Knox shall return the original Deposit
Materials to the Producer.

     3.  Notification of Deposits. Simultaneous with the delivery to Fort Knox
of the Deposit Materials or any Additional Deposit, as the case may be, Producer
shall deliver to Fort Knox and to Licensee a written statement specifically
identifying all items deposited and stating that the Deposit


                                       32

<PAGE>   25
Materials or any Additional Deposit, as the case may be, so deposited have been
inspected by Producer and are complete and accurate.

          4.   4.1     Delivery by Fort Knox to Licensee. Fort Knox shall
     deliver the Deposit Materials, or a copy thereof, to Licensee only in the
     event that:

          (a)  Producer notifies Fort Knox to effect such delivery to Licensee
     at a specific address, the notification being accompanied by a check
     payable to Fort Knox in the amount of one hundred dollars ($100.00); or

          (b)  Fort Knox receives from Licensee:

               (i)    written notification (with specific details) that Producer
     has failed in a material respect to support the applicable Systems as
     required by the license agreement ("License Agreement") between Licensee
     and Producer or that Producer has otherwise defaulted in a material respect
     under the License Agreement ("Producer Default");

               (ii)   evidence satisfactory to Fort Knox that Licensee has
     previously notified Producer of such Producer Default in writing;

               (iii)  a written demand that the Deposit Materials be released
     and delivered to Licensee;

               (iv)   a written undertaking from the Licensee that the Deposit
     Materials being supplied to the Licensee will be used only as permitted
     under the terms of the License Agreement;

               (v)    specific instructions from the Licensee for this delivery;
     and

               (vi)   a certified or cashier's check payable to Fort Knox in the
     amount of five hundred dollars ($500.00).

          (c)  If the provisions of paragraph 4.1(a) are satisfied, Fort Knox
     shall, within five business days after receipt of the notification and
     check specified in paragraph 4.1(a), deliver the Deposit Materials in
     accordance with the applicable instructions.

          (d)  If the provisions of paragraph 4.1(b) are met, Fort Knox shall,
     within five (5) business days after receipt of all the documents specified
     in paragraph 4.1(b), send by certified mail to Producer a photostatic copy
     of all such documents. Producer shall have ten (10) days from the date on
     which Producer receives such documents ("Objection Period") to notify Fort
     Knox of its objection ("Objection Notice") to the release of the Deposit
     Materials to Licensee and to request that the issue of Licensee's
     entitlement to a copy of the Deposit Materials be submitted to arbitration
     in accordance with the following provisions:

               (i)    If Producer shall send an Objection Notice to Fort Knox
     during the Objection Period, the matter shall be submitted to, and settled
     by arbitration by, a panel of three (3) arbitrators chosen by the Illinois
     Regional Office of the American Arbitration Association in accordance with
     the rules of the American Arbitration Association. The arbitrators shall
     apply Illinois law. At least one (1) arbitrator shall be reasonably
     familiar with the computer software industry. The decision of the
     arbitrators shall be binding and conclusive on all parties involved, and
     judgment upon their decision may be entered in a court of competent
     jurisdiction. All costs of the arbitration incurred by Fort Knox, including
     reasonable attorneys' fees and costs, shall be paid by the party which does
     not prevail in the arbitration; provided,

                                       33

<PAGE>   26
     however, if the arbitration is settled prior to a decision by the
     arbitrators, the Producer and Licensee shall each pay 50% of all such
     costs.

              (ii)  Producer may, at any time prior to the commencement of
     arbitration proceedings, notify Fort Knox that Producer has withdrawn the
     Objection Notice. Upon receipt of any such notice from Producer, Fort Knox
     shall reasonably promptly deliver the Deposit Materials to Licensee in
     accordance with the instructions specified in paragraph 4.1(b)(v).

          (e) If, during the Objection Period, Fort Knox has not received an
     Objection Notice from Producer, then Fort Knox shall reasonably promptly
     deliver the Deposit Materials to Licensee in accordance with the
     instructions specified in paragraph 4.1(b)(v).

              4.2  Delivery by Fort Knox to Producer. Fort Knox shall release
     and deliver the Deposit Materials to Producer upon termination of this
     Agreement in accordance with paragraph 7(a) hereof.

              4.3  Notwithstanding the provisions of paragraph 4.1, if Licensee
     believes in good faith that it will suffer irreparable harm to its business
     and operations in the event of delay caused by compliance with the terms of
     paragraph 4.1, or in the event that release of the Deposit Materials is
     wrongfully delayed by Licensor, Licensee may petition a court of competent
     jurisdiction for injunctive relief to prevent such delay and/or to order
     release of the Deposit Materials. Any and all costs incurred by Fort Knox
     in connection therewith, including reasonable attorneys' fees and costs,
     shall be borne 50% by each of Producer and Licensee.

          5.  Indemnity. Producer and Licensee shall, jointly and
     severally, indemnify and hold harmless Fort Knox and each of its directors,
     officers, agents, employees and stockholders ("Fort Knox Indemnitees")
     absolutely and forever, from and against any and all claims, actions,
     damages, suits, liabilities, obligations, costs, fees, charges, and any
     other expenses whatsoever, including reasonable attorneys' fees and costs,
     that may be asserted against any Fort Knox Indemnitee in connection with
     this Agreement or the performance of Fort Knox or any Fort Knox Indemnitee
     hereunder.

          6.  Disputes and Interpleader.

          (a) In the event of any dispute between any of Fort Knox, Producer
     and/or Licensee relating to delivery of the Deposit Materials by Fort Knox
     or to any other matter arising out of this Agreement, Fort Knox may submit
     the matter to any court of competent jurisdiction in an interpleader or
     similar action. Any and all costs incurred by Fort Knox in connection
     therewith, including reasonable attorneys' fees and costs, shall be borne
     50% by each of Producer and Licensee.

          (b) Fort Knox shall perform any acts ordered by any court of competent
     jurisdiction, without any liability or obligation to any party hereunder by
     reason of such act.

          7.  Term and Renewal.

          (a) The initial term of this Agreement shall be two years, commencing
     on the date hereof (the "Initial Term"). This Agreement shall be
     automatically extended for an additional term of one year ("Additional
     Term") at the end of the Initial Term and at the end of each Additional
     Term hereunder unless, on or before ninety (90) days prior to the end of
     the Initial Term or an Additional Term, as the case may be, any party
     notifies the other parties that it wishes to terminate the Agreement at the
     end of such term.

                                       34

<PAGE>   27
          (b)  In the event of termination of this Agreement in accordance with
     paragraph 7(a) hereof, Licensee shall pay all fees due Fort Knox and shall
     promptly notify Licensee that this Agreement has been terminated and that
     Fort Knox shall return to Producer all copies of the Deposit Materials then
     in its possession. 

          (c)  In the event of termination of this Agreement in accordance with
     paragraph 8(b) hereof, Producer shall promptly notify Licensee that this
     Agreement has been terminated.

          8.  Fees. Producer shall pay to Fort Knox the applicable fees in
     accordance with Exhibit 1 as compensation for Fort Knox's services under
     this Agreement.

          (a)  Payment. Fort Knox shall issue an invoice to Producer following
     execution of this Agreement ("Initial Invoice"), on the commencement of any
     Additional Term hereunder, and in connection with the performance of any
     additional services hereunder. Payment is due upon receipt of invoice. All
     fees and charges are exclusive of, and Producer is responsible for the
     payment of, all sales, use and like taxes. Fort Knox shall have no
     obligations under this Agreement until the Initial Invoice has been paid in
     full by Producer.

          (b)  Nonpayment. In the event of non-payment of any fees or charges
     invoiced by Fort Knox, Fort Knox shall give notice of non-payment of any
     fee due and payable hereunder to the Producer and, in such an event, the
     Producer shall have the right to pay the unpaid fee within ten (10) days
     after receipt of notice from Fort Knox. If Producer fails to pay in full
     all fees due during such ten (10) day period, Fort Knox shall give notice
     of non-payment of any fee due and payable hereunder to Licensee and, in
     such event, Licensee shall have the right to pay the unpaid fee within ten
     (10) days of receipt of such notice from Fort Knox. Upon payment of the
     unpaid fee by either the Producer or Licensee, as the case may be, this
     Agreement shall continue in full force and effect until the end of the
     applicable term. Failure to pay the unpaid fee under this paragraph 8(b) by
     both Producer and Licensee shall result in termination of this Agreement.

          9.  Ownership of Deposit Materials. The parties recognize and
     acknowledge that ownership of the Deposit Materials shall remain with
     Producer at all times.

          10.  Available Verification Services. Upon receipt of a written
     request from Licensee, Fort Knox and Licensee may enter into a separate
     agreement pursuant to which Fort Knox will agree, upon certain terms and
     conditions, to inspect the Deposit Materials for the purpose of verifying
     its relevance, completeness, currency, accuracy and functionality
     ("Technical Verification Agreement"). Upon written request from Producer,
     Fort Knox will issue to Producer a copy of any written technical
     verification report rendered in connection with such engagement. If Fort
     Knox and Licensee enter into such Technical Verification Agreement,
     Producer shall reasonably cooperate with Fort Knox by providing its
     facilities, computer systems, and technical and support personnel for
     technical verification whenever reasonably necessary. If requested by
     Licensee, Producer shall permit one employee of Licensee to be present at
     Producer's facility during any such verification of the Deposit Materials.
     Results of shall technical verification shall be kept in confidence by the
     parties.

          11.  Bankruptcy. Producer and Licensee acknowledge that this Agreement
     is an "agreement supplementary to" the License Agreement as provided in
     Section 365 (n) of Title 11, United States Code (the "Bankruptcy Code").
     Producer acknowledges that if Producer as a debtor in possession or a
     trustee in Bankruptcy in a case under the Bankruptcy Code rejects the
     License Agreement or this Agreement, Licensee may elect to retain its
     rights under the License Agreement and this Agreement as provided in

                                       35

<PAGE>   28
Section 365 (n) of the Bankruptcy Code. Upon written request of Licensee to
Producer or the Bankruptcy Trustee, Producer or such Bankruptcy Trustee shall
not interfere with the rights of Licensee as provided in the License Agreement
and this Agreement, including the right to obtain the Source Material from Fort
Knox.

     12.  Miscellaneous.

     (a)  Remedies. Except for actual fraud, gross negligence or intentional
misconduct, Fort Knox shall not be liable to Producer or to Licensee for any
act, or failure to act, by Fort Knox in connection with this Agreement. Any
liability of Fort Knox regardless of the cause shall be limited to the actual
cost of new blank magnetic media. Fort Knox will not be liable for special,
indirect, incidental or consequential damages hereunder.

     (b)  Natural Degeneration; Updated Version. In addition, the parties
acknowledge that as a result of the passage of time alone, the Deposit Materials
are susceptible to loss of quality ("Natural Degeneration"). It is further
acknowledged that Fort Knox shall have no liability or responsibility to any
person or entity for any Natural Degeneration. For the purpose of reducing the
risk of Natural Degeneration, Producer shall deliver to Fort Knox a new copy of
the Deposit Materials at least once every three years.

     (c)  Permitted Reliance and Abstention. Fort Knox may rely and shall be
fully protected in acting or refraining from acting upon any notice or other
document believed by Fort Knox in good faith to be genuine and to have been
signed or presented by the proper person or entity. Fort Knox shall have no
duties or responsibilities except those expressly set forth herein.

     (d)  Independent Contractor. Fort Knox is an independent contractor, and is
not an employee or agent of either the Producer or Licensee.

     (e)  Amendments. This Agreement shall not be modified or amended except by
another agreement in writing executed by the parties hereto.

     (f)  Entire Agreement. This Agreement, including all exhibits hereto,
supersedes all prior discussions, understandings and agreements between the
parties with respect to the matters contained herein, and constitutes the entire
agreement between the parties with respect to the matters contemplated herein.
All exhibits attached hereto are by this reference made a part of this Agreement
and are incorporated herein.

     (g)  Counterparts; Governing Law. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement. This Agreement shall be construed and enforced in accordance with the
laws of the State of Illinois.

     (h)  Confidentiality. Fort Knox will hold and release the Deposit Materials
only in accordance with the terms and conditions hereof, and will maintain the
confidentiality of the Deposit Materials and will use the Deposit Materials only
in accordance with this Agreement.

     (i)  Notices. All notices, requests, demands or other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be delivered by hand or by commercial


                                       36

<PAGE>   29
     overnight delivery service which provides for evidence of receipt, or
     mailed by certified mail, return receipt requested, postage prepaid, and
     addressed as follows:


              (i)  If to Producer:

                   to the address listed on the signature page
                   hereof


             (ii)  If to Licensee:

                   to the address listed on the signature page
                   hereof

            (iii)  If to Fort Knox:

                   Fort Knox Escrow Services, Inc. 3539-A Church
                   Street Clarkston, Georgia 30021-1717 Attn:
                   Contracts Administrator

          If delivered personally or by commercial overnight delivery service,
     the date on which the notice, request, instruction or document is delivered
     shall be the date on which delivery is deemed to be made, and if delivered
     by mail, the date on which such notice, request, instruction or document is
     received shall be the date on which delivery is deemed to be made. Any
     party may change its address for the purpose of this Agreement by notice in
     writing to the other party as provided herein.

          (j)  Survival. Paragraphs 5, 6, 8, 9 and 11 shall survive any
     termination of this Agreement.

          (k)  No Waiver. No failure on the part of any party hereto to
     exercise, and no delay in exercising any right, power or single or partial
     exercise of any right, power or remedy by any party will preclude any other
     or further exercise thereof or the exercise of any other right, power 

                                       37

<PAGE>   30
or remedy. No express waiver or assent by any party hereto to any breach of or
default in any term or condition of this Agreement shall constitute a waiver of
or an assent to any succeeding breach of or default in the same or any other
term or condition hereof.


     IN WITNESS WHEREOF each of the parties has caused its duly authorized
officer to execute this Agreement as of the date and year first above written.


                  Fort Knox Escrow Services

                  By:

                  Title:


                  Producer

                  By:

                  Title:

                  Address:


                               Attention:


                  Licensee

                  By:

                  Title:

                  Address:



                               Attention:


                                       38

<PAGE>   31
                                   EXHIBIT 1




Fees to be paid by Producer shall be as follows:


          Initialization fee (one time only)          $ 750


          Annual maintenance/storage fee
           (includes one Deposit Material update)     $ 800/Product


          Additional Updates                          $ 100/Product
           (above one per year)



Payable by Licensee:


          Due Upon Licensee's Request for Release
           of Deposit Materials                       $500/Product per Licensee


A ten percent discount is credited towards the initialization fee for current
Fort Knox clients. Fees due upon receipt of signed contract or deposit material,
whichever comes first. Thereafter, fees shall be subject to their current
pricing, provided that such prices shall not increase by more than 10% per year.


                                       39


<PAGE>   32
                                   EXHIBIT 2
                                        
B-1 Product Name 
                 -------------------------------------------------------------- 

Version # 
          ---------------------------------------------------------------------
                                        
Description of Materials Deposited:   Date:
                                            -----------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
                                        
       Updates
                                        
Version # 
          ---------------------------------------------------------------------

Description of Materials Deposited:   Date: 
                                            ----------------------------------- 

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
                                        
                                        
B-2 Product Name 
                 --------------------------------------------------------------
Version # 
          ---------------------------------------------------------------------

Description of Materials Deposited:   Date: 
                                            -----------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

       Updates

Version # 
          ---------------------------------------------------------------------

Description of Materials Deposited:   Date: 
                                            -----------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

                                       40



<PAGE>   33
                                   EXHIBIT F

                                SPSS COMPETITORS

<TABLE>
<CAPTION>

COMPANY                                     PRODUCT
- -------                                     -------      
<S>                                         <C>
STATSOFT                                    ALL
MINITAB                                     ALL
SAS Institute/Abacus                        SAS/JMP/STATVIEW
DATADESK                                    ALL
MANUGISTICS                                 STATGRAPHICS
STATA                                       ALL
QUALITY AMERICA                             ALL
PQ SYSTEMS                                  ALL
HERTZLER                                    ALL
DATAMYTE                                    ALL
MATHSOFT                                    S+ PRODUCT
</TABLE>

                                       41




<PAGE>   34
                                   EXHIBIT G
                                        
                                ELECTRONIC BOOKS
                                        

     Content contained in the following book(s) may be included in electronic
     format on CDs sold as part of "Other SPSS Integrated Versions" as defined
     in paragraph 1.2.


     ISBN# 013-455677-1 SPSS 6.1 for Windows Brief Guide 
     ISBN# 013-656885-8 SPSS 7.5 for Windows Brief Guide 
     ISBN# 013-687914-4 SPSS 8.0 for Windows Brief Guide 
     ISBN# 013-618885-0 SYSTAT 6.0 for Windows Brief Guide

     Content from other titles may be added from time to time with written
     consent of the Publisher.

                                       42


<PAGE>   1

                                                                    Exhibit 15.1


                         Acknowledgment of Independent
                          Certified Public Accountants
                 Regarding Independent Auditors' Review Report


The Board of Directors
SPSS Inc.:

With respect to the Registration Statements on Form S-8 (nos. 333-25869,
33-73130, 33-80799, 33-73120, and 33-74402) of SPSS Inc., we acknowledge our
awareness of the use therein of our report dated July 31, 1998 related to our
review of interim financial information.

Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.




                                              /s/ KPMG Peat Marwick LLP

                                       



Chicago, Illinois
August 12, 1998

                                       43




<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>                     <C>
<PERIOD-TYPE>                   3-MOS                   6-MOS
<FISCAL-YEAR-END>                          JUN-30-1998             JUN-30-1998
<PERIOD-END>                               JUN-30-1998             JUN-30-1998
<CASH>                                               0                 $10,010
<SECURITIES>                                         0                       0
<RECEIVABLES>                                        0                  30,886
<ALLOWANCES>                                         0                   1,436
<INVENTORY>                                          0                   2,974
<CURRENT-ASSETS>                                     0                  45,169
<PP&E>                                               0                  33,349
<DEPRECIATION>                                       0                  20,735
<TOTAL-ASSETS>                                       0                  70,643
<CURRENT-LIABILITIES>                                0                  27,495
<BONDS>                                              0                       0
                                0                       0
                                          0                       0
<COMMON>                                             0                      90
<OTHER-SE>                                           0                  39,905
<TOTAL-LIABILITY-AND-EQUITY>                         0                  70,643
<SALES>                                         29,158                  57,658
<TOTAL-REVENUES>                                29,158                  57,658
<CGS>                                            2,574                   5,009
<TOTAL-COSTS>                                    2,574                   5,009
<OTHER-EXPENSES>                                22,267                  43,286
<LOSS-PROVISION>                                    21                     128
<INTEREST-EXPENSE>                                  55                      98
<INCOME-PRETAX>                                  4,339                   9,250
<INCOME-TAX>                                     1,488                   3,173
<INCOME-CONTINUING>                              2,851                   6,077
<DISCONTINUED>                                       0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                                     2,851                   6,077
<EPS-PRIMARY>                                     0.32                    0.68
<EPS-DILUTED>                                     0.30                    0.64
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>                     <C>
<PERIOD-TYPE>                   3-MOS                   6-MOS
<FISCAL-YEAR-END>                          JUN-30-1997             JUN-30-1997
<PERIOD-END>                               JUN-30-1997             JUN-30-1997
<CASH>                                               0                  $6,664
<SECURITIES>                                         0                       0
<RECEIVABLES>                                        0                  26,153
<ALLOWANCES>                                         0                   1,283
<INVENTORY>                                          0                   2,341
<CURRENT-ASSETS>                                     0                  38,641
<PP&E>                                               0                  28,045
<DEPRECIATION>                                       0                  16,876
<TOTAL-ASSETS>                                       0                  63,523
<CURRENT-LIABILITIES>                                0                  27,423
<BONDS>                                              0                       0
                                0                       0
                                          0                       0
<COMMON>                                             0                      88
<OTHER-SE>                                           0                  32,437
<TOTAL-LIABILITY-AND-EQUITY>                         0                  63,523
<SALES>                                         26,726                  54,038
<TOTAL-REVENUES>                                26,726                  54,038
<CGS>                                            2,426                   5,015
<TOTAL-COSTS>                                    2,426                   5,015
<OTHER-EXPENSES>                                22,132                  42,425
<LOSS-PROVISION>                                   127                     153
<INTEREST-EXPENSE>                                  22                      65
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<EPS-DILUTED>                                     0.13                    0.44
        

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